AMMONIA
U.S. Gulf/Tampa: The markets remained calm last week, with no new business reported to change previous benchmarks.
May ammonia imports were off 31 percent, according to the U.S. Department of Commerce, to 565,049 st from the year-ago 823,163 st. July-May imports were off 23 percent to 6.09 million from the year-ago 7.96 million st.
Eastern Cornbelt: The anhydrous ammonia market was reported in the $315-$320/st FOB range for prompt tons last week, with reports of fall prepay still available from some suppliers at the $330-$340/st FOB level in the region. One source said there was little new buying taking place, as most have either filled or locked in prepay commitments. Forward contract ammonia for August continued to be referenced in the $350-$355/st FOB range in the region, with incremental increases for each month after that.
Western Cornbelt: Sources reported few changes to spot prices, and very little activity. “With grain prices down, the phone has just shut off,” said one. “There’s not much activity, on all fronts.”
The ammonia market was steady at $310-$320/st FOB regional terminals to the dealer. Forward contract ammonia for August was referenced at $325/st FOB in Nebraska, $335/st FOB in Iowa and $355/st FOB in Missouri.
Northern Plains: Sources tagged the spot ammonia market at $340-$350/st FOB regional terminals, with forward contract ammonia for August referenced at $350/st FOB Glenwood and Pine Bend, Minn., and $355/st FOB Grand Forks and Velva, N.D. North Dakota sources pegged delivered ammonia at $355/st for fill and $375-$385/st for fall prepay.
Great Lakes: The anhydrous ammonia market was pegged at $315-$340/st FOB in the region, depending on location and time of delivery. Michigan sources tagged the market at $320/st FOB Courtright, Ont., for cash tons, with fall prepay quoted at $340/st FOB Indiana terminals to the dealer. Wisconsin dealers pegged the market at $315/st FOB for prompt tons, with fall prepay reportedly being offered in the $320-$330/st FOB range.
Middle East: The market is moving. After weeks of sitting in the same general spot, sources report that recent sales to Mitsui, Mitsubishi, and Yara have moved the market solidly into the $200s/mt FOB. Sabic sold tons to Mitsui for $213/mt FOB. Mitsubishi took a cargo at the same rate from Qafco. And Yara picked up 23,000 mt from PCC in Iran at $199/mt FOB. Sources say Iranian material is usually discounted $5-$10/mt because of the extra distance vessels have to travel and because of occasional difficulties in the loading procedures.
The bottom line for market watchers last week was that the Middle East price moved from just under $200/mt FOB to $200-$215/mt FOB.
Traders and producers said the two Japanese trading houses were anxious but not desperate to buy material. Mitsui will most likely send its cargo to India, and Mitsubishi its purchase to Korea.
Producers in the area have been comfortable for some time. Contract sales have kept vessels loading on a regular basis. The only complaint was that demand was never strong enough to push the price higher.
Even with Yuzhnyy effectively shut down, demand from Europe and the U.S. was so weak that even strong sales into Asia did nothing to raise prices. At the best, said one Asian buyer, the prices in the Arab Gulf held even on the Asian demand. Had the sales to the Far East been soft, he added, prices in the AG would have plummeted.
Sources add that production in the area has not been at 100 percent. Some plants cut back on output while others took extended maintenance turnarounds.
More ammonia will be added to the mix in 18 months.
Qafco started construction on new plant last week. The Qafco V facility will come online in 2001. At that time, its annual ammonia output will be 1.7 million mt.
Black Sea: Production in the area remains limited to efficient and low-cost plants. For most producers the breakeven price is about $320/mt. With the current ammonia market still under $200/mt FOB, most manufacturers see little reason to restart.
The one glimmer of good news, said one Asian trader, is that reports of tonnage in the $170s/mt FOB have faded.
While no one could point to any business done in recent weeks in the $170s/mt FOB, the rumors of such deals hounded those who tried to move the price up. At this point, said one trader, no one is looking at anything under $180/mt FOB.
Producers are said to be talking about $200/mt FOB on the heels of regular news reports of ammonia production shutting down throughout Europe.
Even with rising optimism from the producers, sources peg the market in the $180s/mt FOB with a strong push into the $190s.
Asia: Demand in Asia remains strong. Sources report that Taiwan buyers TFC and CPDC are regularly asking their suppliers to add a few extra tons to each shipment. The only soft spot is in South Korea, where Namhae is sticking with only its contracted tonnage.
The entire South Korean fertilizer industry has gone into a slump. Sources say the lack of regular shipments to North Korea, as political tensions heighten between the two Koreas, is forcing Namhae and others to cut back on production.
UREA
U.S. Gulf: Rice demand continued to keep the urea market firm last week, with business called $265-$271/st FOB. Late-week trades were in the higher end of the range at $268-$271/st. Sources said there were very few barges available for those still needing barges for rice season.
