AMMONIA
U.S. Gulf/Tampa: Just as Green Markets went to press came word that Tampa business for June was concluded at $210/mt DEL. Buyer price ideas had been $200/mt, with sources citing available product from Koch in Trinidad. Sellers were seeking $225/mt DEL, saying that number was justified based on new business to Morocco and Australia. Reports from Shanghai of further production cuts in Russia added to their argument.
In the meantime, U.S. ammonia producers continue to benefit from much lower natural gas prices. The June NYMEX gas futures contract closed at $3.538/mmBtu on May 27, down from the year-ago $11.916/mmBtu.
Eastern Cornbelt: Much of the region enjoyed a three-to-four day run of good weather over the Memorial Day weekend, which allowed growers to make big strides on corn and soybean planting in many locations. Unfortunately, another round of showers moved through the region at midweek, with up to 2-3 inches of rain reported in some locations.
Ammonia continued to move out of some terminals last week, but the pace was slow. Sources said both ammonia and UAN were moving for sidedress applications on corn, particularly in parts of Indiana that were able to plant corn earlier this spring. The ammonia market was pegged at $340-$370/st FOB regional terminals, reflecting another slight drop from last report. Sources quoted the dealer market FOB Henderson, Ky., firmly at the $350/st level at midweek.
Western Cornbelt: Fieldwork was slow last week for some locations that experienced wet weather over the Memorial Day weekend, but planting progress was generally well advanced in the region. Dealers reported a little sidedress movement last week, although corn crops in some areas were not far enough along yet. “It’s just spiking through here,” said one southern Iowa source at midweek.
Ammonia pricing continued to fall, with sources quoting the spot market at $315/st FOB in Nebraska and $325/st FOB out of Iowa terminals to the dealer. A Nebraska source also reported fall prepay offers circulating in the $320-$325/st FOB range. Out of Kansas production points, the ammonia market was reported in the $270-$275/st FOB range last week.
California: Effective at midnight May 21, Calamco’s anhydrous ammonia posting dropped $105/st to $390/st truck-DEL in the state, with rail-delivered ammonia pricing falling to the $435/st level. Aqua ammonia pricing dropped on that date from $135/st to $108/st FOB in the state.
Pacific Northwest: The anhydrous ammonia market had reportedly dropped to $375-$400/st DEL in the Pacific Northwest region, with the low for railed tons and the upper end reflecting truck-delivered product in late May.
Western Canada: The spot fertilizer markets were in a state of transition last week, with some sources reporting lower prices as the season winds down. Dealers were trying to get rid of the inventory they have, so spot buying was limited and generally confined to hand-to-mouth quantities.
Anhydrous ammonia was quoted in a broad range at $670-$871/mt DEL in the region, with the low reported at midweek to reflect current spot quotes and the upper end representing list pricing to the dealer.
Correction: The U.S.-based Transammonia Inc. was not the company that was involved in an ammonia deal with Iran as was reported here last week (GM May 25, 2009). Instead, the correct identification should have been listed as Swiss-based Trammo Trading.
UREA
U.S. Gulf: Granular barges were trading last week at a very firm $240-$245/st FOB. According to sources, while some said buyers were at bottom of the range and sellers at the top, both ends of the range were reportedly met by the end of the week. One source said the last two weeks have seen phenomenal movement, which has translated into great inland demand – which has in turn boosted urea barge prices. As a result, those needing product for rice will have to pay up, they say.
Eastern Cornbelt: Sources in some areas reported fairly steady urea movement in recent weeks, weather and field conditions permitting. One said growers were more likely to switch from ammonia to urea in his area due to the rain delays and attractive pricing. The granular urea market last week was reported at $275-$295/st FOB, with one Indiana dealer reporting a $305/st DEL level to his location at midweek.
Western Cornbelt: Granular urea was pegged at $270-$295/st FOB regional terminals based on spot quotes, reflecting a slight increase from the previous week. The upper end was reported in Iowa, while dealer pricing out of Missouri River terminals was tagged at the $285/st FOB level at midweek. The Catoosa/Inola market in Oklahoma was reported in the $270-$280/st FOB range last week, while dealer pricing out of the Twin Cities market in Minneapolis was pegged at the $270/st FOB mark.
