Chesapeake, Va.-The Chesapeake fire marshal who is heading up one of at least three investigations into the Nov. 12 collapse of a 2.5 million gallon liquid fertilizer tank has declined to confirm corrosion of tank welds as a possible cause. Fire department spokesman Steve Johnson told Green Markets, “The investigation is still in the preliminary or planning stage. Our focus is on assuring that required inspections and services have been properly completed on the facilities. Our task force will not be doing engineering evaluations, that is not their area of expertise.” Johnson did confirm that the fire marshal’s office is working with the federal Occupational Safety and Health Administration, and that Allied Terminals is doing its own investigation. Johnson termed as “assumptions” press reports that the corrosion from the fertilizer could have caused the failure, along with at least two other scenarios. “We will cooperate with OSHA and other private and public agencies that are stakeholders in this event,” Johnson insisted. “The press article you mention states assumptions. We have no conclusive evidence yet as to what caused the collapse.” Green Markets contacted Gary Boley, who heads his own company, Inter Spec LCC, in Norfolk, only two miles from the terminal. Although Boley has never inspected a tank there, he said there are lots of vertical and floor welds that could be attracted by nitrates combining with carbon to cause the corrosion. Boley, who was one of the first 20 inspectors certified by the American Petroleum Institute in the early 1990s and has inspected 500 fertilizer and several thousand oil and chemical tanks, suggested that the liquid line, which rises and falls with delivery of the product, could contribute to the weld problem. But liquid AN has not been found to have an effect on the walls of the tank, he added, and the age of the tank seems to be of little consequence. Another possibility cited by Boley is filling over certified levels, which puts the tank into “more severe service,” since fertilizer is 32 percent heavier than water and 70 to 75 percent heavier than gasoline. Boley also suspected that when the Allied tank was changed from riveted to welded two years ago, overheated welding rods could have been used, which would weaken the plates and leave them vulnerable to failure. Boley’s Inter Spec provides inspection and engineering services throughout the U.S. and internationally.
U.S. Gulf/Tampa: As Green Markets went to press just before Thanksgiving there was nothing firm on new Tampa business for December. However, the speculation was not good for sellers. Citing falling global prices and curtailments, pressure was on Tampa to fall. The only question was by how much. Buyers argued that there was just too much product on the water and in storage for prices not to crater.
In the meantime, across the Gulf at NOLA, sources reported firm offers on the table at $250/st FOB.
Trinidad: PotashCorp’s #2 plant is currently being brought back into service following scheduled maintenance. Now the #1 plant will go down for scheduled maintenance.
Eastern Cornbelt:Sources said field applications of ammonia had picked up considerably last week, with demand in central Illinois described as brisk. One source said a weekend forecast for clear skies and temperatures in the 40s promised more open fieldwork days for fall ammonia. “If we can have another week’s worth of activity, we’ll be sitting okay,” he said.
Sources tagged the ammonia market at $650/st FOB in Illinois for very limited spot sales. Most of the tons currently moving were prepaid earlier for fall. No firm offers were reported for spring prepay ammonia last week, and sources were unsure what the number would have to be to attract some interest. One supplier was referencing forward contract ammonia for January through May at $1,015-$1,025/st FOB regional terminals.
Western Cornbelt:With improved weather and the bulk of harvest completed, sources said ammonia movement to the field picked up last week. Although volumes were confined to fall prepay tons booked earlier, sources said the application pace was brisk in all three states. Dry tons were also moving to the field in some areas, and several sources said the pace should remain steady if weather conditions are cooperative.
On a truck-delivered basis, anhydrous ammonia was pegged at $475-$540/st in the region from southern production points. Out of regional terminals, the spot market was quoted at $450-$550/st FOB, with the low in Nebraska. Sources reported no new business to test the market, however.
Forward contract ammonia from one supplier was referenced as high as $1,010-$1,020/st FOB regional terminals for the January-May shipping period.
Southern Plains:Fertilizer activity remained very quiet in the region, except for some fall ammonia movement in parts of Kansas. Some areas also reported a late run earlier in November as growers finished the last of the wheat crop, but activity was spotty at best.
Anhydrous ammonia pricing reflected a significant drop from last report. Sources quoted the market at $375-$410/st FOB regional production points for spot market tons, with the upper end at $450/st FOB Kansas pipeline terminals to the dealer.