The big question, which may or may not be answered at the Southwestern Conference, is, will the firm barge prices continue once rice demand is gone? Some cited forward paper trades as saying no, as they were weaker. Bears are also fearful of corn prices, saying they will further keep already reluctant buyers from stocking up the depleted urea supply chain.
Industry optimists, however, hang their hats on a wheat country peg, with one noting that overseas drought should kick up wheat prices and make for a good fall planting season. They add that even current NOLA numbers are not likely to get too many overseas exporters excited about the U.S. market, so the danger of oversupply is diminished.
Urea imports were actually up 13 percent in May, according to DOC to 394,205 st from the year-ago 350,197 st. July-May imports, however, were off 13 percent to 5.5 million st from the year-ago 6.34 million st.
Eastern Cornbelt: Granular urea pricing was up slightly in the wake of a firming barge market, but there was little new business to test the terminal price. Sources pegged the dealer market at $290-$295/st FOB most regional terminals to the dealer last week.
Western Cornbelt: Granular urea was pegged at $280-$295/st FOB in the region, with reports of postings now at the $300/st level FOB Enid, Okla. Product continued to move on rice acres in Missouri. USDA rated the rice crop there at 67 percent good or excellent last week.
Northern Plains: The granular urea market was up from last report at $290-$295/st FOB the Twin Cities, with the upper end reflecting reference levels. North Dakota sources pegged the market at $310/st FOB and $315/st DEL, with minimal movement. Forward contract tons for August were referenced at $310/st FOB Pine Bend and $330/st DEL in North Dakota and northern Minnesota.
Great Lakes: Wisconsin sources pegged the granular urea market at $290/st FOB river terminals and $300/st truck-DEL to central and southern locations in the state. The dealer reference price out of Michigan terminals was quoted at the $310/st FOB mark.
Northeast: Broadcast applications of urea were taking place in certain areas of the region last week. As for new urea sales, they were few and far between. One source pegged the dealer market at $305/st FOB in western Pennsylvania, and no current pricing was reported out of the Baltimore and Philadelphia markets. Product remained sold out at Savannah, Ga. One New York source quoted delivered urea at the $325/st mark from Wilmington, N.C.
Pakistan: Last week was busy for TCP. Beginning Saturday, July 11, TCP ran three tenders, each for 50,000 mt. These tenders were in addition to tenders for 100,000 mt each conducted June 27 and 30 and another 50,000-mt tender that closed July 4. Eventually TCP scrapped the July 4 tender.
The July 11 tender showed a definitive uptick in pricing with an award given to Sabic for 50,000 mt at $291/mt CFR. The July 13 tender, however, had prices down a couple of dollars. Sources speculated that Sabic might have offered favorable financing or other incentives to secure the deal. One observer noted that last year Saudi Arabia provided Pakistan with a large development aid package that included favorable rates on fertilizer and shipping.
Firm offers came in at 380,000 mt with options for another 90,000 mt.
Results of the July 11 tender follow:
July 11, 2009 TCP Urea tender for 50,000 mt |
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| Supplier | Source | Quantity (MT) | US$/mt CFR |
| Helm | Open | 25,000 | €207.50 |
| Sabic | Saudi Arabia | 40,000 | 291.00 |
| Toepfer | Open | 25,000 | 291.25 |
| 25,000 (S/O) | 291.25 | ||
| Transammonia | Open | 25-50,000 | 291.80 |
| Shandong Liaocheng | China | 50,000 | 292.50 |
| Dreymoor | Open | 25-35,000 | 292.97 |
| 25-30,000 (S/O) | 292.97 | ||
| Helm | Open | 25-35,000 | 294.00 |
| Swiss Singapore | Open | 25,000 | 294.60 |
| Midlink | Ukraine | 25,000 | 295.00 |
| Multicommerce | Open | 25-35,000 | 296.32 |
| Keytrade | Open | 25-35,000 | 298.75 |
| 25-35,000 (S/O) | 292.97 | ||
Sources say that even though the Helm offer was the lowest – about $290/mt CFR at the time – the tender documents called for all offers to be made in U.S. dollars. Others suggested that shipping time and suspected but unrecorded incentives from Saudi Arabia led the award to Sabic.
No sooner had the ink dried on the award contract than TCP was back in talks following the July 13 tender.
Total tonnage offered in this tender came to 305,000 mt in firm offers and optional offers of 110,000 mt.
Results of the tender follow:
July 13, 2009 TCP Urea tender for 50,000 mt |
Offering Company | Quantity (mt) | Origin | US$/mt CFR |
| Transfert | 20,000 | Open | 289.00 |
| Transammonia | 25-50,000 | Open | 289.87 |
| Helm | 25-35,000 | Open | 289.95 |
| 25-35,000 | Open | 294.00 | |
| Shandong Liaocheng | 25,000 | China | 290.40 |
| 25,000 (S/O) | 290.40 | ||
| Swiss Singapore | 25,000 | Open | 290.55 |
| 25,000 (S/O) | |||
| Toepfer | 25,000 | Open | 290.59 |
| 25,000 (S/O) | 290.59 | ||
| Key Trade | 25-35,000 | Open | 293.75 |
| 25-35,000 (S/O) | 293.75 | ||
| Mid Link | 25,000 | Ukraine/CIS | 295.00 |
| Multicommerce | 25-35,000 | Open | 296.29 |
Sources report that Transammonia won the award for 50,000 mt at $289.87/mt CFR.
