All Posts from November 1, 2019

Ukraine to Comply with WTO Decision on Russian AN Antidumping

Ammonium Nitrate, News, News Briefs, Russia, Ukraine

Ukraine intends to comply with the September decision of the World Trade Organization (WTO) on the country’s dispute with Russia over antidumping duties for Russian ammonium nitrate (AN), but needs time, according to a Prime Business report this week, citing a WTO source following a meeting of the WTO Dispute Settlement Body.

The WTO Appellate Body on Sept. 12 ruled in favour of Russia in an appeal brought by Ukraine over the antidumping duties (GM Sept. 13, p. 27; Sept. 20, p. 27). Russia, which brought the case in 2015, essentially won it in 2018, but Ukraine appealed (GM July 27, 2018; Aug. 24, 2018; Nov. 9, 2018).

Russia welcomed Ukraine’s statement this week, and said it is ready to discuss the problem with Ukraine, according to the report, citing the WTO source.

Antidumping duties have been in force in Ukraine on Russian AN since 2008. In July 2014, Ukraine decided to maintain the duties following a review, largely triggered by a complaint by local nitrogen fertilizer producer Ostchem, which is owned by businessman Dmytro Firtash via his Group DF conglomerate. The producer had argued that prices for natural gas for fertilizer plants in Ukraine and for Russian fertilizer producers differed greatly.

In its case filed to the WTO in May 2015, Russia had argued that the antidumping duties imposed by Kiev on imports of AN from Russia violated the WTO Anti-Dumping Agreement.

As a result of the review, Ukraine set the antidumping duty rate at 20.51 percent for Acron Group subsidiary Dorogobuzh and 36.03 percent for other Russian exporters to the country for a period of five years.

In March 2018, Ukraine raised the antidumping duties on Russian AN imports (GM March 30, p. 27). The duties increased to 29.25 percent for Dorogobuzh and to 42.96 percent for other Russian exporters.

European Commission Okays Triton Deal to Buy Spain’s Fertiberia

Europe, News, News Briefs

The European Commission last week gave notice of its decision that it would not oppose the proposed acquisition of Spanish fertilizer company Fertiberia Group SA by Triton Fund V, an investment firm belonging to Channel Islands-domiciled private equity investment group Triton.

Triton reported in August that funds advised by the group had signed an agreement to acquire Fertiberia Group, from Grupo Villar Mir, a privately-owned Spanish conglomerate (GM Aug. 23, p. 24). The private equity investment group has not disclosed the value or terms of the proposed transaction.

Fertiberia produces a range of nitrogen fertilizers, notably ammonium nitrate and urea, as well as nitrogenized solutions, NPKs, and Ad-Blue. It operates 10 fertilizer plants in Spain with a total of around 4 million mt/y capacity, three in Portugal via its ADP Fertilizantes subsidiary with aggregate capacity of 1.37 million mt/y, and a 120,000 mt/y blending plant in France.

The Spanish group also owns a 49 percent stake in Algeria’s Fertial SPA, with production capacity of some 2.34 million mt/y.

Triton Fund V is an investment firm dedicated to investing primarily in medium-sized businesses headquartered in Northern Europe, with particular focus on businesses in three cope sectors – Business Services, Industrials, and Consumer/Health.

Grupa Azoty Sees Improved Q3 Result

News, News Briefs, Poland

Polish fertilizers and chemicals group Grupa Azoty SA, Tarnów, sees its third-quarter EBITDA at Pln316.3 million (approximately $82.5 million at current exchange rates) with revenue at Pln2.56 billion, the group said in a preliminary results filing on Oct. 29. Net profit for the third quarter is expected to come in at Pln61.0 million.

The Polish group reported a third-quarter 2018 consolidated net loss of Pln116.8 million on revenues of Pln2.33 billion (GM Nov. 9, 2018). Its third-quarter 2018 attributable net loss was Pln105.6 million, with EBITDA at Pln44.1 million.

It sees first nine-month 2019 net income at Pln455.9 million and EBITDA and revenue at Pln1.26 billion and 8.67 billion, respectively, according to a Bloomberg report, citing the filing.

For first nine-months 2018, the group reported a consolidated net profit of Pln59 million on revenues of Pln7.2 billion (GM Nov. 9, 2018). Adjusted EBITDA was Pln580 million.

Grupa Azoty will publish its final third-quarter 2019 results on Nov. 13.

Bunge 3Q Fert EBIT Off, Volumes Up

News, News Briefs

Bunge Ltd., White Plains, N.Y., reported third-quarter Fertilizer segment EBIT of $21 million on net sales of $178 million, down from the year-ago $23 million and $153 million, respectively. The company said the slightly lower results were in line with year-ago levels. Adjusted EBIT was $22 million, versus the year-ago $23 million. Sales volumes were up at 512,000 mt from the year-ago 448,000 mt.