California:Effective Nov. 21, Agrium’s truck-DEL anhydrous ammonia postings dropped to $755/st in central California and $760/st in northern California. Calamco adjusted its anhydrous ammonia postings on Nov. 20, with new reference levels dropping to $755/st truck-DEL and $800/st rail-DEL in the California market. Calamco’s aqua ammonia price dropped on that date to $185/st FOB in California.
Western Canada: Agrium has idled its Redwater #1 plant, the smaller of its two plants at the site. A swing plant that goes up and down based on market conditions, it has been down for two weeks. Agrium’s Fort Saskatchewan plant is down for a week of maintenance.
Black Sea: Soft prices continue to plague the region. Sources report prices near $200/mt FOB for bids and $230/mt FOB for offers. Buyers argue the price should be at $200/mt FOB and lower because of the traditional gap between the Middle East price and Yuzhnyy. With the Middle East pegged at $160-$180/mt FOB, the Yuzhnyy price should be $180-$200/mt FOB, according to those who argue the point using math. Yet no one has been able to point to any business from the area that is near the $200/mt FOB mark.
The price slide has prompted reports of plant closings beyond the usual maintenance schedule. Now OPZ said it will stop ammonia exports and produce ammonia only for its own urea operations. The immediate effect will be to cut about 15 percent of the exports from Yuzhnyy. Industry sources say OPZ exported about 450,000 mt from January through October of this year.
The move comes on the heels of BASF announcing it was closing most of its ammonia operations as well. The BASF closings, however, also include ammonia buyers. For many in the industry, the company-wide closures or cutbacks will do little to tighten the ammonia market.
Traders in Asia say the closing of production facilities should help provide a floor to the market. The other major component is U.S. buying demand – and that is still up in the air.
Middle East: Clarification of the IFFCO/India deal from earlier this month puts the latest deal at $199/mt CFR. Earlier reports indicated a price of $190/mt CFR. For traders, however, the $9/mt difference is not big enough to see an end to the soft market.
The deal with IFFCO done from Qafco and Fertil via Kisan is part of a series of contract deals to India.
At present, said one Asian trader, it is the contracted tons into India that are setting the market price and pace. Industry watchers have been unable to name any spot deals in the past few weeks, leaving the contracts to set the regional price.
India: Demand remains firm. Buyers such as IFFCO are setting the pace in the Middle East. Through its partner, Kisan, IFFCO has been able to secure cargo from the Middle East producers. In some cases the cargoes picked up are run through another trading house. In the end, recent purchases have been at prices lower than previous deals.
UREA
U.S.Gulf: Most players put new prompt granular trades last week at $240-$245/st FOB, though there was one report that a deal as low as $235/st FOB was done. Further confirmation was not available at press time.
Trinidad: PotashCorp’s urea plant will come down for scheduled maintenance for two weeks in late December or early January.
Eastern Cornbelt: Granular urea was pegged at $335-$370/st FOB regional terminals, which was down again from last report. One Illinois source said dealer pricing in the mid$300s/st FOB was a viable spot market last week.
Western Cornbelt: Granular urea pricing continued to slide in the region. Sources tagged the dealer market at $310-$350/st FOB, with the low reported in Missouri and the upper end in Iowa. Effective Nov. 21, Agrium’s urea postings in the Northern Plains area dropped to $400/st FOB North Dakota terminals at Alton, Carrington, Colfax, Marion, and Scranton, and $405/st rail-DEL in Wisconsin, Minnesota, and the Dakotas.
Southern Plains: Granular urea pricing was quoted at $280-$290/st FOB in Oklahoma last week for spot market tons to the dealer. The Houston market was pegged at the $275/st FOB mark, but with limited supply for the near-term. One supplier was referencing forward contract urea for January through February at $343/st FOB Inola, Okla.
South Central: Urea was moving on timber acres in some sections of the South Central region last week. Urea pricing out of regional terminals had dropped considerably, with sources reporting a broad range of $290-$350/st FOB. The upper end reflected posted levels, but most acknowledged that the true dealer market was at or near the $300/st FOB level last week.
Southeast: Granular urea was quoted at $360-$390/st FOB port terminals to the dealer, with the Norfolk, Va., market tagged at the $370/st FOB level last week.