Once again, observers point to timing of shipping the cargo, which most likely led TCP to accept the Trammo offer over that of Transfert. Sources speculate that the Transammonia deal will be covered out of Oman while Transfert would most likely source out of Yuzhnyy.
The next day, TCP closed another tender.
July 14, 2009 TCP Urea tender for 50,000 mt |
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| Supplier | Origin | Quantity (mt) | US$/mt CFR |
| ECS | Open | 50,000 | 278.00 |
| Transfert | Open | 55,000 | 287.25 |
| 95,000 (S/O) | 287.25 | ||
| Helm | Open | 25,000 | 287.55 |
| 25-35,000 (S/O) | 292.62 | ||
| Shandong Laiocheng | China | 25,000 | 288.40 |
| Gavilon | Open | 25,000 | 288.46 |
| Keytrade | Open | 25-35,000 | 290.00 |
| 25-35,000 (S/O) | 290.00 | ||
| Midlink | Ukraine | 25,000 | 290.00 |
| Dreymoor | Open | 25-35,000 | 290.71 |
| 25-35,000 (S/O) | 290.71 | ||
| Swiss Singapore | Open | 25,000 | 290.91 |
| 25,000 (S/O) | 290.91 | ||
| Transammonia | Open | 25-50,000 | 292.37 |
| Multicommerce | Open | 25-35,000 | 295.99 |
In this tender firm offers were as high as 385,000 mt with options coming in at 220,000 mt.
Transfert won the award – sources say TCP may have been put off by the unusually low offer by ECS. Sources add that TCP asked Transfert to exercise its option on the 95,000 mt offer as well.
With the latest round of tenders, TCP picked up 335,000 mt at an average price of $285.17/mt CFR.
A summary of the awards follows:
| Date of Tender | Company | Quantity (mt) | US$/mt CFR |
| June 27 | Hagrapota | 25,000 | 276.00 |
| June 30 | Transammonia | 35,000 | 281.75 |
| Transfert | 25,000 | 281.75 | |
| July 4 | Scrapped | ||
| July 11 | Sabic | 50,000 | 291.00 |
| July 13 | Transammonia | 50,000 | 289.87 |
| July 14 | Transfert | 55,000 | 287.25 |
| 95,000 (S/O) | 287.25 |
There are still two more tenders to go. One closes July 25 and the other closes July 28. Each is for 50,000 mt.
Traders in the area said rather than call one big tender for the full 300,000 mt, TCP called smaller tenders to avoid a dramatic spike in the global price.
The first two tenders were for 100,000 mt each but TCP only took 85,000 mt from the two. Sources said the small order was an indication from TCP that it did not like the prices being offered and that it was willing and ready to make purchases in small steps if necessary.
One trader said the volatility of the market made the smaller tender route the more logical path to take.
The slight drop in prices from the July 11 tender to the subsequent two tenders indicated more competition among traders, said one source, rather than an actual softening of the netback price.
Sources said traders were willing to secure a cargo or maybe two on the hope that they might win one award from TCP. Few were willing to make bets on multiple cargos – something larger tenders would have required. At the same time, TCP could gauge the market temperature more easily with smaller purchases.
TCP has been under pressure to purchase at least 300,000 mt by the end of July. Local political leaders were reporting shortages among their constituencies as the application season approaches. The concerns of local farmers made their way up the chain until the national government ordered TCP to purchase more urea quickly. The government threatened that if TCP could not make the purchases in time, it would authorize private-sector buyers to import the material as needed.
The only problem TCP was facing going into the flurry of tender activity was guarantees that banks in Pakistan would honor its letters of credit.
Late last month the central government had to call in representatives of the commercial banks in Pakistan to discuss the LC issue. Local media reports said some of the banks complained that TCP was already overdrawn on its accounts because of tenders in other commodities. Since that meeting, there have been no complaints of LCs not being honored.
The issue facing TCP now is ensuring the arriving material is efficiently offloaded and sent inland. Sources say if the seasonal rains remain as they are, some delays in the ports may occur. Likewise, damage to the roads may further delay movement of the urea from the ports to the local distribution centers.
Pakistan will import about 750,000 mt of urea to partly meet requirements in Kharif season, according to an announcement of National Fertilizer Corp. (NFC), Ministry of Industries & Production. The government has estimated a shortage of 450,000 mt during the season. A report of National Fertilizer Development Centre (NFDC) also says that with the present level of urea production (2,558,000 mt), 623,000 mt in imports, and inventory (38,000 mt), the urea availability during Kharif season would be about 3,219,000 mt. As against this, urea consumption is estimated around 2,988,000 mt. Thus the urea supply/demand situation during Kharif 2009 would be satisfactory if planned imports arrived in time.
