AMMONIA
U.S. Gulf/Tampa: With prices for deliveries to Tampa already settled for the month, ammonia was unchanged last week, and that was likely to continue until the beginning of next month. No new spot sales were found, but tonnage was being exchanged.
On the Gulf’s river system, rain was said to have kept ammonia from being used in sidedress applications in many areas last week. The expectation was that prices will trend downward in the near future.
Eastern Cornbelt: Parts of the region continued to battle wet conditions that hampered efforts to sidedress corn and finish planting the remaining corn and soybean fields. Several sources talked of active sidedress applications of ammonia and UAN as weather conditions permitted, however, with one Indiana dealer reporting that products were moving both for sidedress and preplant applications in his trade area during the final days of May.
Anhydrous ammonia was pegged at $425-$445/st FOB regional terminals, with the low out of spot river locations in Illinois. Those numbers reflected a drop from last report. One source said he was quoted as high as $470/st FOB for spot tons in late May, but pricing had slipped to $430/st FOB in early June.
Western Cornbelt: Sidedress applications on corn were underway as weather conditions permitted, along with post-emergence herbicide spraying on soybeans. Sources continued to describe hand-to-mouth buying, as no one wants to wrap up the season with excess inventory. “We’ve never had so many one-truckload orders, and then they come back the next day or the next hour for another,” said one supplier. “It is one truckload at a time this year.”
The anhydrous ammonia market remained in the $380-$410/st FOB range out of regional terminals for prompt tons or for June shipments of prepay ammonia for sidedressing. One western Iowa source quoted dealer pricing at the $410/st level FOB Sergeant Bluff last week.
Northern Plains: Tons were moving for corn sidedressing in parts of Minnesota and South Dakota last week, although storms limited activity in some locations and wet conditions continued to slow the planting pace in North Dakota.
The anhydrous ammonia market was quoted at $390-$435/st FOB terminals, depending on location, with the low quoted at Pine Bend and Glenwood, Minn., for prepay tons for June shipment. North Dakota sources quoted delivered ammonia at the $465/st level on the low end for tons trucked from both Minnesota and Iowa.
Eastern Canada: Ontario sources said growers were sidedressing corn and finishing soybean planting in early June. “We are busy, busy,” said one dealer, who noted that temperatures were up in the 80s in his location.
The anhydrous ammonia dealer market was pegged at the $525/mt level FOB Courtright, Ontario.
Black Sea: Things are not looking good for the Ukrainian producers. Sources at the IFA meeting in Paris said price increases of natural gas are inevitable and the price of ammonia is not expected to rebound soon. This double whammy is already causing some producers to shut down their operations rather than run at a loss.
Reports at the end of May that a deal was done in the low-to-mid $290s/mt FOB continued to circulate at the IFA meeting, but no one could name a buyer or seller. Some buyers held out hope the price was correct. For sellers, they dismissed the talk as so much smoke and mirrors.
Fueling the sub-$300/mt FOB rumors are reports that producers have been entertaining bids in the $290s/mt FOB.
Both sides were in agreement, however, that until a named buyer and seller step forward, there is little reason to think the price has moved below $300/mt FOB.
By the end of the conference, a belief that the ammonia market had bottomed out was taking hold. Sources said Asian demand remains strong. India is a steady buyer. And the U.S. market could be in a position to rebound in the next couple of weeks. In addition, said one source, the transportation market is making getting ammonia around the world easier.
The one major gloomy spot for the Ukrainian producers is the increase in natural gas prices. Sources explained that Russia has been providing natural gas to Ukraine at a discount for tons purchased last year. New prices are slated to kick in soon.
Once the new prices are applied, Russia will again offer Ukrainian buyers a discount. But this time the discount will be on the market value of the natural gas instead of the earlier discounted price. The difference could mean as much as a $2 increase per unit to the Ukrainians.
With break-even production costs now pegged at $300-$320/mt, sources say the only way some of the companies will survive is to close their plants once again.
Middle East: Sources report that the slide in Indian buying from Arab Gulf producers is not a signal India is reducing its intake. Rather, it is because Indian buyers are looking to other sources for their material.
Last month some Indian buyers turned to Egypt for a couple of cargoes. The final delivered cost was just a fraction below previous purchases. The net result, however, was a lower netback because of the freight differential between shipping from Egypt and the Arab Gulf.