Nine-month Fertilizer EBIT was $28 million on net sales of $355 million, up from the year-ago $12 million and $300 million, respectively. Adjusted EBIT was $29 million, up from the year-ago $15 million. Sales volumes were 1.01 million, up from 874,000 mt.

Company-wide, Bunge reported a net loss attributable to Bunge common shareholders of $1.496 billion ($10.57 per diluted share) on net sales of $10.3 billion, although this included some $1.7 billion in charges related to portfolio initiatives, primarily the formation of a joint venture for the Brazilian Sugar & Bioenergy business. Year-ago income was $357 million ($2.44 per share) on sales of $11.4 billion. The company reported adjusted EBIT of a positive $304 million, down from the year-ago $573 million.

“We navigated uncertain and deteriorating market conditions well,” said Greg Heckman, Bunge CEO. “While we expect headwinds to continue, we are making progress on our key priorities. We have improved our operational execution, as well as our discipline around risk management. Our decision to combine our global and North American headquarters to St. Louis is an important step in the work underway to streamline our global business structure. We will continue to focus on the business drivers without our control as we execute our mission of delivering results and driving increased returns to shareholders.”

Heckman told analysts that core businesses performed ahead of expectations during the quarter. He added that he didn’t know if the company could see a more difficult environment than the one it has seen this past quarter, citing Asian swine fever, the on-again, off-again trade war, the late harvest in the U.S., and the Argentine elections. As for the later, he said based on history, there will be some capital controls that will be disruptive and impact not only farmers, but the crush industry as well. However, he said the good news is that Bunge has had decades of experience in Argentina and has a very experienced team in place that has seen this more than once.

The nine-month net loss attributable to Bunge common shareholders was $1.25 billion ($8.87 per share) on sales of $30.3 billion, versus the year-ago positive $307 million ($2.16 per share) and $34.2 billion. Adjusted EBIT was $840 million, up from $775 million.

OWI Buys Dasco DEF, AGU Businesses

News, News Briefs

Old World Industries (OWI), Northbrook, Ill., said on Oct. 29 it has acquired Monument, Colo.-based Dasco Inc.’s diesel exhaust fluid (DEF) and prilled, automotive-grade urea (AGU) global business and assets. In addition to these products, Dasco is also involved in the agriculture market, manufacturing products related to crop nutrients, animal feed ingredients, and industrial chemicals.

OWI said over the past 10 years, it has solidified itself as a domestic leader in the DEF market, which is expected to grow at nearly 10 percent compounded annual growth rate over the next decade. Dasco began selling DEF in 2013 and has continued to grow this product line, consisting of bulk liquid DEF and prilled AGU. As a term of the agreement, OWI will begin servicing Dasco’s DEF customers and working with Dasco’s DEF and AGU suppliers.

“OWI successfully entered the DEF market in 2009 with best-in-class products under its flagship brand BlueDEF,” said Charles Culverhouse, OWI CEO. “We have become the market leader for DEF because our channel partners, distributors, and consumers recognize OWI’s commitment to providing the highest quality DEF available. The acquisition of Dasco’s DEF and AGU business expands OWI’s reach and capabilities to meet the needs of our customers and consumers in this growing category.”

Recently, OWI inked an agreement with Unity Envirotech of Illinois LLC to be the exclusive sales, marketing, and distribution agent for the ammonium sulfate (AMS) that Unity produces at its Henry, Ill., facility (GM Sept. 6, p. 1). It marked OWI’s first foray into fertilizer.

OWI is currently the number one supplier for antifreeze, coolant, and DEF in North America, with well-known brands that include PEAK Performance® automotive products, BlueDEF® and Victory Blue™ diesel exhaust fluid, and Final Charge® and Fleet Charge® coolant products. OWI is among the largest privately-held companies competing in the automotive aftermarket, with a presence in various consumer product markets in 55 countries.

LCF Gets C$300 M in Investment Capital

Canada, News, News Briefs

Montreal-based La Coop fédérée (LCF) on Oct. 30 announced that four financial institutions – Caisse de dépôt et placement du Québec (CDPQ), the Fonds de solidarité FTQ, Fondaction, and Desjardins Capital – will invest C$300 million in the company.

The investment will take the form of preferred shares, the company said, and the amounts invested will be paid into the share capital of LCF. The proceeds will be used to finance the capital acquisition and capital investment projects of the company and its divisions resulting from LCF’s 2019-2022 strategic goals.

