All Posts from March 1, 2010

A sale to Morocco from Sabic at $400/mt CFR nets back to $370-$375/mt FOB. Ammonia players east of the Suez are agreeing that the price range is now $365-$375/mt FOB. Others say, however, that the train has long since left that station. The new pricing idea by Friday morning was closer to $380/mt FOB.

Asian sources closed out Thursday saying $365-$370/mt is the price buyers would like to have. However, the rapid movement of the price now indicates no deals are available at that low level.

One of the arguments for higher prices is increased demand for ammonia by phosphate producers. Because of the current high price of DAP in the international market, many places that would ordinarily import DAP are now making their own for less.

Producers are opening their offers at $400/mt FOB. By the end of this week, even that level might begin to look good to buyers.

Producers in the Gulf are operating at full capacity. Even with the plants turning out as much as possible, the producers are rejecting requests from contract buyers for a few additional tons with each shipment.

Asia: The fertilizer demand for ammonia in the area is waning. The driving force remains the industrial buyers. Sources report that buyers are constantly asking for extra tons with each cargo. Producers politely send their regrets.

The joint venture operations in Indonesia continue to churn out material. The Japanese co-owners, Mitsui and Mitsubishi, have indicated they have no plans to shut down their plants for routine maintenance.

UREA

U.S. Gulf: The latest granular trades were called $315-$317/st FOB. Cold, wet weather was keeping a lid on demand, particularly in Texas, where movement is normal this time of year.

Eastern Cornbelt: Granular urea pricing was quoted at
$350-$360/st FOB in the region. There were reports of lower
numbers available out of spot Mississippi River locations,
but no levels were confirmed.

Western Cornbelt: The granular urea market was pegged at $345-$355/st FOB in the region, with the low out of spot Mississippi River terminals in late February. One Missouri source quoted the dealer market at the $355/st FOB level in his trade area, but said no sales were being made at that level.

Southern Plains: Granular urea was quoted at $335-$340/st
FOB, down some $5-$10/st from last report. Sources reported dealer postings last week at $335/st FOB Inola, Okla., and
$340/st FOB Enid, Okla.

South Central: Granular urea pricing was down slightly from last report. Sources tagged the dealer market at $345-$348/st FOB regional terminals, with the low on the Mississippi River and the upper number out of spot Arkansas River locations. One supplier said he expected to drop the price to the $340/st FOB level by the end of the week.

Southeast: The granular urea market was down slightly at $350-$360/st FOB port terminals to the dealer, depending on location. The low end was quoted out of Norfolk, Va. Sources also reported postings from some suppliers as high as $380/st FOB coastal locations in late February, with no business to test that level.

Black Sea: The price keeps sliding. Sources report $270/mt FOB was done. Producers reportedly are now counter offering at that level as buyers look for the floor.

Some Asian traders say the Yuzhnyy market is just about at its nadir.

The reason for the dramatic slide in prices is placed largely at the Indian doorstep. Indian buyers are the only remaining single time, big-volume buyers. The longer the Indians wait to call a urea tender, the more nervous the urea producers become.

The freight market is also not helping producers.

The buyers who remain in the market – and those coming in soon – are all requiring offers for delivered tons. Sources report the freight market is strengthening. Any increase in shipping, said one source, will require a subsequent product price decrease if the buyers hold to their pricing ideas.

For now, sources peg the market at $265-$270/mt FOB. Sources add that unless India steps in with big purchases soon, the price could drop further.

The last time the price was below $260/mt FOB was the first week of December 2009. At that point, the price was coming off an eight-month average of $237/mt FOB.

For comparison, the price was edging upward in January. The average price so far this year was $283/mt FOB. Last week’s decline drops that average to $281/mt FOB.

Sources say the price should keep falling until a clear buying indication comes from India.

Middle East: Most producers remain comfortable with long-term sales, but that has not stopped the spot price from falling.

Sources now peg the granular market at $310-$315/mt FOB, with talk of $300-$310/mt FOB. The prilled market is marked $10/mt less.

The latest indication of price softening comes from a reported deal by Helm for a cargo of Iranian granular with an estimated netback of $305-$310/mt FOB.