India: Just as Pakistan appears to be winding down its buying season, the Indians are looking to get back into the market. For the past couple of weeks sources have been expecting to hear that STC is calling a tender. The conventional wisdom is that the tender will have to be called by the end of the month. Odds are in favor of a tender being called sooner than the 31st.
Sources report the Indian buyer is indicating that it wants to pay no more than $280-$281/mt CFR for its urea.
To back up their argument, STC reportedly tells traders and Middle East producers that the freight rates to Indian ports is less than shipping to Pakistan and many of the ports can handle more vessels than the Pakistan facilities.
For producers the issue is moving the netback price up, not granting further discounts.
In the Indians’ favor are reports that the price of Chinese urea is coming down. Sources say a number of traders have been talking to Chinese urea producers looking to secure tons in the low- to mid-$250s/mt FOB. Prices in that range could accommodate the Indian request.
One trader noted that some of the Middle East producers could scuttle any deals involving Chinese or Black Sea material by offering low prices in exchange for exclusive rights to supply all the urea STC can take. Such a move would not be unusual, for the Arab Gulf producers in particular. In the past, they have dropped their pricing goals a couple of dollars to ensure full order books for a couple of months.
Sources say Indian buying will most likely be brisk. Initial estimates of a slower buying season were based on the limited rainfall at the beginning of the monsoon season. Now, however, the rains have picked up. Meteorological reports in the past two weeks point to a normal season.
Middle East: The business concluded between Sabic and TCP/Pakistan now puts the Middle East market dramatically higher.
Public prices had been stuck at $260-$261/mt FOB based on the last Indian tender a couple of months ago. The TCP business now puts the market at $270-$275/mt FOB.
Producers argue the netback could be even higher because the buyer or seller could have a charter vessel available for even lower freight rates.
Area producers had stayed out of the June TCP tenders. Sources said the producers had more than enough business on their books between long-term contracts and awards from the Indian tenders.
Sabic secured one more cargo for its order book by winning the July 11 TCP tender. Sources say the producer may have offered favorable financing to secure the deal that – on the surface – looks significantly higher than previous and subsequent awards.
Producers are now arguing that their new starting point is $280/mt FOB. Others in the industry, however, are saying the market is still roiling about looking for stability.
When India enters, said one trader, the market might find firm grounding.
One scenario being discussed by industry observers is for the Middle East producers to offer significant quantities at a low price and secure two to three more months of full order books.
One trader said that trying to force the market up – as some producers have tried to do in the past – would most likely fail because of the presence of Chinese urea.
Reportedly, Indian buyers are talking to the Middle East producers trying to work out a deal to make both sides happy. For the Indians that means nothing higher than $283/mt CFR, which translates to $260-$265/mt FOB for the producers.
For the producers, accepting the Indian pricing ideas would mean two to three months of prices right where they have been for the past two months – but full order books.
Qafco started construction on its newest facility. The Qafco V plant will include ammonia and urea production. The new urea unit will have an annual output of 1.3 million mt to increase Qafco’s total annual output to 4.3 million mt. The new facility is expected to be up and running by mid 2011.
Black Sea: Sources point to $50/mt freight from Yuzhnyy to Pakistan and the Transfert deal with TCP. The estimated netback on the Transfert deal comes to $237/mt FOB. And sources say if Transfert will be filling its awards with Black Sea material, the tons it purchased couldn’t be much less than that.
In addition to the Pakistan business, sources report prices are edging up as traders look to the pending Indian tender.
At the same time that things are beginning to look better for producers, the presence of Chinese urea in the global market is providing a ceiling on how high producers can go in their pricing ideas.
Earlier deals in the $230s/mt FOB are gone say sources. One trader said it is even getting harder to nail down deals in the $240s/mt FOB.
Producers are quoting $260/mt FOB but no one has been able to point to anything in the $250s/mt FOB.
Sources say the upcoming two Pakistan tenders combined with the expected Indian tender could move prices into the $250s/mt for August.
For now, sources peg the market $240-$245/mt FOB with enough potential strength to reach the upper $240s/mt this week.
China: International traders and local producers have been meeting in the hopes of hammering out prices that will make Chinese urea competitive into India and Pakistan.
Sources say if the producers are willing to accept the low $250s/mt FOB, their product could provide serious competition to Middle East and Black Sea urea into India.
For now, sources say some deals in the low $250s/mt FOB may have been done. One trader said for sure some deals were done around $253-$255/mt FOB.
Indonesia: PIM concluded a selling auction at $268/mt FOB. The 30,000 mt went to a local trader who will probably flip the tons to an international trader quickly. Sources say the deal may end up being for as many as 40,000 mt.