Western U.S.: Agrium’s granular urea postings dropped on Nov. 21 to $400-$415/st DEL in Montana and Wyoming, depending on location; $425/st FOB warehouse locations at Glade, Kennewick, Warden, and Wilson, Wash.; $430/st DEL in Washington, Oregon, Idaho, and northern Nevada; $440/st DEL in northern and central Utah; $445/st DEL in southern Utah; $455/st FOB West Sacramento, Calif.; $475/st truck-DEL in Central California; and $480/st truck-DEL in Northern California.
Pakistan: The TCP tender closed Nov. 22. Talks over the weekend resulted in 250,000 mt being awarded at the lowest offered price. Twelve companies offered tons to TCP, but only seven complied with the tender documents.
TCP tender offers
Supplier
Quantity (mt)
Origin
US$/mt
FOB
CFR
Keytrade
30-35,000
Open
274.85
Transammonia
30-40,000
Ukraine/Yuzhnyy
265.00
279.40
30-40,000
Riga
265.00
284.40
25-30,000 (S/O)
Malaysia
260.00
285.40
Transfert
25,000
Open
284.95
Sabic
50,000
Saudi Arabia
271.00
285.00
25-35,000
Open
294.95
Multicommerce
25-35,000
Open
299.80
25-30,000
304.85
25-30,000
295.43
Dreymoor
25-30,000 (S/O)
Open
299.97
25-30,000 (S/O)
299.97
Swiss Singapore
50,000
Open
311.00
In the end, TCP paid $274.85/mt CFR to the following companies:
Supplier
Quantity (mt)
Transammonia
75,000
Keytrade
65,000
Transfert
60,000
Sabic
50,000
Terms of the tender require the suppliers to ship within 15 days of the opening of the letters of credit. Sources say that makes the shipping dates the first half of December.
Funding for the urea came through late Monday from the IMF and other international banking sources, said sources. Awards were issued Monday, and final papers for the funding were signed Tuesday.
Sources were divided on the full impact the tender will have on the market. Few believed any upward movement in the price would be seen in the next couple of weeks.
The initial offering prices into the TCP tender were higher than those in the MMTC/India tender that closed just a few days prior. Sabic, for example, added $10/mt to its pricing ideas. In the end, the Sabic shipment has an estimated netback of $265-$268/mt FOB.
Because no awards were made in the MMTC tender, the question most commonly heard around the industry is what will happen when or if MMTC retenders.
Even though TCP took all the tons it asked for, expectations are high that it will call another tender quickly.
In total, local sources expect Pakistan to import 700,000 mt of urea in November-December.
India: Talks between MMTC and companies that offered tons into the tender of Nov. 20 were able to secure some savings, but not enough to get MMTC to make awards. As a result, the conventional wisdom is that MMTC will retender within the next week or so.
Even though MMTC was able to negotiate a reduction in pricing, such as Sabic taking $2/mt off its price for its full 90,000 mt, no awards were issued. Keytrade lowered its offer to $266.90/mt CFR. As Green Markets went to press, no other company was given an award.
Sources now expect to see the tender scrapped and a new one called. Adding to the expectation that a new tender will be called is the fact that the validity of many of the offers made in the MMTC tender expired Friday, Nov. 21. One trader noted that offering companies set the short time limit so they would be able to participate in the TCP/Pakistan tender if they lost in the MMTC tender. As it turns out, TCP issued awards faster than MMTC.
Reportedly, MMTC believed it could get better prices than those offered. The results of the TCP/Pakistan tender, however, show a firming market. The Sabic price in particular showed a firmness that was absent just a couple of weeks ago.
Sources say if MMTC issues a new tender, the Middle East producers will likely try to follow up on the Sabic offer to TCP of $271/mt FOB and push the price up.
India still needs 300-500,000 mt for the current application season.
Middle East: The results of the MMTC/India and TCP/Pakistan tenders showed a strong desire by producers to secure awards and move the price up. In the Indian tender the Middle East suppliers lowered their prices $10/mt from the previous tender to ensure an award. Sabic was even willing to take another couple of dollars off to get the business. And the Indians have yet to make an award.
In the TCP tender, suppliers must have figured they would get the Indian business. Only Sabic offered, and it did so with a $10/mt bump in pricing.
In the end, Sabic got an award from TCP at an estimated netback of $265/mt FOB.