Sabic remains the most comfortable of the producers in the area. One source said the company is fully booked through July.

Much of Sabic’s success in having a full order book into the second semester is because of the government-to-government deal between Pakistan and Saudi Arabia. Under the aid assistance package from the Saudis, Pakistan will receive about 300,000 mt of Sabic urea.

Contracts with American and Australian buyers provide another large portion of sales.

Finally, contracts and long-term arrangements with traders round out the sales. Most of these tons are bound for Asian buyers.

Many producers in the area report full order books for March as well.

One source noted, however, that a lot of the business is paying off swaps from the last two to three months.

If the price continues to drop below $300/mt FOB and moves to the $270/mt FOB neighborhood, observers say Middle East tons could become competitive in any upcoming Indian tender.

Indonesia: The only bright spot for urea pricing came when Pusri closed its selling tender Feb. 24. About 15 companies bid for four lots of 5,000 mt of prilled urea.

The top four companies settled at the Keytrade price of $331/mt FOB for one lot of 5,000 mt each. This tender marks an increase in the selling price from the last done deal of $316/mt FOB.

Initially, sources said this would be the last Pusri tender until after June 1. In just a matter of 24 hours, however, others in the industry remained convinced that another tender might be called for April or May.

The determining factor will be how the government planners see the domestic urea situation. The government wants to make sure all domestic demand is covered before it will issue any export permits.

There is talk in the area that once PIM gets its plant backup and running, it will apply permits to export its granular output. PIM has apparently solved its problems getting enough natural gas to run its facility. Now it faces quality issues with its granular production.

Sources say the size of the granules has been an issue in the past few weeks.

India: Indian buyers have slid over to the driver’s seat. Industry watchers are still expecting to see a buying tender later this month.

The fact that no tender appeared in February is credited for lowering the prices in Yuzhnyy and the Middle East.

Eventually India will have to buy at least 300,000 mt. The trick, said one trader, is to come in just as the price hits its lowest mark and before all the traders start snapping up cheap tons.

How much urea India will buy could be determined by how well the new subsidy program is implemented.

Under the new system, subsidies will be issued based on nutrient content. The idea is to encourage farmers to buy just enough N, P, or K for their crops and soil conditions.

If the plan works, farmers might find it cheaper and easier to buy a product other than urea for their nitrogen needs. If urea purchases are reduced, said one trader, the import needs will also change.

NITROGEN SOLUTIONS

U.S.Gulf: Recent barge trades were put in the $210-$215/st FOB ($6.56-$6.72/unit) range for prompt, with late March called $220/st FOB.

The word on the street was that Helm was loading tonnage from the Trinidad AUM plant, but that the plant may still not be at full capacity. Initial cargoes were reported to be going to Europe and/or the U.S. West Coast.

Eastern Cornbelt: UAN-32 was pegged in the $248-$260/st ($7.75-$8.13/unit) range FOB regional terminals, with the lower numbers quoted out of spot river locations for prompt tons.

Western Cornbelt: The UAN-32 market was quoted at $245-$260/st ($7.66-$8.13/unit) FOB regional terminals. One Iowa source confirmed new sales to the dealer at $8.00/unit FOB in late February.

Southern Plains: The UAN-32 market was tagged at $230-$245/st ($7.19-$7.66/unit) FOB regional terminals, with the low out of regional production points and the upper end reflecting the dealer market at inland tanks. Some offers were on the table at higher prices for forward tons, with one source quoting $255/st ($7.97/unit) FOB for second quarter shipments.

South Central: UAN-32 out of regional terminals had reportedly firmed to the $225-$245/st ($7.03-$7.66/unit) FOB range in late February.

Southeast: Sources pegged the inland terminal market for UAN-32 at $220-$230/st ($6.88-$7.17/unit) FOB. Reference pricing for UAN-30 out of coastal terminals was quoted as high as $215-$220/st ($7.17-$7.33/unit) FOB, but sources acknowledged that cheaper tons were available, with some quoting spot tons as low as $6.56-$6.72/unit FOB for February shipments.