Bangladesh: The Bangladesh Finance Minister has approved the proposal of the Industries Ministry for import of 475,000 mt of urea during 2009-10 (July-June). As per approval, BCIC will procure 400,000 mt granular urea from Karnaphuli Fertilizer Co. Ltd. (KAPCO) at a total cost of US$118.90 million. The price was set at US$297.25 /mt. The rest of the quantity of 75,000 mt will be imported from abroad through tenders.
NITROGEN SOLUTIONS
U.S. Gulf: Most sources last week put UAN barges within the $130-$135/st FOB range ($4.06-$4.22/unit). Barges have firmed up slightly in recent weeks after a spate of earlier buying at the $120/st FOB mark. The upward trend continues at many inland points, according to sources last week, who reported that good moisture levels have prompted farmers to use more UAN than expected from the Cornbelts through the Southern Plains. Pockets of activity developed to keep major suppliers busy late into the season.
UAN imports were off 63 percent in May, according to DOC, to 104,113 st from the year-ago 284,432 st. July-May imports were off 54 percent to 1.54 million st from the year ago 3.3 million st.
Eastern Cornbelt: The UAN market continued to be tagged in the $5.25-$5.75/unit FOB range out of regional terminals to the dealer. One source put the common dealer market in Indiana and Ohio at the upper end of that range for summer fill tons, while the low was quoted in Illinois on a spot basis. Forward contract tons for August-September continued to be referenced at $174.40-$190.40/st ($5.45-$5.95/unit) FOB in the region.
Western Cornbelt: The UAN-32 cash market was quoted at $168-$185/st ($5.25-$5.78/unit) FOB regional terminals, depending on location. One source pegged the common dealer price in Iowa at the $176/st ($5.50/unit) FOB level last week. Several sources described UAN sidedress movement on corn as heavy, with one claiming volumes were much heavier than expected.
Northern Plains: The UAN market was quoted at $5.50-$5.80/unit FOB terminals in the region. Forward contract UAN-32 for August and September was referenced at the $185.60/st ($5.80/unit) level FOB Pine Bend. Delivered UAN-28 in North Dakota was pegged at $190/st ($6.79/unit).
Great Lakes: Sidedress movement was generally finished in the region, and UAN pricing had dropped from last report. Several sources reported more interest in UAN than anticipated for sidedress demand, however, and the market for replacement tons was reportedly trying to go up. The biggest problem, said one, is that retail pricing continues to lag as dealers try to unload inventory carried over from spring.
The dealer market for fill UAN-28 in Michigan was pegged at $160-$170/st ($5.71-$6.07/unit) FOB depending on location, with the upper end reported FOB Webberville and the low FOB Toledo, Ohio. Dealer reference prices were quoted in the $180-$185/st ($6.43-$6.61/unit) range in Michigan. In Wisconsin, sources tagged the UAN-32 market at $168-$170/st ($5.25-$5.31/unit FOB for fill or prompt tons, with the upper end of that range also quoted for rail-delivered UAN-32 in southern and central Wisconsin.
Northeast: One source said sidedress nitrogen was still going down through highboys with drop tubes in portions of New York and New England, due to frequent rain delays in June and early July and slower-than-normal crop development caused by cool weather.
UAN and urea inventories were slim to none in the region last week. Sources said Philadelphia was currently sold out, and limited UAN-30 tons out of Baltimore were pegged at the $180/st ($6.00/unit) FOB level. One source reported taking delivered UAN-32 from Chesapeake, Va., at the $188/st ($5.88/unit) level after freight, while New York sources placed the UAN-32 market at the $6.50/unit dealer reference level FOB terminals.
AMMONIUM NITRATE
U.S. Gulf: May imports were 40,235 st, down from the year ago 47,260 st, according to the DOC. July-May imports were off 38 percent to 599,630 st from the year-ago 972,031 st.
Western Cornbelt: Ammonium nitrate remained at a nominal $265-$270/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Sources confirmed an updated summer fill price from Honeywell at $160/st FOB or DEL for granular ammonium sulfate in the Midwest, but it was once again for limited tons. New sales were made at that level, however. One Illinois source said $180-$190/st FOB was being quoted from other suppliers, and some reportedly continued to reference a $225/st FOB price to the dealer.
Western Cornbelt: Sources reported granular ammonium sulfate pricing from Honeywell at the $160/st FOB or DEL level in the region, but for limited fill tons. One source said he placed an order early in the week but was rebuffed when he called back for more tons at that level. Other sources claimed the previous level of $225/st FOB was still out there for spot tons in the region.
Northern Plains: Granular ammonium sulfate was tagged at $225/st FOB or rail-DEL in the region.
Great Lakes: Several sources reported booking granular ammonium sulfate fill tons from Honeywell early in July at the $125/st DEL or FOB warehouse level, but those allocated tons were quickly sold out. Granular ammonium sulfate remained at the $250/st level FOB Essexville, Mich. One Wisconsin source pegged the market at $150/st rail-DEL for mid-grade and $160/st rail-DEL for granular last week from Honeywell for fill tons, while another said $180-$190/st FOB was the more common range for any available granular tons. One source reported very limited availability of steel mill grade sulfate.