This price is higher than what was offered in the Indian tender, but lower than what the producers were hoping for. Still, said one trader, this is an indication that the market may have bottomed out.
The real proof of where the market will go should be seen when MMTC retenders.
Industry observers point to stagnant buying around the globe. They say existing stockpiles of more expensive urea could force some buyers to buy a few cargoes now to help average out the price of what they sell inland. Others say buyers don’t have the cash or available credit to come in now.
Adding to the market woes of producers is the change in export duties from China. With only a 10 percent duty on exports from China beginning Dec. 1, sources say Chinese product will be more competitive as global prices rebound.
The industry is also waiting to see what happens with U.S. purchases. The credit crunch and gloomy economic situation could cause importers to reduce their usual take. For now, the market in the area for prills and granular is at parity. Sources say the price is a mixture of the Indian and Pakistani tenders, $261-$265/mt FOB.
Black Sea: Yuzhnyy producers are not looking at a happy fourth quarter. Prices have stagnated at $235-$245/mt FOB. Sources say for some producers this already represents a price level below production costs. For others, there is still $10-$15 to go.
Shutdowns in Europe and the Baltic region are preventing prices from crashing further, but demand remains weak. Sources say unless more buyers step up soon, more plants in the Black Sea area may have to extend their maintenance programs. For some plants, such an extended shutdown could cause problems as winter approaches.
Some producers reportedly have enough orders on hand or sufficient storage capacity to avoid dramatic price reductions to ensure a sale.
Looming on the horizon for the Ukrainian producers, however, is another boost in natural gas prices from Russia.
Asia: Sri Lanka will be calling two small tenders to close Dec. 1. These tenders are the only real action taking place in the urea market outside of India, Pakistan, and Bangladesh. Sources say Southeast Asia is full. The Philippines, Vietnam, and Thailand are all reported to have plenty of reserves, albeit at prices much higher than the current global market. If local traders have enough money available, they may try to pick up some of the lower-priced urea available on the market today. They could then combine it with the expensive product to offer tons at an averaged price.
The problem for many is that the tightened credit conditions make only cash deals possible. And not many of the local traders have a lot of ready cash.
NITROGEN SOLUTIONS
U.S. Gulf: Price ideas continue to plummet, though finding an actual transaction is another matter.
Eastern Cornbelt: The UAN-32 market was generally reported in the $9.75-$11.75/unit FOB range for spot market tons, although new sales were few to test the market. One supplier was referencing forward contract UAN-32 for January at $420.80-$430.40/st ($13.15-$13.45/unit) FOB regional terminals.
Western Cornbelt: UAN was reported in a very broad range at $9.20-$11.72/unit FOB, with the low in Iowa and the upper end reported a dealer reference price in Missouri. Sources reported no actual sales to test those numbers, however.
Southern Plains: UAN-32 pricing also continued to slide. Sources pegged the regional market at $260-$280/st ($8.13-$8.85/unit) FOB, with the low end out of regional production points.
South Central: UAN-32 was reported in a broad range at $260-$285/st ($8.13-$8.91) FOB terminals to the dealer, with the low end of that range also reported on a rail-DEL basis to some locations.
Southeast: UAN-30 was pegged at $280-$300/st ($9.33-$10.00/unit) FOB regional terminals, with the upper end also quoted for rail-DEL tons into South Carolina. As was reported last week, new indications of imported UAN-32 vessel tons were in the $250-$280/mt range on the East Coast, with the low for offers and the upper end reportedly for confirmed business.
California: Agrium’s UAN-32 postings dropped on Nov. 21 to $413/st ($12.91/unit) FOB Sacramento, Calif., $435/st ($13.59/unit) truck-DEL in central California, and $440/st ($13.75/unit) truck-DEL in northern California.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate remained in a broad range at $400-$510/st FOB in the region, but sources acknowledged that the dealer postings at the upper end of that range were “way out of whack,” and would have to be lowered to spark any interest.
Southern Plains: Ammonium nitrate pricing had reportedly dropped to $400/st FOB the Tulsa market, but sources described inventories as limited.
South Central: Ammonium nitrate was quoted at $400-$470/st FOB.