California: Granular urea pricing was down in the state, with sources quoting the rail market as low as $330/st DEL. Truck market urea was pegged at $360-$390/st FOB, with postings as high as $420/st FOB in California.
Pacific Northwest: Granular urea pricing was pegged at $320-$330/st DEL in the region.
Western Canada: Granular urea was reported in a very broad range at $470-$600/mt DEL in Western Canada, with the low for spot tons in Alberta and Saskatchewan and the upper numbers reflecting the most recent reference price to the dealer.
China: Sources say most of the time at the IFA gathering in Shanghai was spent talking and not doing. Few in the industry expected to see any major deals concluded at the industry’s annual meeting. The main topic of discussion was what will happen June 1 with Chinese export duties.
Rumors intensified on media reports that the Chinese government will make an announcement June 1 about the export duty regime.
The export duty on urea is slated to drop from its current 110 percent to 10 percent July 1. The rumors state that Beijing will drop the export duty to zero. Some sources say the drop will take place June 1 – the same day the phosphate export duty drops – while others say the drop will take place July 1.
In addition to the dramatic removal of all export duties, sources say government sources were hinting that the zero duty level will be in place for the rest of the year.
The current tariff plan has the duty dropping to 10 percent for July and August. The rate will jump back to 110 percent in September.
Chinese government planners devised the current tariff plan to discourage exports. They wanted to avoid large-scale urea exports to ensure local farmers a plentiful supply at lower prices.
The run on urea a couple of years ago resulted in spot shortages in China and higher prices. Once the export tariffs were raised, exports and domestic prices fell as local inventories grew.
If Beijing drops the duty to zero, sources say Chinese urea could become plentiful in the global market. One trader noted that shipments of panamax-sized cargoes would be especially competitive in deals to India’s east coast.
In previous years, Chinese urea dominated sales into India at the expense of the Yuzhnyy and Middle East suppliers.
India: Sources report that the Indian delegates to the IFA conference were friendly, but non-committal. One trader said just about every buyer was anxious to see what China did about its export duties before making any buying commitments.
The recent IPL tender covers India’s short-term urea demand. The company booked 450,000 mt of urea for June delivery.
More material will be needed in the third quarter, but, say sources, everyone wants to see what happens to the Chinese export price.
Pakistan: Domestic political pressure continues on TCP to buy more urea. Local media reports say legislators are complaining that Pakistan needs an additional 250-260,000 mt in the next couple of months. International traders agree that more urea needs to be purchased to fulfill the country’s needs, but disagree that it needs to be purchased immediately. Sources say TCP will most likely call a tender by the middle of June.
In the meantime, the financing for the purchase of the 260,000 mt awarded in last month’s tender cleared its final hurdle.
Pakistan media report banks were hit hard by the global economic downturn and reduced liquidity because of large-scale wheat purchases. Shahid Hussain Raja, under-secretary of the Ministry of Food and Agriculture (MINFA), told local media the wheat purchases had drained the resources of Pakistan’s banks.
By late Thursday, however, TCP was able to convince the banks that its own financial situation was improving. As last week closed, four of the five letters of credit to cover the urea tender awards were opened. TCP expects the first shipment of urea to arrive by the end of the month.
The delay in obtaining the financing led to concerns of a urea shortage. During April, demand for urea was 9 percent higher than last year. Political leaders and agricultural officials began raising warning signs that unless more urea was ordered quickly, large areas of the country would experience severe shortfalls.
TCP officials assured government ministers and the agriculture industry that it was doing what it could to ensure a plentiful supply.
Local market sources disclosed that MINFA has re-estimated that there could be a shortage of about 500,000 mt of urea for the Kharif season. Meanwhile, according to rough estimates, the total requirement for the Kharif season is 2.9 million mt while the country has 2.5 million mt, leaving a shortfall of 400,000 tons.