The issue never was a reduction in ammonia purchases, said one trader – it was rather a shift in sourcing. He added that the resulting loss of the sales by the Arab Gulf producers means a build-up of extra ammonia in the area.
Even as the reserves build, sources say the price hasn’t shifted dramatically. Material is on the market in the upper $290s/mt FOB to low $300s/mt FOB.
UREA
U.S. Gulf: The price of urea continued to deteriorate last week as prices for NOLA barges fell as much as $10/st FOB, to between $240/st and $250/st FOB, depending on location and luck. A rumor of a sale at $239/st FOB could not be confirmed.
Urea was going onto the ground last week and will continue to do so, but there was nothing to indicate the price might rise during the next week or so. The price could drop well into the $230s/st FOB range before the end of the season, but a lot will depend on the international market, which was clinging to life. The price on the swaps market was around $240/st FOB late last week. Still, dealers want to be empty at the end of the season, which was the way they began the spring season. Recent sales into India were said to have created a major drag on the price.
Eastern Cornbelt: Granular urea pricing continued to slip as well. Sources quoted the low end at $285-$290/st FOB out of river terminals in the Illinois and Wisconsin market, although one contact said he had a one-off offer for limited tons as low as $260/st FOB at midweek. The upper end of the regional range was quoted at the $310-$320/st FOB level in the Ohio market last week.
Western Cornbelt: The granular urea market was described by one source as “a little bit of an auction” right now, with no shortage of product and no strength in pricing. Sources said the regional market had slid to $285-$310/st FOB, with the low reported in southeastern Missouri and the upper end in western Iowa to the dealer. Another source put the common dealer market at the $300/st level FOB inland terminals last week.
Northern Plains: Granular urea was tagged at $283-$298/st FOB the Twin Cities, down from last report. Dakota sources pegged the market at $320-$330/st DEL or FOB, depending on location, with the upper end reflecting dealer postings and the low FOB Craven, S.D., for prompt tons.
Northeast: Granular urea pricing had reportedly slipped to $330-$335/st FOB regional terminals, with the upper end reflecting dealer list pricing FOB Philadelphia, Pa., and E. Liverpool, Ohio. One source reported very little rail business into the region, noting that most suppliers were finishing up with trucks and “just trying to be empty.”
Eastern Canada: Sources tagged the granular urea market at $390-$450/mt FOB in Eastern Canada, down from last report, with the upper end reflecting dealer reference pricing.
India: After all the speculation and all the concern, MMTC offered the urea gang at the IFA conference in Paris something to talk about.
The Indian buying house closed out its tender by taking only 150,000 mt. In addition, the buying house was unable to get sellers to significantly lower their prices. The 150,000 mt will be coming from Transammonia at the prices Trammo first offered in the tender: $259.87/mt CFR to Kandla, $260.62/mt CFR to Mundra, and $264.37/mt CFR to Krishnapatnam.
More than 1.2 million mt were offered in the tender that closed May 24. Talks started right away with the low-cost traders and all the Arab Gulf producers.
The AG producers came through with 405,000 mt in firm offers at $247-$248/mt FOB. MMTC countered at $238/mt FOB. The producers came back with a counter bid at $245/mt FOB. MMTC held firm – and so did the producers.
The settled Trammo prices showed no decrease from the initial offer. Other traders approached by MMTC also rejected lower prices.
Several sources at the IFA meeting said that MMTC had overplayed its hand in demanding lower prices from the Arab Gulf. One trader noted that even the Trammo offer included a reference price of $249/mt FOB. And that material is expected to come from Oman.
The big issue is nailing down the amount of tons on hand in India and the country’s actual need.
Sources say the Indian government has no real appetite for buying extra tons right now. The late monsoons have led many in the industry to think India will not need as many tons of urea as earlier predicted. For the government, that is good news. The less the Indian treasury has to pay out in subsidies, the happier it is.
Eventually, say sources, India will have to buy more tons. The conventional wisdom is that STC or IPL will be coming back before the end of the month with a tender. And, sources say, they will buy many more tons than did MMTC.
Middle East: Producers appeared willing to let the price slide a bit – but not too much – in their talks with MMTC/India.