Southeast: Ammonium nitrate remained at $540-$550/st range FOB Tampa based on the last done business. There were reports of rail-DEL tons coming into the region in the $400s/st last week, but no actual business was confirmed to test those numbers.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $200-$210/st FOB or DEL in the region. Agrium’s Nov. 21 granular ammonium sulfate postings included $305/st rail-DEL in Wisconsin, Minnesota, and the Dakotas.
Western Cornbelt: Granular ammonium sulfate remained at the $200-$205/st FOB mark from most locations. Honeywell announced a prepay program for shipments completed Jan. 1 through July 10, 2009, for the Iowa, Missouri, Kansas, Nebraska, Illinois, Wisconsin, Minnesota, and Dakotas region. The program has granular ammonium sulfate at $210/st rail-DEL or FOB warehouse, and mid-grade sulfate at $190/st rail-DEL or FOB warehouse. Program terms also specify that customers must provide an estimated shipping forecast by Jan. 23.
Southern Plains: The granular ammonium sulfate market was pegged at $250-$300/st FOB Texas shipping points, with the low FOB Freeport.
South Central: Ammonium sulfate was reported in the $225-$285/st FOB range in the region, depending on location, with the low in Arkansas. Delivered granular sulfate continued to cover a wide range at $200-$335/st.
Southeast: The granular ammonium sulfate market was quoted at $290-$300/st FOB, with delivered granular sulfate in the $335-$363/st range in the region. Standard grade was reported at $285-$310/st DEL.
Pacific Northwest: Agrium’s granular ammonium sulfate postings dropped on Nov. 21 to $300/st FOB warehouses in Washington, Idaho, Oregon and Nevada, and $305/st DEL in those states plus Montana and Wyoming.
PHOSPHATE
Central Florida: Last week was Thanksgiving, but there has been little for the industry to be thankful for during the second half of the year. Prices have fallen by roughly half, and dealers and traders were filled to the brim. Meanwhile, producer inventories had grown to near maximum and places to put more phosphates were rapidly disappearing. The domestic and world markets essentially have shut down, and the outlook for any kind of change before the end of the year was bleak.
CF was performing a turnaround at its Plant City, Fla., plant, and PCS has shut down one of its production plants at White Springs. Mosaic still claimed to be cutting production by 500,000 to a million st, but raw material suppliers believe it must be even more.
CF’s move last week to slash prices to $490/st FOB at both Central Florida and New Orleans put traders and dealers in a financial bind because the price change lowered the value of their inventories, which doesn’t look good on the balance sheet.
With no new prompt sales and no new offers, prices in Central Florida were unchanged last week at $490-$500/st FOB. CF had the lowest asking price. PCS Sales was still holding to its posting of $1,070/st FOB. Mosaic had no posted price for Central Florida. The most recent price for Agrifos was $755/st FOB for trucks and $750/st FOB for rail shipments, but those will likely change once the market begins to move.
U.S. Gulf: The biggest turkey during Thanksgiving week was the market, although real turkeys were at least cooking. The NOLA DAP barge market was as dead as the turkey on the table last week, and there appeared to be no good news on the horizon. Prices were down, and profits for the year were sure to follow.
In other depressing news, IFA issued a report that said the reduced use of fertilizers worldwide would have a negative impact on food supplies, which means even more people in the world will face starvation.
Meanwhile, the credit crunch was affecting lending from banks, and warehouses were full of phosphates that have not sold. Some on the dealer level had filled at prices between $1,000/st FOB and $1,200/st FOB, and took a big hit last week when CF announced its new low prices. The situation for terminals was even worse. They have contracts with producers, which required them to take delivery of NOLA DAP barges at current market prices, even though it was difficult – if not impossible – to sell what they already had in stock.
Warehouse prices also took a hit last week. As a result of CF’s move, most dropped to the $525-$575/st FOB level – a hit of $200/st FOB or more. Last week, there was still no one predicting movement would begin around the first of December. Now, January would be nice.
One positive note last week – the price of corn moved up a bit during early week trading. Also, if the weather in the Midwest gets cold enough in the next couple of weeks, farmers will be able to get into their fields and put phosphate and potash on the ground.
Based on CF’s new prices and other somewhat recent offers, the NOLA DAP barge range was $500-$550/st FOB. Mosaic had no posted price.