Pakistan imported about one million mt of urea and other fertilizer between January and April 2009, according to data released by Federal Bureau of Statistics. The total urea and other fertilizer imports during the first ten months of the current financial year July’08-April’09 period stood at 993,307 mt at $491.211 million, compared to 1.935 million mt at $823.850 million – showing a fall of 48.67 percent and 40.38 percent in terms of quantity and dollar value, respectively, for the same period last year.
During the month of April 2009 alone, Pakistan imported 128,629 mt of urea at a cost of $55.998 million, compared to 50,150 mt at $ 25.01 million in March 2009. This showed the import of urea is up by 156.49% and 123.9/8% in terms of quantity and value in dollars, respectively, over the previous month. Similarly, if compared with April 2008 (85,145 mt at $69.279 million) the import of urea is also up by 51.07 percent in terms of quantity, but dropped by 19.17 percent in terms of value in dollars over the same month last year.
Black Sea: Sources report a cargo was booked last week at $247/mt FOB to cover Indian business. The netback was calculated from an estimated delivered price of $279/mt CFR and favorable freight rates. The price in the area has been inching up as traders moved paper back and forth in anticipation of the IPL/India tender. Sources now peg the market at $240-$247/mt FOB.
Middle East: Producers are reportedly in good shape thanks to booking about 280,000 mt with IPL last month. That amount includes a reported 70,000 mt Transammonia is supplying from the new Oman facility.
Traders say there may only be one or two cargoes free in June. If tons are available, said one trader, the producers will be asking for a substantial increase in the price.
Helping the producers this month are many operations down for regular maintenance. Sources say, however, that production will be back up in July.
Producers are hoping to take advantage of additional buying from India and Pakistan. Unfortunately for the producers, if China drops its export duty to zero, the Middle East price will have to drop to be competitive.
NITROGEN SOLUTIONS
U.S. Gulf: Despite good demand at inland points, sources said that barge price ideas continue to fall, though word on actual trades was harder to find. Some pointed to forward fill numbers, reported at $120-$130/st FOB, as putting pressure on that market.
Eastern Cornbelt: UAN-32 remained at $215-$232/st ($6.72-$7.25/unit) FOB regional terminals for spot tons to the dealer, with one supplier reportedly referenced at the $6.50/unit FOB mark to resellers.
Western Cornbelt: The UAN-32 spot market was generally quoted in the $210-$225/st ($6.56-$7.03/unit) range FOB regional terminals to the dealer, with the low reported in Nebraska and the upper end reported out of spot Missouri River locations. An Iowa source pegged the common dealer market in the $6.75-$7.00/unit FOB range last week.
California: Rail-delivered UAN-32 was tagged as low as $210-$220/st ($6.56-$6.87/unit) in California, while truck market UAN was reported in the $225-$240/st ($7.03-$7.50/unit) FOB range.
Pacific Northwest: Sources tagged the regional UAN-32 market at $230-$235/st ($7.19-$7.34/unit) DEL, reflecting another drop from last report. The upper end reflects list pricing that took effect at mid-month.
Western Canada: The UAN-28 market was steady at $371-$387/mt ($13.25-$13.82/unit) DEL to the dealer.
AMMONIUM NITRATE
U.S. Gulf: AN remained quiet last week. Prices remained stable, with reports of very little product available.
Western Cornbelt: Ammonium nitrate remained at $265-$270/st FOB in the region, with the Catoosa, Okla., market pegged at the $250/st FOB mark. Nebraska sources quoted delivered nitrate in the $270-$280/st range from the port.
California: No market was reported for ammonium nitrate in California. CAN-17 was unchanged at $255-$265/st FOB last week.
Pacific Northwest: Ammonium nitrate was reported at $335-$350/st DEL in the region, depending on quality, reflecting a drop from last report. CAN-17 pricing remained at $245-$250/st FOB and $260/st DEL in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $225-$245/st FOB.
Western Cornbelt: Granular ammonium sulfate remained at $225-$245/st FOB in the region.
California: Ammonium sulfate pricing remained at $245-$290/st FOB, with the low for standard grade after discounts and the upper end for granular product in desert locations. Sources said they anticipate some sulfate movement for rice topdressing in the coming weeks.