Northeast: Granular ammonium sulfate was reported at $200-$205/st FOB and $200-$210/st DEL in the region last week.
PHOSPHATES
Central Florida: Phosphate sales out of Central Florida remained depressed last week, and there was little hope that situation would change until at least the Southwestern Fertilizer Conference at San Antonio. Producers and traders both said last week that dealers were waiting to see what their customers, farmers, want to do, before making any serious moves. In order to be ready for the fall season, buys will have to be made during the next six weeks in order to receive supplies in time. The biggest problem with waiting until the last minute would be logistics — a logjam of railcars, which would be a wonderful problem for producers — for a change.
PotashCorp has begun to crank up granulation at its White Springs facility in northern Florida. The company planned to produce sufficient quantities to match the market, which means not a whole lot.
The Central Florida DAP price range remained unchanged last week at $250-$260/st FOB. PCS Sales had no published price. Mosaic had no list prices for Central Florida, but was making DAP sales within the current price range with a $10/st FOB bump for MAP. CF’s price for DAP was $260/st FOB and $10/st FOB more for MAP. Agrifos was no longer posting prices, but was charging based on market conditions.
U.S. Gulf: Ever since the USDA came out with its revised estimate of 87 million acres of corn planted this season, the phosphate market has been in the dumps. However, some question the accuracy of the estimate. Sources say the amount of nitrogen sold so far has been well below what would be necessary to meet the needs for a corn crop that size, which meant that either the estimate was too high or the yields will be low. One source said that if the estimate is on target and the corn yields are normal or high, “it would be a disaster for the fertilizer industry,” because farmers might think they did not need that much. Still, the fertilizer banked in the land will be consumed by the plants and would not be there for the next planting. Farmers would have plenty of cash in their pockets and would make the investment to rebuild their soil.
While farmers in North America have apparently cut back on phosphate purchases, other countries have been taking up the slack. Most in the industry were counting on domestic buyers making their move sometime around the Southwest Conference. The primary reason was empty dealer bins. At some point, dealers must restock and prices have been stable for some time and there were no factors to push the price up or down last week. The only thing that could change that would be if buyers hit the market as a group, which would push the price upward.
Mosaic was continuing its turnaround at the river last week and production remained at about 50 percent. Considering the current market, that may be a blessing.
The warehouse prices in the Midwest were essentially unchanged last week, but somewhat stronger sales were done in wheat country. Locks 17 and 18 near Catoosa will be closed by the U.S. Army Corps of Engineers from Aug. 26 through Sept. 6 for maintenance. Considering the amount of phosphate sold during that period, it should not be a major problem.
The NOLA DAP barge price range remained stable at $260-$264/st FOB, although most offers were closer to $265/st FOB. Both Mosaic and CF had a $10/st FOB additional charge for MAP.
Eastern Cornbelt: The DAP market was steady at $295-$305/st FOB regional warehouses, with the low in Illinois and the upper end reported in Ohio to the dealer, with MAP $10/st higher. Forward contract DAP for August continued to be referenced at $305/st FOB Peoria and $310/st FOB Cincinnati.
10-34-0 was tagged at $350/st FOB in Indiana and Ohio, with the low end of the range reported at $315-$325/st FOB in Illinois. Those levels reflected another sizable drop from the previous range.
Western Cornbelt: DAP pricing remained at $290-$310/st FOB warehouses to the dealer, with MAP $10/st higher. Forward contract DAP for August was referenced at $305/st FOB St. Louis and $310/st FOB Inola, Okla., from one supplier, with MAP at $320/st FOB Inola. 10-34-0 was tagged at $310-$350/st FOB in the region.
Northern Plains: DAP was pegged at $300-$310/st FOB in the region, with MAP roughly $10/st higher. Forward contract tons for August FOB Pine Bend were listed at $310/st for DAP and $320/st for MAP. Delivered MAP in North Dakota was reported at the $345-$355/st level.
10-34-0 pricing had reportedly dropped to $345/st DEL in North Dakota from Canada. No current numbers were reported for 10-34-0 in Minnesota.
Great Lakes: The spot market for DAP was pegged at $300-$310/st FOB, with the upper half of that range reported in Michigan. MAP was $10/st higher than DAP, with Michigan sources quoting the spot market at $315/st FOB Maumee, Ohio, and $320/st FOB Webberville. A Wisconsin dealer reported truck-delivered tons at $322/st for DAP and $332/st for MAP.
The 10-34-0 market was down significantly from last report due to cheaper ammonia and phos acid pricing. The dealer market was quoted at $315-$325/st FOB in Wisconsin. The upper end of the 10-34-0 range was pegged at $350/st FOB in Michigan, with reports of a few spot sales at that level. One source said list pricing in Michigan remained as high as $450/st FOB on a spot basis.