The initial offers into the MMTC tender showed evidence that everyone was looking at a softer urea market. MMTC, however, wanted a much softer market.
The producers countered the MMTC bid of $238/mt FOB with their own offer of $245/mt FOB.
The initial offer represented a $10-$15/mt drop in pricing ideas. The counter offer shaved off another $3-$4/mt. Overall, said a source close to a producer, the offer was reasonable in the current market situation.
In the end, MMTC and the producers did not come to an agreement.
Some traders noted that the unwillingness of the producers to lower their prices into the $230s/mt FOB showed they firmly believe the market is due for a rebound. Others question that line of thinking. They ask: “Who will buy the tons?”
The only big buyer other than India at this time is Pakistan, sources say. And TCP/Pakistan will not take enough to move the market. At best, they say TCP will soak up some small excess tons and provide a temporary good feeling in those who write up the orders.
Sources were talking about the possibility that Sabic and TCP will once again be part of a government-to-government deal. Rumors are circulating that Pakistan and Saudi Arabia are again discussing an aid package that includes favorable rate loans to Pakistan to buy fertilizer.
Until the results from the TCP tender come out later this week, however, no one is thinking the Middle East material is selling below the numbers suggested in the MMTC tender.
Black Sea: While the producers in the Middle East are thinking they can hold off against price decreases, their counterparts who service Yuzhnyy are anything but sanguine. Traders were walking around the IFA corridors talking about $200/mt FOB urea by the middle of the month.
Sources report $220/mt FOB was done just as IFA members started leaving for Paris. By the end of the conference, that $220/mt FOB was looking really good to producers.
If another Indian tender is called before the end of the month – which is likely – sources say the offers from the Black Sea will be $210-$215/mt FOB. If India holds out until July – which is less likely – the price could easily slip to $200/mt FOB. And the soft market and freight rates work against the Yuzhnyy supplies.
Sources report European demand is down. The buying interest from Central and South America is said to be just enough to satisfy the buyers’ needs at the time of the sale. No one seems to be willing to take a long position.
The only thing working for the producers is that some are planning routine shutdowns in June and July. The absence of material from these plants could help boost the price for those companies still operating. But, said one source, that is their only hope for a price turnaround.
Sources are putting the current Black Sea market at $220- $225/mt FOB.
Pakistan: TCP closes two tenders almost back-to-back later this week. Each tender is for 200,000 mt, with shipment to start within two weeks of the opening of the letter of credit.
Sources at the IFA conference in Paris last week were skeptical that TCP will take the full 400,000 mt. Officially, the full amount is needed because of curtailments in domestic production.
The diversion of natural gas from the urea plants to home heating and cooking caused urea producers to reduce their output for this quarter. The lost production is pegged at 200,000 mt. The government had earlier authorized the importation of 200,000 mt as well.
The traditional pattern in TCP tenders is for the buying house to accept the lowest offer, if it is within reason. Rather than negotiate with that company for more tons or get other offering firms to lower their prices, TCP usually calls another tender for the balance not covered in the deal.
Sources say they expect to see at least three tenders related to the first 200,000 mt.
The second group is more problematic. One source noted that buying the remaining 200,000 mt will totally depend on the weather.
If the monsoons get better, then the tons may be needed. But if the weather patterns remain the same as they have been in recent weeks, the farmers may not have a need for more urea.
In other news, Pakistan’s largest urea manufacturer, Fauji Fertiliser Company (FFC), and Mansha Group have expressed an interest in making separate bids for the acquisition of an 80 percent stake in Agritech Ltd (formerly Pak American Fertilizer Ltd). The plant is located at Daudkhel, district of Mianwali, in Punjab province, and has urea production capacity of 483,000 mt/y.
Azgard Nine Limited, the holding company of Agritech, announced that it would disinvest its entire holdings in the company, along with Hazara Phosphate (130,000 mt of SSP located in NWFP), market sources reported. It said a hike in interest rates, coupled with a fall in the equity markets, placed an undue liquidity burden on the holding company.
The two market giants are competing for the acquisition of Agritech, according to market reports. However, the process is only at the initial stage.
NITROGEN SOLUTIONS
U.S. Gulf: Nitrogen solutions were following the path set by urea and were trending downward. Rain in some areas was part of the problem, but the price appeared to be headed in that direction even before the wet weather. Sources said customers were holding off, waiting for summer fill programs – and, hopefully, lower prices to come.