Pacific Northwest: The granular ammonium sulfate market remained at $225-$230/st DEL in the region.
Western Canada: Granular ammonium sulfate remained at $380-$390/mt DEL in Western Canada.
PHOSPHATES
Central Florida: Farmers in the Northeast and parts of the Midwest served by rail from Central Florida put most of their corn crops in the ground during the past couple of weeks, and most beat the mythical June 1 deadline for getting the best results. A later planting date would have meant lower corn yields or a switch to soybeans, which require less phosphate. Sources said warehouse activity was up, but most of the activity was coming from dealers, who were looking to do some fill.
Truck business, which was highly active a week earlier, tapered off last week. In addition, it was not possible to ship a railcar to the Northeast or Midwest from Florida and have it arrive in time to be useful for this growing season. That means the slow season was likely to begin grinding to a halt for the next several weeks.
Raw materials continued to be a bargain for phosphate producers last week. With the cost of sulfur delivered to Tampa only $5/lt, ammonia was said to likely settle much lower for June.
A Central Florida trader pointed out the wide difference between the price of DAP there and at the Gulf’s river system, which has been close to $50/st in some cases. “It makes Central Florida DAP non-competitive,” the source said. “Either the Gulf price has to go up or Central Florida will have to come down.”
Hours after that comment, CF announced a new Central Florida price of $270/st FOB for DAP and $10/st FOB more for MAP, lower but still above the gulf price.
As a result of the CF news, the Central Florida DAP price range was $270-$305/st FOB, down from the previous week’s $295-$305/st FOB. PCS Sales had no published price. Mosaic’s price was $315/st FOB for DAP and $325/st FOB for MAP, but it has sold DAP at $295/st FOB. CF dropped its price to $270/st FOB from $295/st FOB for DAP, and $10/st FOB higher for MAP. The price from Agrifos remained at $350/st FOB for trucks and $340/st FOB for rail shipments.
U.S.Gulf: For phosphate traders, last week was something like a wooden stake being driven through the heart of a vampire, sending it back to the world of the dead. In this case, the vampire was the good guy and meant a robust, healthy time two weeks ago, but traders said the market returned to the grave last week. Traders reported few NOLA DAP barge transactions. However, it was a different story for a producer who was able to scarf up more business than usual – and at higher prices.
One reason for the difference was availability. Few uncommitted NOLA DAP barges were on the river system last week, so traders had fewer chances to make sales. On the other hand, Mosaic had a more than sufficient supply and was able to take advantage of the situation.
With decent weather throughout most of the Midwest last week, farmers made a dash to their fields and planted corn – just in time. Sources said it appeared 80-85 percent of the corn was in the ground in the Eastern Cornbelt, which includes Ohio, Indiana, and Illinois. With the unusually late start of the spring season’s planting, many were beginning to doubt the USDA’s estimate of 85 million acres of corn being planted this year, but it appeared the final total will be much closer to that figure than many in the industry anticipated.
The December 2009 price of corn was up somewhat last week, hitting around $4.49/bushel, which will be more than enough to offset farmers’ input costs for fertilizer and fuel, both of which were significantly lower than last season.
The U.S. Army Corps of Engineers reopened two dams that feed the Arkansas River after closing them the previous week. Only one barge, hauling urea, was still on the water late last week, but the trip to Inola will take several days longer than it would otherwise.
Warehouse prices were still positive in comparison to NOLA DAP barges last week, running between $320/st FOB and $325/st FOB for spot sales. Prepaid sales were running as low as $315/st FOB from terminals.
NOLA DAP barge prices were lowest at the beginning of the week, and prices continued to rise each day. The lowest buy was made by a trader at $249/st FOB on Monday, but sales were made in the range of $255-$260/st FOB later in the week. The NOLA DAP barge price range last week was $249-$260/st FOB based on confirmed sales, up from $244/$258/st FOB the previous week. Both Mosaic and CF had a $10/st FOB additional charge for MAP.
Eastern Cornbelt: DAP was reported at $320-$330/st FOB regional warehouses to the dealer, with the low reported FOB Peoria and Cincinnati. MAP was $10/st higher than DAP. 10-34-0 pricing remained at a nominal $600-$700/st FOB, with the low in Illinois and the upper end in Ohio, but sources reported minimal movement of starters last week.