“La Coop fédérée has experienced unprecedented growth in recent years, consolidating its leading position in the agri-food and retail sectors in Quebec and Canada,” said Gaétan Desroches, La Coop fédérée CEO. “This investment by these reputable financial institutions that is being announced today is not only a great sign of confidence in our organization, but also in the cooperative business model.”

LCF ranks as the largest agri-food enterprise in Quebec and the 24th largest agri-food cooperative in the world, with more than 120,000 members, 14,000 employees, and annual sales of C$6.5 billion. Including its nearly 60 affiliated cooperatives, LCF has some 19,000 employees and consolidated revenues of C$9.5 billion, contributing nearly C $4 billion to Canada’s GDP, providing federal and provincial governments with C$1 billion in annual tax revenues, and generating more than 35,000 full-time jobs.

LCF’s activities are divided into three divisions: Olymel SEC (under the Olymel, Flamingo, Lafleur, Aliments Triomphe, and Pinty’s banners), Sollio Agriculture (under the La Coop, Elite, Agrocentre, Agrico, Agromart, and Country Stores banners), and Groupe BMR Inc. (under the BMR, Unimat, Agrizone, Potvin & Bouchard, The Shop, and Country Stores banners).

“The agri-food industry, at the very heart of people’s day-to-day life, is an important driver for Québec’s economy,” said Marc Cormier, Executive Vice-President and Head of Fixed Income at CDPQ. “This investment will allow La Coop fédérée, one of the world’s largest agri-food cooperatives, to pursue its growth strategy while generating stable revenues for our depositors over the long term.”

CDPQ is a long-term institutional investor that held C$326.7 billion in net assets as of June 30, 2019. The Fonds de solidarité FTQ had net assets of C$15.6 billion as of May 31, 2019. Fondaction manages assets in excess of C$2 billion, and Desjardins Capital has assets under management of C$2.5 billion in various sectors across Quebec.

“Desjardins Capital has been a financial partner of La Coop fédérée for almost 15 years and is proud to have been one of their first equity partners. This brings our total investment up to $100 million in preferred shares,” said Luc Menard, CEO of Desjardins Capital. “This partnership supports vibrant rural communities in Quebec and across Canada.”

Agricultural Retailers Association – Management Brief

Management Briefs

MANAGEMENT BRIEFS

The Agricultural Retailers Association (ARA) announced on Oct. 28 that Danielle Sikes has joined the organization as Director of Public Policy. Before joining ARA, Sikes served as the Director of Congressional Relations for the National Pork Producers Council, where she advocated on behalf of U.S. pork producers before Congress and the administration.

Previously, she worked in the office of Congressman Bob Gibbs (R-Ohio), serving as a legislative assistant handling agriculture, finance, foreign affairs, tax, and trade issues. A native of Southern California, Sikes earned a bachelor’s degree in political science from California State University, Fullerton.

“We are excited to have Danielle on board,” said ARA President and CEO Daren Coppock. “Her experience and relationships in Washington will be an asset to the team and for our members.”

Fertilizer Canada Signs MOU to Promote 4Rs in Africa

Africa, Canada, News, News Briefs

Fertilizer Canada in October announced that it has signed a Memorandum of Understanding (MOU) with Tractors for Africa to advance sustainable agriculture in Ghana. The project is supported by Global Affairs Canada and focuses on the incorporation of 4R Nutrient Stewardship into fertilizer management practices in order to increase incomes for up to 80,000 smallholder farmers, particularly women.

“Fertilizer Canada is pleased to be partnering with Tractors for Africa to advance sustainable and resilient agriculture creating new opportunities for smallholder farmers,” said Clyde Graham, Executive Vice President of Fertilizer Canada. “Mechanization is an important tool for agricultural crop production. Farmers who have access to improved tools and technologies have the opportunity to shift from subsistence farming to market-oriented farming. Farm equipment also improve the precision of fertilizer application.”

Fertilizer Canada and Tractors for Africa said the MOU reflects both organizations’ commitment to improve food security, promote climate-smart agriculture, and support the United Nations Sustainable Development Goals. The 4R Solution Project is a partnership between Fertilizer Canada, the Cooperative Development Foundation of Canada, and International Plant Nutrition Institute Canada.

“Tractors for Africa is excited to partner with Fertilizer Canada to enable the goal of raising living standards for African farm families,” said Louis Ricard, Co- Founder and Treasurer of Tractors for Africa. “Our core mission is to deliver mechanized solutions and provide training to farming cooperatives on equipment, business systems, and soil management. Incorporating Fertilizer Canada’s 4R Solution Project in the yearly training will show farmers how to use these critical inputs in an economic and sustainable way, contributing to higher yields and a pattern of sustainable agriculture into the future.”