Eastern Cornbelt: Sources said suppliers with solutions and ammonia tons in position were starting to make deals as the sidedress season progresses, so lower prices were reported last week. Illinois sources pegged the UAN-32 market at $235-$240/st ($7.34-$7.50/unit) FOB on the low end to the dealer, while Indiana dealers pegged the upper end of the range for UAN-28 at $220/st ($7.86/unit) FOB. Dealer reference prices remained as high as $8.15/unit FOB in the Ohio market.
Western Cornbelt: Several sources said UAN-32 pricing in the region had slid to $235/st ($7.34/unit) FOB spot terminals at the low end, with the upper end of the regional range pegged at $240-$250/st ($7.50-$7.81/unit) FOB.
Northern Plains: The UAN-28 market was pegged at $218.40-$224/st ($7.80-$8.00/unit) FOB Minnesota terminals, with the low end FOB Pine Bend for prompt tons. North Dakota sources quoted delivered UAN-28 in the $245-$255/st ($8.75-$9.11/unit) range in early June.
Northeast: UAN-30 remained at the $205/st ($6.83/unit) level FOB Baltimore, Md., to the dealer. A Delaware source reported brisk solutions movement and tight inventories at some terminal locations last week. Out of terminals in upstate New York, the UAN-32 market was pegged at $7.75/unit FOB to the dealer.
Eastern Canada: UAN-28 pricing was also down, with sources quoting the dealer market in a broad range at $230-$255/mt ($8.21-$9.11/unit) FOB regional terminals, depending on location. Dealer reference levels in Ontario were quoted in the $250-$255/mt ($8.93-$9.11/unit) FOB range, with UAN-32 posted at $286/mt ($8.94/unit) FOB in Ontario.
AMMONIUM NITRATE
U.S. Gulf: An ammonium nitrate vessel was said to have stopped and unloaded at both Tampa and New Orleans, and a couple of sources said postings were moving up. Sales were reported to be between $240/st FOB and $260/st FOB, but $250/st FOB was closest to the market value. A source said that if the price fell to $230/st FOB, business would increase.
Western Cornbelt: Ammonium nitrate remained at $305-
$325/st FOB, with limited tons available.
Eastern Canada: Ammonium nitrate was quoted in the $375-$400/mt FOB range, with the low in southern Ontario and the upper end in the Maritimes.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate continued to be quoted in the $240-$250/st FOB range in the region.
Western Cornbelt: Granular ammonium sulfate was steady
at $240-$250/st FOB in the region.
Northern Plains: Granular ammonium sulfate remained at $250/st FOB or DEL in the region, with reference levels from some suppliers at the $260/st level.
Northeast: Granular ammonium sulfate remained in a broad range at $214-$240/st FOB, with the low FOB Hopewell, Va., and the upper end FOB Philadelphia. One regional source also quoted delivered product at the $240/st level to his location.
Eastern Canada: Granular ammonium sulfate pricing had reportedly slipped to $270-$318/mt FOB, with the low reported in southern Ontario on a spot basis and the upper end reflecting the dealer reference level. One source said rail-delivered tons were available in the Maritimes for as low as $265/mt in early June.
PHOSPHATES
Central Florida: Demand for rail shipments out of Central Florida on a prompt basis was close to nothing last week, and that situation will not change until the fall season gets underway.
CF Industries issued a new price for Central Florida last week, which was down $10/st FOB, at $400/st FOB. Mosaic had not responded with a matching price as of late last week, but it may not, considering the market’s nearly nonexistent pulse.
A rumor was circulating that the U.S. Environmental Protection Agency had issued an order for PotashCorp to cease operations at its White Springs mine and processing plant in northern Florida. The company said that was not accurate. A sinkhole was found in December 2009, but operations were continuing uninterrupted while efforts to correct the situation were underway.
The Central Florida DAP price range last moved from $405-$415/st FOB to $400-$415/st FOB. CF Industries’ price was $400/st FOB, and Mosaic was offering to sell at $410/st FOB. PCS was making sales at “competitive prices.” Agrifos’ prices were $440/st FOB for DAP and $450/st FOB for MAP, with railcars about $5/st FOB less.