Western Cornbelt: The DAP market was pegged at $320-$335/st FOB regional warehouses to the dealer, with the upper end out of spot Missouri River warehouses. Iowa sources pegged the common dealer market at the $330/st FOB level last week. MAP was $10/st higher than DAP, with one Nebraska source tagging the market at the $335/st FOB level in his location.
10-34-0 was pegged at $540-$600/st FOB in the region, but sources reported no business to test those numbers. Sources reported 10-34-0 pricing out of Kansas shipping points in the $460-$470/st FOB range.
California: MAP and DAP were steady at $455-$460/st DEL or FOB California warehouses. 16-20-0 remained at $310-$320/st FOB, and 10-34-0 was unchanged at $477-$487/st FOB. Phosphoric acid remained at $11.00/unit DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA), with Simplot referencing MGA at $11.20/unit FOB in California. Sources said they expect some pricing adjustments to the dry phosphate and phosphoric acid markets by July as old inventories are cleaned up and movement tapers off.
Pacific Northwest: MAP was unchanged at $445-$455/st FOB or DEL in the region, with DAP at $450-$460/st FOB or DEL. 16-20-0 pricing remained at $300-$305/st DEL, and 10-34-0 was quoted at $445-$455/st FOB in the region. One Washington source quoted delivered 10-34-0 at the $455/st level as well.
Phosphoric acid was steady at $11.00/unit DEL in the region for both SPA and MGA, but sources said a pricing adjustment is likely in the next 30 days.
Western Canada: MAP was quoted at $550-$665/mt DEL in Western Canada, reflecting a sizable drop from last report. Reference levels remained as high as $790-$825/mt DEL to the dealer.
U.S. Export: Most of those involved in the export of DAP were still at or returning from the International Fertilizer Association’s conference in Asia late last week. An attendee said one important question – the status of China’s export duties – went unanswered at the meeting (see below).
India was said to still be in a buying mode, and Pakistan was showing interest in getting into the market. Otherwise, the pickings were slim.
Based on current market conditions, the export DAP price range was $273-$275/mt FOB last week.
China: Sources in Asia report the Chinese government is slated to make an announcement about its export duty regime Monday, June 1. Sources expect to hear that China is removing export duties on all phosphate exports, especially DAP, for the rest of the year.
Duties are slated to come down from 110 percent to 10 percent June 1. The inventories of DAP in China have been building at an alarming rate, say sources. The central government is reportedly anxious to get the DAP out of the warehouses and into the international market as quickly as possible.
Asian traders said it makes sense for Beijing to eliminate the export duty on DAP. Stretching out the no-duty period through December, however, is seen as a dicey proposition. They note that if demand for Chinese DAP repeats what happened in the urea market a couple of years ago, Chinese farmers could face a severe phosphate shortage by the end of the year.
India: RCF has finalized 200-205,000 mt of DAP under its recent tender. Details include: Helm 30,000 mt ex China at US$329.75/.mt CFR Tuticorin; Helm 30,000 mt ex China at $329.75/mt CFR Kandla; Helm 40,000 mt ex China at $325.15/mt CFR Vizag; Swiss Singapore 30,000 mt ex China at $325.50/mt CFR New Mangalore; MMTC 40/45,000 mt ex China $329.75/mt CFR Dharmtar/ Kandla; and Swiss Singapore 30,000 mt $329.75/mt CFR Tuticorin.
These are the lowest prices achieved so far, and Indian buyers are now looking at levels closer to $300/mt.
In the meantime, word out of the IFA meeting was that phos acid prices for the third quarter could not be finalized due to the falling DAP prices. Sources say to expect both sides to meet again in a few weeks.
POTASH
Eastern Cornbelt: Potash pricing continued to be quoted in the $630-$650/st range FOB warehouses from brokers and resellers out of most locations. One source reported dealer pricing still at the $700/st FOB level out of nearby locations last week, however.