The vessel market was tagged in the $240-$250/mt CFR range, with replacement tons indicated in the $250-$260/mt CFR range at mid-month.

AMMONIUM NITRATE

U.S. Gulf: Recent barge sales continue to be pegged at $250/st FOB.

Western Cornbelt: Ammonium nitrate was steady at $285-$290/st FOB, with the upper end quoted in Iowa and the low in Missouri to the dealer.

Southern Plains: The ammonium nitrate market was tagged at $275-$280/st FOB the port of Catoosa, Okla., with sources talking of near-term movement on grass. Those numbers were up $10-$15/st from last report.

South Central: Ammonium nitrate was quoted at $265- $280/st FOB, with the low out of regional production points. Terminals were generally quoted in the $275-$280/st FOB range to the dealer.

Southeast: The Tampa ammonium nitrate market remained at $280-$290/st FOB.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate remained at $230-$235/st FOB or DEL in the region.

Western Cornbelt: Granular ammonium sulfate was tagged at $220-$235/st FOB in the region, depending on location, with the low reported in Missouri and the upper end in Iowa.

Southern Plains: Granular ammonium sulfate was unchanged at $195-$235/st FOB Texas shipping points, with the low at Freeport.

South Central: Granular ammonium sulfate was pegged at $200-$210/st FOB and $215-$230/st DEL in the region last week. One source said he expects the market to firm to reflect true replacement costs once product begins moving on rice later this spring. “It’s a product that is always tight when the demand gets there,” he said.

Southeast: Granular ammonium sulfate was reported at $195-$200/st FOB, with the low at Hopewell, Va., and the upper end FOB Augusta, Ga. Delivered granular sulfate was quoted at $215/st in Florida, with standard grade referenced at $184/st DEL in the Florida market.

PHOSPHATES

Central Florida: With the really cold and wet weather across most of the country, only a few railcars were sold on a prompt basis last week, and truck deals were far more common.

Although the weather in Florida this winter has been much colder than normal, it was far better and warmer than the rest of the country. Not far away, in Georgia, the temperature had risen, but fields were too muddy for preparation or planting crops. As a result, both traders and producers saw an uptick of truck sales of DAP for local consumption.

Meanwhile, market areas served by rail from Central Florida were preparing for another round of cold, snow, and ice, and will probably remain out of the picture until sometime in mid-to-late March before farmers will be able to begin preparing fields – but it could take even longer.

Phosphate producers last week agreed to new, higher prices for ammonia, which will rise from $365/mt DEL to $450/mt DEL. At the same time, the price of molten sulfur delivered to Tampa was $90/lt DEL, but that price, too, will likely take a big bounce upward when the negotiations for the next quarter are completed, say sources. Sulfur in this country and the rest of the world has been in extremely short supply, and phosphate producers will have little choice if they want to get their share.

The U.S. markets remained at a discount to the export market last week, but customers here were still complaining the price was going up too fast and was too high. However, with raw materials on the rise and competition from the export market, the grumbling will probably do little good.

The Central Florida DAP price range last week increased from $395-$400/st FOB the previous week to $400-$405/st FOB. Small buyers will likely pay a higher price. Truck sales of DAP were done at $410/st FOB. Mosaic increased its posted price from $400/st FOB to $410/st FOB, while CF’s price was $405/st FOB. PCS Sales was charging market-based prices. Prices from Agrifos were $450/st FOB for DAP and $460/st FOB for MAP, but railcars were about $5/st FOB less, if available.

U.S.Gulf: It appeared less than 10 NOLA DAP barges were traded on the river system last week, and all apparently were for set aside for export deals. Dealers have been filling their bins during the past couple of months and terminals were stuffed with product for when their customers run low, so not much was moving for the domestic market. The weather has been bad enough to make a snowman shiver, and more of the nasty stuff was headed toward the Midwest last week – and that won’t help business.

Prices for NOLA DAP barges began to rise two weeks ago, when CF sold a chunk to Transammonia for an export deal and then sought to replace the product on the river. Considering it made more on the export price than the cost of replacement on the river, it was a good deal for CF.