U.S.Gulf: New, prompt spot NOLA DAP barge sales were just a memory last week, and a hope for the future. It is nearly summer, and nobody was seriously looking for new supplies of phosphate. That was not exactly a surprise, because dealers had made it clear they wanted to end the season with empty bins, which was the way they started.
Producers were not looking for customers because they already claim they had enough to do loading vessels for the export market – which primarily meant India. Production was still running at a relatively high rate, somewhere around 85 percent of capacity, but summer fill programs were not on the agenda.
Even activity at terminals and warehouses was down last week, as most of the country had finished planting corn. The only exception was in scattered places in northern Ohio, where heavy rain this spring kept the ground too wet for planting. If that corn does not go in the ground within the next week or so, soybeans may be the substitute crop.
The price of corn continued to slip on the futures market, dropping to $3.69/bushel late last week. That meant farmers were going to get only a little better than $3/bushel, which was not an inducement to buy more phosphate.
Offers were the only basis for establishing the market last week and those were running in the $395-$400/st FOB range, although some buyers were offering as low as $385/st FOB with no takers. The buyers were basically testing the market, but without success. One said he believed the price could dip to as low as $375/st FOB before the market begins to pick up late this summer for the beginning of the fall season.
A July DAP barge was sold last week at $395/st FOB, but that was not considered a prompt spot sale due to the delayed loading date. As a result, it was not used to determine the range. CF Industries issued its price list for DAP last week, which asked for $400/st FOB for July, $405/st FOB in August, $410/st FOB in September, and $415/st FOB for October through December. However, those prices will be subject to change once the actual season arrives and the company has a better take on what the market will be.
Based on offers to sell last week, the NOLA DAP barge range drifted south to $395-$400/st FOB from $395-$405/st FOB the previous week. It seemed unlikely prices will go up during the next several weeks, and summer looks like a slow drift southward.
Eastern Cornbelt: DAP was tagged at $440-$455/st FOB regional warehouses, with the low out of river locations and the upper numbers inland. MAP was $10/st higher than DAP. Sources talked of limited tons out of regional warehouses, and also reported prepay inquiries coming in from dealers.
10-34-0 was quoted at $335-$355/st FOB in the region, down slightly from last report.
Western Cornbelt: DAP was pegged in the $440-$450/st range FOB most regional warehouses, with MAP $10/st higher. 10-34-0 pricing had reportedly dropped to $325-$335/st FOB in the region.
Northern Plains: DAP was pegged at $440-$450/st FOB the Twin Cities, with MAP $10/st higher. Dakota sources quoted the MAP market at $460-$470/st FOB inland warehouses, with delivered MAP in North Dakota tagged at the $480/st level to dealer locations.
The 10-34-0 market remained at $335-$340/st FOB Minnesota terminals, with delivered 10-34-0 quoted at $355-$360/st in North Dakota. Agrium’s phosphoric acid postings moved on June 1 to $745/st rail-DEL for both super phosphoric acid and merchant grade acid in Minnesota and the Dakotas.
Northeast: Dealers in New York were looking to supply customers but had already allowed their bins to run empty, so they were putting pressure on their suppliers to make deliveries immediately. Trucks were in short supply, however, and that complicated the already difficult process.
MAP remained at $465-$475/st FOB regional warehouses to the dealer, with the low reported in western Pennsylvania and the upper end reflecting dealer postings FOB Philadelphia. DAP was $10/st less than MAP, where available, with the E. Liverpool market pegged at the $465/st level. One dealer said he continued to buy single loads to meet demand, but was operating hand-to-mouth as the season wraps up.
10-34-0 was referenced at $365/st FOB in upstate New York, with Pennsylvania sources quoting delivered tons at the $370/st level.
Eastern Canada: MAP was quoted at $550-$585/mt FOB in Ontario, with the upper end reflecting the dealer reference price. That range was down slightly from last report. No current prices were reported for DAP or TSP in the region.
U.S. Export: Most of those involved in the export phosphate business were in Paris last week for the IFA conference, but no new sales were done there, according to sources at the conference.
The last export sale was a week earlier – 20,000 mt to Venezuela at $450/mt FOB. India, of course, was the major destination of phosphate shipments, and that will continue to be the case for the next few months.