AdvanSix 3Q Income Up 44 Percent in Challenging Times; AS a Bright Spot

Ammonium Sulfate, News, News Briefs, Northeast

AdvanSix, Parsippany, N.J., reported a 44 percent uptick in third-quarter net income, to $7.9 million ($0.28 per diluted share) from the year-ago $5.5 million ($0.18 per share), though sales were off 16 percent, to $310.6 million from $368.6 million. EBITDA was $24.9 million, up from $20 million.

“The end market environment remains challenging as we saw a further slowdown in demand on a global basis through the third quarter” said Erin Kane, AdvanSix President and CEO. “Given our global low-cost position, we continue to benefit from our strong utilization rates and operating leverage in the face of slowing nylon demand, acetone oversupply conditions, and mixed fertilizer industry dynamics.

“We are planning conservatively in the near-term based on the challenging macro environment and are taking proactive measures to drive disciplined cost management, optimize working capital performance, and cash flow generation, while deploying capital prudently,” he added.

The company said overall market-based pricing was unfavorable by approximately 3 percent compared to year-ago levels, reflecting challenging end market conditions for acetone, nylon, and caprolactam, partially offset by improved ammonium sulfate performance. AS represented 20 percent of total third-quarter sales versus 19 percent for the year-ago quarter.

On AS, the company said there was a $13 million typical seasonal decline from the second to third quarter, with an unfavorable product mix with new season fill in the third quarter. It noted that domestic prices are typically strongest in the second quarter, with the third quarter characterized by higher exports of standard product.

Going forward, the company expects mixed AS fertilizer environment to continue through the 2019/20 planting season. However, it expects the AS price/mix to improve seasonally from the third to fourth quarter, with demand strengthening into the spring. It noted increased AS competitive pressure, and said it will be monitoring North American supply/demand and imports.

AdvanSix said the improved EBITDA was primarily due to the net favorable year-over-year impact of planned plant turnarounds ($25 million), partially offset by the unfavorable impact of market-based pricing, lower volume, and operational performance, including fixed cost absorption and unfavorable product mix, and an approximately $4 million unfavorable impact from an extended cumene supply following the Philadelphia Energy Solutions (PES) supplier fire.

“Our organization shows its resiliency by navigating through challenging end market conditions and external factors, with a focus to outperform on what we can control,” added Kane. “We recently completed our fourth-quarter planned plant turnaround on time and on budget, which will have an approximately $25 million unfavorable impact to pre-tax income in the fourth quarter. Despite a more uncertain macro environment, we continue to position the company for long-term performance by executing on our strategic priorities including safe, stable and sustainable operations, differentiated product growth and disciplined capital allocation.”

Nine-month net income was $43.4 million ($1.49 per share) on sales of $970.7 million, down from the year-ago $45.5 million ($1.46 per share) and $1.13 billion, respectively. EBITDA was $102.9 million, off from $103.7 million.

UAN

Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf:

UAN barges continued to be called $150-$155/st ($4.69-$4.84/unit) FOB, but some were predicting lower numbers for the next round of business.

East Coast vessel pricing remained at $155-$160/mt CFR.

Eastern Cornbelt:

The UAN-32 market was steady at $185-$205/st ($5.78-$6.41/unit) FOB regional terminals in the Eastern Cornbelt, depending on location, with the low confirmed at Cincinnati and Mount Vernon, Ind., and the high out of spot Illinois River terminals. UAN-28 was quoted at $160-$162/st ($5.71-$5.79/unit) FOB Cincinnati in late-October.

Western Cornbelt:

UAN-32 was unchanged at $185-$205/st ($5.78-$6.41/unit) FOB in the Western Cornbelt, with the low reported at St. Louis and the upper end out of spot Iowa terminals.

Southern Plains:

The UAN-32 market was quoted at $170-$180/st ($5.31-$5.63/unit) FOB regional production points in the Southern Plains, with pricing out of Gulf Coast terminals reported firmly at the $180/st ($5.63/unit) FOB level. “There is very little buying at the moment,” said one contact. “Seems everyone is busy with the harvest.”

South Central:

The UAN-32 market remained at $180-$190/st ($5.63-$5.94/unit) FOB terminals in the South Central region. Pricing FOB Memphis and West Helena, Ark., was steady at the $185/st ($5.78/unit) FOB level.

Southeast:

The UAN-32 market was pegged at $172-$175/st ($5.38-$5.47/unit) FOB Wilmington and Norfolk, Va., with the upper end of the regional range remaining at the $200-$204/st ($6.25-$6.38/unit) FOB level out of inland Georgia terminals.

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