Western Cornbelt: The potash market was tagged at $600-$630/st FOB regional warehouses, with delivered granular tons quoted at the $640/st level in Nebraska.
California: There were few new sales to test the potash markets. One source said his farmer customers had turned away from high-priced potash this spring, saying the extra expense was not justified by any projected yield increases. “It may not pay to get that extra 10-15 bushels at these prices,” said one dealer. “That’s what I’m hearing.”
Sources said producers were holding firm on muriate of potash prices, with the California market unchanged at $849-$875/st FOB and $875-$900/st DEL.
Sulfate of potash was pegged at $1,000-$1,055/st FOB for bulk tons, with the low for granular product and the high reflecting list pricing water soluble SOP. Standard grade SOP was reportedly listed at the $1,015/st FOB level. One source said water soluble product should be going down in spoon-fed applications right now, but the movement is just not there this spring.
Potassium nitrate pricing was unchanged at $1,310-$1,380/st FOB in the state, with the low for bulk and the upper end for bagged product.
Pacific Northwest: Delivered potash remained in a broad range at $750-$850/st in the region, depending on supplier and point of origin. “Nothing is going on, so it doesn’t matter what the price is,” said one source. “It’s a heck of a game of poker the domestic producers are playing,” added another. “Can they hold their price, or will they have to drop to get business? We might have to wait until fill fall before they show their hand.”
Western Canada: Potash FOB Saskatchewan mines was reported at $960-$1,000/mt FOB, depending on grade and supplier.
SULFUR
Tampa: Last week prill operations on the Gulf Coast were still running strong, although not at full capacity, and inventories were growing. However, six cargos were expected to be loaded in June, and those will remove somewhere in excess of 150,000 mt from priller stockpiles at Beaumont.
Meanwhile, something very similar to balance was shaping up on the supply and demand sides. Refineries can make money from current fuel prices, which have risen in the past couple of weeks, and signs continued to point to increased driving on the nation’s highways. Fewer refinery problems were seen in comparison to the same period last year.
When second-quarter sulfur prices were being negotiated, the phosphate industry pointed to the strong likelihood they would be curtailing more production during the quarter – but so far, nothing much has happened. If additional cuts in production do come, they will probably be announced sometime in June.
West Coast: Second-quarter prices were either settled or being settled last week for the West Coast. As expected, the price fell, which was a plus of sorts for refineries because of the negative pricing structure in the first quarter. Prices in northern California dropped from $0.00-$30.00/mt FOB to about half that.
Vancouver: Despite the glut of sulfur on the Gulf Coast, supplies were tight at Vancouver late last week, and supplies for spot sulfur were beginning to close.
India: The following purchases have been made in the past ten days: IFFCO 40-45,000 mt from ICEC at US$59.75/mt CFR Paradeep; Coromandel 17,500 mt from Swiss Singapore at $59.85/mt CFR Vizag/Chennai; FACT 25,000 mt from Swiss Singapore $64.65/mt CFR Cochin; and PPL 35,000 mt from Sampurna Trading at $62.50/mt CFR Paradeep.
MARKET NOTES
Pakistan: On May 24, Pakistan and Iran signed an agreement regarding the import of natural gas into the country. The project, termed as the peace pipeline by officials from both countries, has been signed by Pakistan President Zardari and President Mahmoud Ahmadinejad of Iran on the sidelines of the tripartite summit on Afghanistan security in Tehran. Earlier, Islamabad agreed to allow the import of one billion cubic feet of gas at the rate of 80 percent of the price of crude oil.
India: Coromandel Fertilizers Ltd, a part of the Rs156.46bn Murugappa Group, is in talks to invest Rs30-40bn to set up a urea and ammonia manufacturing plant in a West Asian country. Details are expected to be finalized in December. The company is in a phos acid jv in Tunisia, and owns a small stake in Foskor Ltd. of South Africa. Officials say Coromandel is looking to reduce its revenue dependence on the sales of fertilizers by expanding its range of offerings to include pesticides, micronutrients, water-soluble products, and retail. The fertilizer business currently represents about 70 percent of the company’s total sales, and it is looking to reduce this to around 50 percent in the next three-five years.