Eastern Cornbelt: Sources reported some movement of phosphates to the field last week, but activity was limited. The DAP market was reported at $535-$575/st FOB most river warehouses in the region, with MAP at a $25/st premium. Those numbers were down some $150/st from last report following a big downward pricing adjustment by CF at mid-month. One regional supplier was referencing forward contract DAP for January at $540/st FOB Peoria, Ill., and $545/st FOB Cincinnati, with a $15/st increase slated for shipments in February through June.
No current market information was available for 10-34-0 last week.
Western Cornbelt: Phosphate pricing continued to plummet. Sources quoted the DAP market at $525-$675/st FOB regional warehouses to the dealer, and several sources said they were starting to pick up some very limited spot business at the low end of that range. The problem continues to be lots of high priced inventory in dealer bins, with reports that retail prices continue to reflect these earlier replacement costs, so growers are holding back.
MAP was $545-$700/st FOB. The 10-34-0 market was tagged at $880-$900/st FOB in the region. Noting lower ammonia and acid costs, however, several sources said that market has to come down.
As of Nov. 21, Agrium had lowered its super phosphoric acid (SPA) and merchant grade acid (MGA) postings in the continental U.S. to $1,150/st rail-DEL for shipments from Nov. 21 through Dec. 31. That was down from November pricing levels at the $1,750/st DEL level and October postings at the $2,500/st DEL mark. Agrium said it will not post phosphoric acid pricing beyond Dec. 31 at this time, but “will continue to monitor the market situation and communicate a January SPA/MGA price before year end.” The company also clarified that it will not be repricing any SPA or MGA shipped on or before Nov. 21 to the new price level.
Southern Plains: Phosphate pricing was down significantly from last report. Sources quoted the DAP market at $520-$540/st FOB Inola and Catoosa, Okla., with MAP $25/st higher than DAP. One supplier was referencing forward contract DAP and MAP for January at $540/st and $565/st FOB Inola, respectively, with a $15/st increase for February-June shipments.
10-34-0 was reported in a broad range at $750-$900/st FOB in the region last week, also down dramatically from last report.
South Central: One source said phosphate and potash usage in his trade area was only 15-20 percent of normal this fall. DAP pricing had reportedly dropped to $475-$570/st FOB regional warehouses to the dealer, with the low end confirmed in Arkansas. MAP was $20-$25/st higher than DAP, and TSP was quoted at $450-$550/st FOB in the region last week.
Western U.S.: Agrium’s MAP postings dropped on Nov. 21 to $585/st DEL in Montana and Wyoming; $590/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; $590/st FOB and $595/st DEL in Washington, northern Idaho and Oregon excluding Malheur County; and $600/st FOB warehouse or rail-DEL in California and Arizona.
U.S. Export: No new export transactions were found last week, and prospects appeared dim for any serious movement in the near future. India and Pakistan may need additional phosphate before the end of the year, but no large tenders had been issued. In South America, Argentina, which had a farmers strike for much of the year, had no need for additional supplies.
With no new deals last week and no new offers, the export DAP price range remained unchanged at $533-$555/mt FOB.
POTASH
Eastern Cornbelt: Potash was quoted at $775-$850/st FOB regional warehouses, depending on grade and location. One dealer said that while growers are showing some interest in phosphates after the long harvest, many continue to draw the line at potash. “Growers are telling us to go ahead and spread some phosphate, but no potash,” said one.
Western Cornbelt: Potash was reported in the $750-$860/st FOB range in the region last week, with the upper end quoted for white granular potash on a spot basis in Missouri. One Iowa source pegged the common dealer price for red granular potash at the $775/st FOB level.
Southern Plains: The potash market was pegged at $800-$825/st FOB regional warehouses, with the mine price FOB Carlsbad, N.M., quoted at $794-$800/st, depending on grade.
South Central: Potash was pegged at $810-$830/st FOB regional warehouses to the dealer.
Southeast: Carolina sources pegged the potash market at $825-$850/st DEL last week, with the lower number reportedly for some dealer-to-dealer trades.
Russia: Uralkali says weakened demand for fertilizer has prompted the company’s decision to cut production in November and December by 50 percent. It says this will result in a 10 percent reduction in annual output, and will affect Uralkali’s financial performance. The company expects that the 500,000 mt decline in production in Q4 will result in a decrease in the company’s cash revenues by US$650 million. Uralkali believes the unfavorable market situation is likely to continue through early 2009, and the company’s production will be curtailed as a result. It says it is currently unable to give firm guidance for utilizing its production facilities in 2009.