Northeast: MAP was pegged at $320-$350/st FOB in the region, with the low end reported in western Pennsylvania. DAP was roughly $10/st less than MAP. Sources said buyers were proceeding with caution on summer fill purchases. “It’s trailer-load by trailer-load,” said one. 10-34-0 pricing had reportedly fallen to $445/st FOB the tank in upstate New York, while other sources quoted delivered 10-34-0 as low as $340/st into the Northeast market.
U.S. Export: In comparison to the major North American markets, the export scene was absolutely booming last week. PhosChem made sales into Brazil and Central America, and recently Agrifos sent two shipments to India. PhosChem sold 7,000 mt of DAP into Central America at $290/mt FOB. In addition, it sold another 7,000 mt of DAP/MAP into Brazil at the same price, then 7,000 mt of MAP to Brazil at $296/mt FOB.
Agrifos sold two handymax cargos into India, between 40,000 and 50,000 mt, at an undisclosed but market-based price.
Sources estimated that PhosChem sent eight panamax-sized vessels to India under contract during June. At that rate, it will have sent all that was due under the one-year deal by August. That deal has helped keep inventories of its members from overflowing.
Keytrade said it would cease North American trading operations but planned to keep its Tampa office open for Latin American business.
The export DAP price moved up from $288-$290/mt FOB the previous week to $290-$296/mt FOB last week. Prices were likely to continue climbing but at a modest rate.
POTASH
U.S. Gulf: Recent potash barge trades were called $525-$530/st, though these are now under pressure.
Eastern Cornbelt: Potash was pegged at $560-$600/st FOB regional warehouses to the dealer, depending on grade and location. Agrium broke the stalemate on domestic potash pricing on Thursday by announcing new, lower postings for the U.S. market. Effective July 16, Agrium’s postings for 60 percent red premium potash moved to $575/st rail-DEL in Illinois, Indiana and Ohio. Out of regional warehouses, postings moved on that date to $560/st FOB.
Western Cornbelt: Potash was pegged at $560-$600/st FOB regional warehouses, depending on grade and supplier. Agrium’s July 16 postings included 60 percent red premium potash at $560/st FOB Dubuque, Iowa, with rail-delivered tons at $575/st in Iowa, Missouri and Nebraska.
Northern Plains: Agrium lowered its postings for 0-0-60 muriate of potash to U.S. customers to $512/st for standard grade and $517/st for red premium FOB Vade, Sask., effective July 16. The company’s rail-delivered postings dropped on that date to $575/st in Minnesota and the Dakotas, with warehouse postings moving to $560/st FOB Shakopee, Minn., and Colfax, N.D.
Great Lakes: Potash was pegged at $595/st for red granular and $603/st FOB for white granular in Michigan. Wisconsin sources tagged the potash market in a broad range at $575-$608/st FOB. Sources in both states confirmed delivered potash for as low as $575-$585/st last week.
Effective July 16, Agrium’s postings for 60 percent red premium potash moved to $575/st rail-DEL in Wisconsin and Michigan. Out of regional warehouses, postings moved on that date to $560/st FOB Saginaw.
Northeast: Delivered potash was pegged at $595-$615/st in the region, while warehouse pricing to the dealer was quoted at $585-$630/st FOB last week, depending on location. Effective July 16, Agrium’s postings for 60 percent red premium potash moved to $595/st rail-DEL in Massachusetts, Connecticut, Rhode Island, Maine, Vermont, New Hampshire, Delaware, Maryland, New Jersey, New York, Pennsylvania, and West Virginia. In the Southeast market, Agrium’s postings moved to $585/st rail-DEL in Alabama, Georgia, Florida, Virginia and the Carolinas.
Agrium’s warehouse postings moved on that date to $560/st FOB E. Liverpool, Ohio, and $580/st FOB Wilmington and Georgia locations at Americus, Bainbridge, Savannah and Tifton.
Pacific Northwest: Agrium’s 0-0-60 red premium potash postings moved on July 16 to $575/st FOB warehouse and $590/st rail-delivered in southern Idaho, Utah, and Oregon’s Malheur County; $580/st FOB and $595/st rail-delivered in Washington, the Idaho Panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $585/st FOB and $600/st rail-delivered in Oregon’s Willamette Valley.
U.S. Imports: The pressure on potash prices was reflected in recent DOC data for May. May imports were off 77 percent to 279,247 st from the year-ago 1.2 million st. July-May imports were off 42 percent to 6.6 million st from the yearago 11.4 million st.
India: The deal with IPC at $460/mt CFR for 850,000 mt with 180 days credit is bound to have a rollover effect on upcoming talks among buyers and producers throughout Asia, said one trader.
While the principals and players did not want to talk about a major $460/mt CFR deal for Russian potash to India last week, the price and news appeared to have taken hold as analysts and many other companies around the world were hanging their hats on that number, which is a $165/mt drop from the year-ago $625/mt.