Last week a couple of other major players were also putting together export deals and were seeking barges to complete their potential commitments. All of that competition helped to continue to push up the price.

However, unless that situation persists this week, prices may stagnate for a time until the weather improves enough for farmers to get into their fields and put fertilizer down for the spring. Considering the strange weather patterns last year and this due to the El Nino effect, that situation could drag on well into what is normally the spring season, as it did the previous year. If so, the only pressure on prices will come from the export market, which has remained robust.

Prices for corn, soybeans, and wheat were all down last week, but still good enough that the higher cost of fertilizer will probably not present a major problem for farmers this year. The biggest push for corn will be for greater ethanol production.

Based on transactions last week, the NOLA DAP barge price rose to $421-$424/st FOB, compared to the previous week’s range of $412-$421/st FOB. However, most sellers were seeking prices above that range by late last week.

Eastern Cornbelt: The DAP market was pegged at $445-$450/st FOB regional warehouses, with MAP at a $10-$15/st premium. One dealer said he booked some DAP prepay at the $464/st DEL level for April delivery. The 10-34-0 market remained at $355-$365/st FOB in the region.

Western Cornbelt: DAP remained at $440-$450/st FOB regional warehouses, with MAP $10-$15/st higher. One Missouri supplier tagged the dealer market in his area at $445/st FOB for DAP and $460/st FOB for MAP. 10-34-0 was unchanged at $345-$355/st FOB in the region.

Southern Plains: DAP pricing had reportedly firmed to $440-$450/st FOB the Tulsa market, with the upper end reflecting new postings from some suppliers. MAP was $15/st higher than DAP, and 10-34-0 was pegged at $335/st FOB out of most tanks in the region.

South Central: DAP out of regional warehouses was pegged in the $430-$440/st FOB range last week, with the low end of the range out of lower Mississippi River terminals. One source pegged the market firmly at the $435/st FOB level out of Arkansas River locations last week. MAP was $10-$15/st higher than DAP. The TSP market was quoted at $385-$390/st FOB warehouses to the dealer.

U.S. Export: PhosChem made export sales last week, which helped keep that market as the primary target for the industry. The sales were to Australia, 25,000 mt at $500/mt FOB, and to Venezuela, 20,000 mt at $510/mt FOB. A source said PhosChem might have also made a sale of about 8,000 mt into Central America at about $500/mt FOB.

Agrifos was also preparing for sales into Latin America and was expecting to load two small vessels relatively soon.

Ameropa was also believed to be preparing to make a sale into Mexico in the very near future.

Argentina and Brazil were considered likely markets for U.S. phosphates, but Brazil was said to still be in full party mode last week. That should change sometime this week or next.

The export DAP price range last week was $500-$510/mt FOB, compared to the previous week’s range of $505-$510/mt FOB. The prospect was for higher prices in the near future, although at a slower pace.

India: RCF has issued a DAP/MAP tender for 2 x 15-18,000 mt closing March 3. Shipment of the first parcel is set for March, with the second optional shipment set for May.

RCF has issued a phosphate rock tender for 120,000 mt of 29 percent minimum P205 for shipment March-June 2010, to be supplied in lots of 18-20,000 mt or 30-40,000 mt. The tender closes March 2, and offers are to remain valid for 30 days from the opening date.

Indian phos acid buyers have agreed to a price of US$690/mt CFR, including 30 days credit, with OCP for shipment February 2010. This is an increase of $80/mt over January 2010 pricing.

POTASH

Eastern Cornbelt: Several dealers reported taking delivery on potash tons booked in January. Out of regional warehouses last week, the potash market was quoted in the $390-$405/st FOB range from resellers, with producer postings tagged at $420/st FOB and $430/st DEL in the region.

Western Cornbelt: Potash was pegged at $390-$405/st FOB regional warehouses on the secondary market, reflecting a slight drop from last report. Sources reported no new sales to test the market, but all agreed that producer postings of $420/st FOB and $430/st DEL had not yet been realized in the region.

Southern Plains: Potash remained at the $390-$400/st level FOB regional warehouses from resellers. The market FOB Carlsbad, N.M., was steady at $360-$368/st, depending on grade.