Based on the most recent sale into Venezuela, the export DAP price range was a flat $450/mt FOB, down from the previous $450-$460/mt range. The greater value of the U.S. dollar was said to be suppressing prices on the international market.
India: People have begun to look more closely at some of the DAP sold to India. Some traders are saying too many tons have been booked. Others say, yes, a large number of tons have been booked, but a large portion of those tons are phantom cargoes.
A few people have also begun to look more closely at the tons sold to India from China. One trader said chances are only 75-80 percent of those cargoes will ever get shipped, because some producers re-sold tons at a higher price without canceling the deal with the first trader.
Sources report the multiple selling of the same tons by a number of Chinese producers is common practice, and it inflates the number of tons being booked.
One trader noted, however, that when the music stops, it is not always the trader with the highest bid that gets the cargo. It becomes a list of multiple items, including the price, the nomination of a vessel, and the loading date. Sometimes a lower-priced bid could get the cargo if the ship and timing are right.
This practice could leave India in need of more DAP later this year. Right now, said one trader, the buyers seem to be waiting to see how the weather affects demand and how many tons really get shipped.
In other news, the shipment of 10,200 mt of phosphate rock finally reached Karachi Port after being delayed in the open Arabian Sea for nearly two weeks.
According to port authorities, the Panama Flagship vessel M/V Hendiah, which suffered a major engine failure and remained stranded nine nautical miles south of the Manora Light House for 12 days, was finally repaired and entered the port on the morning of June 2, to discharge cargo at berth No. 21.
Middle East: Among many international DAP players, the new Saudi plant is looming larger and larger in their rearview mirrors.
Sources say the Ma’aden plant, slated to be in full production next year, is designed only for export. Reportedly, agents for the plant have already been calling on potential clients and offering favorable product, and – if necessary – shipping rates.
Despite the incentives, a number of buyers are reportedly hesitant to go all in with the Saudis. Many are looking to pick up a few shipments here and there from the new plant, but at the same time they do not seem to want to dump their old partners in trade.
Sources said during the IFA conference that a collective sigh of relief came from Tampa, Mexico, and Russia at that news.
POTASH
Eastern Cornbelt: Potash remained at $395-$405/st FOB regional warehouses, depending on grade and location.
Western Cornbelt: Potash was steady at $395-$410/st FOB regional warehouses, depending on location, with the low out of river locations and the upper end reported in western Iowa to the dealer.
Northern Plains: Potash remained at $367-$380/st FOB Saskatchewan mines, depending on grade and supplier. Out of regional warehouses, potash was steady at $390-$410/st FOB, with the low out of the Twin Cities market and the upper end reported in Sioux City.
Northeast: The potash market was tagged at $400-$410/st FOB regional warehouses, with rail-delivered tons quoted at the $420/st level in the region.
Eastern Canada: Potash out of regional warehouses was pegged in the $465-$490/mt FOB range, depending on grade and location. Dealer reference levels in Ontario were reported at $480/mt FOB for red and $490/mt FOB for white granular tons. No current potash prices were available FOB the mine in New Brunswick.
K-Mag was steady at $335-$344.50/mt FOB in Ontario, with the upper end reflecting the posted dealer price. The sulfate of potash (SOP) market was tagged at $600-$645/mt FOB in Ontario.
SULFUR
Tampa: With the third quarter still somewhat distant, not much was stirring on the domestic sulfur market last week, except a little speculation on what impact the international market would have on negotiations here. The international market has become softer during the past month or so.
With supply and demand in closer balance than during the past year, it appeared prices may not change much – if at all – for the next quarter, unless a hurricane moves into the Gulf of Mexico. That could create a lot of unforeseen problems, from the possible closing of refineries to the disruption of transportation. In addition, the impact on the massive oil leak from BP’s Deepwater Horizon spill could create even more problems.
Last week, refineries were still chugging away at about 86 percent of capacity in preparation for the summer driving
season, which was helping to shore up supplies.
Vancouver: China was said to be seeking lower and lower prices on the world market, which could have a major impact on Vancouver sulfur. China was seeking a price of about $130/mt on a delivered basis, which would amount to about $70/mt at Vancouver.
Contract negotiations at Vancouver were said to be looking at prices of between $80/mt FOB and $90/mt FOB for the third quarter. However, no new settlements had been announced.