The company has designed a turnaround program that includes intensified repairing of its production facilities, canceling overtime work and optimizing employees’ schedules, suspending the bonus plan, and reducing various expenses.
In other news, it reports that it has set the upper price limit for potash fertilizers intended for direct application by Russian farmers at 3,700 roubles per mt (FCA, exclusive of packaging) in first half 2009.
SULFUR
Tampa: With phosphate production in Central Florida and the rest of the world cut back to survival levels, sulfur producers were seeing their inventory levels growing rapidly for the last month or more.
The priller at Galveston was running full steam last week, and a vessel was loaded with 53,000 mt for shipment to an undisclosed location – most likely Brazil. Another sulfur vessel was scheduled to be loaded. Martin plans to bring a second priller online at Galveston by March 1, which will help ease some, but far from all, of the burden of excess sulfur.
In addition to the curtailment of phosphate production, the economy was forcing industrial customers to reduce the production of a variety of products that require sulfur, which was adding to the problem for oil companies.
The only transportation problem last week was a buildup of sulfur railcars at Central Florida, which was expected due to phosphate curtailments.
Expectations last week were for sulfur prices for Tampa to take another dive for the first quarter, possibly to $50/lt, but that could be conservative. Low freight rates will help cushion the financial blow.
West Coast: Most, if not all, fourth-quarter sulfur prices were settled last week at negative or nearly negative prices, believed to be $0.00-($30).
The Mosaic Co. reports that Joc O’Rourke will join the company as a senior executive, responsible for its global mining and chemical processing operations, beginning in early January 2009. He will also serve on its senior leadership team.
“Joc brings over 25 years of experience in operating global mining operations and has spearheaded a variety of large scale expansion projects,” said Jim Prokopanko, Mosaic CEO. “Joc will not only broaden our capacity to execute on our strategy, he also brings a tremendous depth of experience and passion for mining and minerals processing and will play a key role in leading the operations of Mosaic’s two major product lines of potash and phosphate.”
O’Rourke has served as president of Barrick Gold’s Australia Pacific Business Unit since 2006. He has also held various operational positions in the global gold, copper, mining, and nickel industries. O’Rourke has a B.S. in mining and engineering from the University of British Columbia and an Executive MBA from the Institute European d’Administration aux Affaires, Fontainebleau.
Belton, Mo.-Specialty Fertilizer Products, which produces Avail phosphorous enhancer and NutriSphere-N nitrogen manager, will move its headquarters in December from Belton to a $450 million mixed-use project about 10 miles away directly across the border in Leawood, Kan. The company, which is becoming known more and more as SFP, will occupy 12,199 square feet in Park Place’s Aubrey Building, now under construction. Some 23 employees will be affected. “As a fast growing agricultural research, development and manufacturing company,” Jake Sanders, marketing development vice president, commented, “the larger facility will allow us to continue to expand and explore additional technologies while better serving a growing customer base.” Melanie Acklin, a spokeswoman for the privately-held company, said annual revenue grew 700 percent between 2004 and 2007. She added that the company needs more opportunities for serving and entertaining more clients, and the Park Place location will afford plentiful nearby hotels and restaurants for this purpose. Sanders also reported an addition to its marketing group, with Stephanie Russell joining SFP from RFD-TV in Nashville, where she was public relations assistant. Russell will assist the director of marketing and vice president of market development in a public relations and marketing capacity, handling tradeshow preparation, vendor correspondence, and customer relations.