A statement was issued, purportedly from the U.K. office of Russia’s IPC, or International Potash Co., that a sale of 850,000 mt of potash at $460/mt CFR was done in IPL’s tender. No confirmation was forthcoming from the buyer, IPL, though who would argue with a price of $460/mt when the other offers were $625-$635/mt. IPC was the only company to bid in the IPL tender to keep its tonnage and price quiet, at least up until the end. However, by press time, Indian sources were confirming that IPL had officially accepted the IPC deal.
“This is the first significant contract to be signed for the supply of potash to India for more than a year,” said the statement. “Agreement between the largest buyer of potash in India and one of the country’s major suppliers was reached because of a willingness by both parties to compromise. It is the view of the supplier that if agreement on price had not been reached, the supply of potash to India would have been delayed for an indefinite period and possibly suspended because the subsidy paid by the Indian government to buyers of potash is much greater than the subsidy paid for other fertilizers. This deal confirms that Indian customers place a high value on this type of fertilizer which is very important in improving the quality of crops. As all other major markets have been waiting for the first new contract to be concluded this represents a breakthrough in the world potash market.”
There were random reports that other major potash suppliers were jumping on the $460/mt bandwagon; however, those were either denied outright or there was no comment. PotashCorp, perhaps one of the more vocal proponents for higher potash prices, was in a quiet period due to the approaching release of its earnings July 23. Sources told Green Markets that PotashCorp was very close to releasing its own updated potash postings for North America when the IPC/IPL news was announced.
The fact that none of the other majors had signed on to the $460/mt concept, gave producers some hope last week. However, other Indian buyers, and a watchful China, are not likely going to forget about the $460/mt. Indeed, as noted above, in North America, Agrium dropped its prices last week, but not as low as they are reportedly paying in India.
SULFUR
Tampa: Discussions between sulfur producers and the phosphate industry on contract prices for the third quarter were underway last week, and a resolution will probably be made relatively quickly. Primarily, there just isn’t a lot to talk about. Sure, the sulfur industry would like to make a little more, but they know that is not highly probable. The world market is bringing a higher price, but by the time the cost of prilling and transportation are taken into consideration, it would not be that much more. No matter what, disposing of sulfur will still be a losing proposition. On the other hand, phosphate could push for lower prices, but the current price is still an extremely good deal, especially considering what they were paying a year ago. The most likely outcome will be a rollover, according to some sources. Watch for an agreement before the end of the Southwest Conference.
The market has been closer to balance than in many years. In part, prill operations can take some credit. During the first six months of the year, about 750,000 mt have been prilled and shipped from the Gulf, and the prillers are still busy, although not running at full capacity.
No transportation issues were found last week.
U.S. Imports: Imports were off 49 percent in May, according to the DOC, to 95,481 st from the year-ago 188,509 st. July-May imports were off 30 percent to 1.42 million st from the year-ago 2.03 million st.
MARKET NOTES
India: The fertilizer subsidy in the Union budget 2009-10, announced by Finance Minister Pranab Mukherjee, has been pegged at Rs 499.80bn (as against Rs 502bn in the interim budget 2009-10), down by Rs 258.69bn from the revised estimate of Rs 758.49bn in 2008-09. The shortfall in outlay has been described in the budget as a result of “lower subsidy provision due to anticipated reduction in the economic cost of indigenous and imported fertilizers as well as decontrolled fertilizers.”
There has also been some fine-tuning of the subsidy outlay as provided in the interim budget 2009-10 and the current budget. The following changes have been made:
Subsidy on imported fertilizers: Revised budget 2008-09: Rs 109.81bn. Interim budget 2009-10: Rs 78bn. Final figure in budget 2009-10 announced: Rs 59.47bn.
Subsidy on decontrolled fertilizers: Revised budget 2008-09: Rs 653.51bn. Interim budget 2009-10: Rs 336bn. Final figure in budget 2009-10 announced: Rs 342.52bn.
Subsidy on indigenous fertilizers: Revised budget 2008-09: Rs 195.16bn. Interim budget 2009-10: Rs 85.80bn. Final figure in budget 2009-10 announced: Rs 97.80bn.
Mukherjee has announced in the Budget 2009-10 that the government intends to more towards a nutrient based subsidy regime instead of the current product pricing regime. “It will lead to availability of innovative fertilizer products in the market at reasonable prices. This unshackling of the fertilizer manufacturing sector is expected to attract fresh investments in this sector. In due course it is also intended to move to a system of direct transfer of subsidy to the farmers.” However, he did not set any specific deadline for moving to a nutrient based system. Nor did he provide a timeline to shift the subsidy burden from the industry directly to the farmers.
The fertilizer industry in the country has hailed the proposed move to shift from the existing product pricing regime to a nutrient based subsidy regime as mentioned in the Union budget for 2009-10, though it is still awaiting specifics. They want the subsidies to go directly to farmers.
Indian producers also complained that the fertilizer sector was exposed to global competition after the government decided to fix the prices of the phosphate fertilizers on import price parity basis rather than the earlier cost-based approach from April 1, 2008. Another added that the government should have reduced import duties on raw materials for fertilizer from the current 5 percent to zero.