Effective March 1, postings from Intrepid Potash FOB Carlsbad will firm to $385/st for 60 percent standard, $390/st for 60 percent granular, $392/st for 62 percent standard, $395/st for 62 percent fine standard, and $398/st for 62 percent granular. The company’s postings FOB Moab and Wendover, Utah, will firm on that date to $385/st for 60 percent standard and $390/st for 60 percent granular.

South Central: The potash market remained at $390/st FOB regional warehouses on the low end, but producer postings were at higher levels. Agrium’s rail-delivered red premium potash postings included $440/st in Kentucky and Tennessee. One source reported imported potash at the $375/st level FOB the Gulf.

Southeast: Delivered potash was quoted in the $432-$440/st range in the region, but sources said almost everyone booked tons in January at cheaper prices, so the market was generally untested.

India: Fresh off a deal to buy product from Canpotex at $370/mt, reports are that Indian buyers need additional product. Reportedly, ICL offered some 600,000 mt to Indian buyers at the same price. However, sources say India, with its considerable needs, may argue that it should have the same or better price as China – $350/mt CFR, per China’s deal with BPC.

SULFUR

Tampa: Refinery production was on the upswing last week – from about 79 percent of capacity to about 81 percent – but that will hardly be enough to ease the tight sulfur situation. Sulfur remained in extremely short supply, and that will continue for the next couple of months, at least. Even with more refineries expected to complete turnarounds in the near future, the problem of short supply will remain.

The economy remained the underlying cause of the problem. Unemployment was still around 10 percent, plus many more people who have simply given up looking for work and were off the rolls, and those people don’t have to – or can’t – drive as much as when they were employed.

However, other sectors of the economy were showing signs of improvement, and that has resulted in a greater demand of sulfur from the industrial sector, which has added to the strain.

The only real transportation problem last week was the loss of Martin’s Margaret Sue, which was undergoing repairs. Apparently, the locking mechanism with the tug, the Martin Explorer, was damaged by sudden high seas in the Gulf while the two were attempting to disengage in order to switch from pushing to towing. Both vessels were damaged, but should be back in service sometime this week. The loss of the barge took about 20,000 lt of molten sulfur out of the system at Tampa.

The cold weather has meant an increase in the use of heating oil production, which results in less sulfur as a byproduct than gasoline, and refineries were primarily using sweet crude, which contains less sulfur.

Depending on how generous phosphate producers will be when new second quarter sulfur prices are reached, more sulfur could go to prill units along the Gulf Coast. Brazil will be the biggest customer.

West Coast: Prillers on the West Coast sell at a discount to Vancouver and were believed to be getting contract prices of around $70-$80/mt FOB, while spot deals were in the $125-$150/mt FOB range.

Vancouver: Tet, the Chinese New Year (Year of the Tiger), was underway last week, and the sulfur business slowed. Most believe China will return to the market after the holiday; if so, the world market will resume its upward march. If not, prices could sag. As of last week, contract prices for Vancouver were in the $80-$100/mt FOB range, and spot deals were running $150-$160/mt FOB. India recently did a sulfur supply deal with a Middle Eastern company for a delivered price of about $200/mt.

MARKET NOTES

India: According to the Indian Economic Survey 2009-10, faced with a shortage of raw materials, Indian fertilizer companies are now looking for partners to set up plants in gas-rich countries abroad. “Indian entities are in dialogue for joint venture in the field of phosphatic and potassic fertilisers in countries such as Jordan, Morocco, Tunisia, Australia, Syria, and Canada,” said the survey.

There is no domestic production of MOP – its requirement is met fully by imports. About 85 per cent of raw materials for DAP and complexes are also being imported, the survey said.

India is estimated to produce 21.24 million mt of urea in 2009-10 – 4.3 million mt of DAP and 7.92 million mt of complex fertilizers, against 19.92 million mt of urea, 2.99 million mt of DAP, and 6.85 million mt complex fertilizers in 2008-09. The country is estimated to import 4.49 million mt urea, 5.56 million mt of DAP, and 4.23 million mt of MOP.