Washington, D.C.-The fertilizer industry isn’t worried at this point about the switchover in 2010 to urea-based selective catalytic reduction conversion or urea SCR for virtually all new diesel vehicles manufactured in the U.S. Urea SCR is the only technology available that can remove enough NOx from diesel exhaust to comply with strict new limits imposed by EPA. Some believe that the additional urea required for reducing vehicle emissions will create a new demand that could drive up fertilizer prices, but TFI and others disagree. “The diesel rule does not go completely into effect until 2010 and we anticipate the industry will be able to meet both agriculture and industrial demand for nitrogen products,” TFI spokeswoman Kathy Mathers told Green Markets. Mathers noted that nitrogen prices in the past few weeks have been backing off and are no longer at record highs. The newly formed North American SCR Stakeholders Group agrees with TFI’s assessment. Kim Doran, SCR Stakeholders spokesperson, explained, “Demand for this automotive-grade urea is not expected to exceed 5 percent of the world’s production. The new use of urea to control vehicle emissions could lead to increased investment and expand world capacity for urea production.” Urea tanks will be standard equipment for most new diesel trucks, buses, cars, and sport utility vehicles manufactured in the United States after Jan. 1, 2010. An automotive grade of urea will be injected into the vehicles’ exhaust stream to “scrub” nitrogen oxide (NOx) from the diesel exhaust. Doran said the automotive urea, called “diesel exhaust fluid” in the U.S. and trademarked AdBlue in Europe, reduces NOx by as much as 90 percent alone, and can take NOx to near-zero levels when used in combination with diesel particulate filter technology.
Paris-The International Fertilizer Industry Association (IFA) last week warned world governments that a “food crisis” may be around the corner. IFA warned that farmers are having difficulty getting credit to plant crops and the rapidly changing prices of agricultural commodities and inputs make it risky for them to invest in fertilizer. IFA also notes that low grain inventories and a steadily growing population, combined with a small harvest in 2009, could result in a considerable rise in grain prices. “A new surge in food prices would dramatically raise the number of undernourished people, leading to political unrest in many countries,” said IFA, which said key players at its recent governing council meeting in Ho Chi Minh City expressed these concerns.
Vancouver-Rocky Mountain Resources Corp., a Vancouver industrial metals and minerals exploration and development corporation, has confirmed two high grade phosphate beds, thicker zones of intermediate grade phosphate, and a vanadium-rich bed in the Montpelier mining district of Southeast Idaho’s Bear Lake County. Rocky Mountain recently acquired a significant position in Paris Hills, about two miles west of the small towns of Paris and Bloomington and about 45 miles south of the active Soda Springs phosphate mining district in Caribou County (GM Sept. 8, p. 14). “First, the thickness and grade of the high grade beds are within the ranges expected based on reports by Earth Sciences Inc. in their work from the 1970s,” said Tom DeMull, Rocky Mountain president. “Second and more significant, Rocky Mountain has identified long intervals of intermediate grade phosphate that were not included in Earth Science’s historic resource at Paris.”
CHS Inc. reported record net income of $803 million for the fiscal year ending Aug. 31, 2008, the fifth consecutive year of record income and revenues. Fiscal ’08 topped the prior year’s $756.7 million. Fiscal ’08 revenues were $32.2 billion, up 87 percent from the year-ago $17.2 billion.
The CHS ag business put in a stellar performance in FY ’08, with earnings of $568.3 million versus the year-ago $118.3 million. Ag business revenues soared to $19.7 billion, up from the year-ago $8.6 billion. The ag business includes crop nutrients, grain marketing, and retail operations, and CHS said all of them had strong global and domestic demand, along with record value for the products they market. For the year, CHS reported wholesale crop nutrient sales of $2.9 billion, with less than 10 percent of those made to co-owned Agriliance LLC or to CHS country operations business. CHS pre-tax crop nutrient income for 2008 was $137.5 million.
Crop nutrient inventories were put at $400 million as of Aug. 31, 2008. None were listed for the year-ago period, as the crop nutrient business was still with Agriliance LLC at that time.
Ag helped take up the slack from the CHS energy business, which saw a drop in earnings to $299.7 million from the year-ago $613.3 million. CHS attributed this to tighter margins.
CHS fourth-quarter net income was off, at $145.4 million on sales of $9.4 billion from the year-ago $297.1 million and $5 billion, respectively. However, ag earnings were up, at $63.8 million from $10.3 million. CHS noted that as the year ended, it recorded a $71.7 million ($55.3 million net of taxes) impairment on the value of its investment in VeraSun Energy Corp., an ethanol producer that recently filed for Chapter 11 bankruptcy. CHS owns 8 percent of VeraSun. VeraSun announced Nov. 24 that it has received a non-binding indication of interest for purchase for substantially all of its assets. For now, VeraSun will pursue this inquiry and is keeping the company’s identity and the terms confidential.
In 2008, based on 2007 results, CHS paid out $340 million in cash patronage, equity redemptions, preferred stock and dividends. Based on 2008 earnings, it expects to return about $340 million to owners during fiscal 2009.
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