One trader noted, however, that come June things may slow down a bit.
Indian demand remains firm, but appears to be slowing down.
Asian demand is already slowing down, just as Asian production returns to normal. Sources say this combination will
help ease the pressure to buy from the Arab Gulf.
Sources now peg the market at $365-$375/mt FOB.
Asia: Sources report the Mitco operations are now all back to 100 percent capacity. A major plant had been running at 70-80 percent capacity for the past few weeks.
Late last month some in the area were beginning to wonder if the plant would ever fully recover from an unscheduled maintenance shutdown.
At the same time, the joint venture Indonesian facilities are running well. Sources report their order books remain full.
Demand from many of the industrial buyers in South Korea and Taiwan now appears to be slacking off. Sources are unsure as to why demand is easing.
The first sign of the slowdown came late last month, when some buyers stopped asking for extra tons with each contract order. Now, taking the basic cargo under the terms of the contracts is the norm.
UREA
U.S.Gulf: Barge price erosion continued last week, with new FOB NOLA sales called $277-$284/st FOB. While there were rumors and reports of $270-$274/st FOB, those were either unconfirmed or represented upriver netbacks to NOLA.
Eastern Cornbelt: Granular urea pricing had reportedly dipped to $335-$345/st FOB regional terminals to the dealer, although sources said tight inventories in the Michigan market had propped up a $365/st FOB dealer price in that location.
Western Cornbelt: Granular urea continued to slide, with dealer pricing quoted in the $325-$335/st FOB range in the region, depending on location. One Iowa source pegged the dealer price at the $330/st FOB level in his trade area last week. Dealer reference pricing FOB Inola and Enid, Okla., reportedly dropped to $305-$310/st FOB.
California: Sources said urea demand will likely pick up in California due to some lost ammonia business in April. Granular urea pricing was unchanged at $375-$395/st FOB and $400-$410/st DEL in the state.
Pacific Northwest: Granular urea pricing was down slightly at $380-$390/st DEL in the region, with the warehouse market pegged at $375/st FOB to the dealer.
Western Canada: Granular urea was unchanged at $491-$516/mt DEL in Western Canada. Dealer reference values were pegged in the $500-$525/mt DEL range.
Pakistan: The global urea market is in such a slump that even the news that Pakistan will need to import 400,000 mt, doubling the original estimate, did not pull up prices or producers’ spirits.
The new estimate came after the government decided to cut natural gas supplies to urea producers by 20 percent.
Before the announcement, the government had authorized TCP to import 200,000 mt for the upcoming application season. Now, according to local media reports, TCP will need to import 400,000 mt.
The fertilizer industry in the country has struck back against the government action. Area media report some of the manufacturers are planning legal action against the government. The producers say the government has a contractual requirement to supply the companies with natural gas. The urea producers say the government cannot unilaterally change the terms of the contract.
The natural gas being taken from the urea producers is being diverted to electricity producers. The ministers involved in the decision decided that avoiding power outages in the country was more important than keeping the urea plants operating at 100 percent of capacity.
The urea producers argued that a cutback in natural gas for the proposed 90 days could lead to 263,000 mt of lost production.
The decision to divert the natural gas will be reviewed by the prime minister every two weeks, area media report.
Sources say no matter what happens, TCP will have to gear up to purchase and import the full 400,000 mt. Chances are TCP will call a tender by the end of this month. Sources say the most likely scenario is that TCP will take the lowest offer and immediately call another tender for the remaining tons. This process will continue until all 400,000 mt are purchased.
One observer noted that the full 400,000 mt might not have to be purchased by tender.
The government of Pakistan could once again approach Saudi Arabia for a development loan/aid package. The current package includes funds for TCP to import about 300,000 mt from Sabic by the end of June. Another aid package could be arranged to cover the tons lost due to reduced domestic production. So far, however, no one has word of any talks along these lines. The industry consensus is that TCP will tender for the whole 400,000 mt and take delivery over the next three-to-four months.
One trader noted that people are desperate for the market to move. He said he would not be surprised to see more than 1 million mt offered in the first TCP tender. This is assuming it comes before the Indian tender.
India: Industry observers say a tender could be called anytime between May 15 and June 15. The Indian urea reserves are said to be sufficient to get the application season started without a major problem. The issue now is the weather.
Sources report the rains that have appeared are coming late and are not strong enough to get the season really moving. Farmers are waiting for the monsoons to strike in earnest before they get serious about urea purchases.
In general, industry watchers expect to see an Indian tender announced either just as the IFA conference gets underway in Paris at the end of the month, or just as the delegates are heading home June 3.
Black Sea: The slide in the market was clear last week. Sources report one small lot – about 5,000 mt – sold at $232/mt FOB. By the end of the week, sources say even that amount looked expensive. The small purchase indicates the continued process of buyers taking only what they need.
Traders are reluctant to take a position with the market in an apparent free fall. Most of the talk of prices seems to be traders talking to each other and producers arguing for prices buyers are unwilling to accept.
With everyone agreeing that $232/mt FOB was done and that the trend is down for future purchases, sources peg the market at $230-$235/mt FOB.
Even the hope of large Indian purchases in the next 30-45 days and reports that Pakistan will need to import 400,000 mt in the next three months did nothing to perk up the market.
The Yuzhnyy producers will face stiff competition from their Chinese counterparts if rumors of India waiting until early June to call a tender come true.
The Pakistan business – even if Black Sea producers secured all 400,000 mt – would only provide a brief respite from the market doldrums.
Middle East: When a market is this quiet, one source said, strange things happen. This year the strange thing is prills selling at a premium to granular. This turnaround on conventional wisdom is largely because of all the new granular production that has come online in the past 18 months.
Egypt reportedly sold a granular cargo in the mid-$250s/mt FOB. The reported Egyptian price has a rollover effect on tons coming out of the Arab Gulf, because many of the contracts from that area are written on a formula basis.
For many in the industry, nailing down the price becomes more math than open deals.
Buyers in Thailand and the Philippines are rejecting $300/mt CFR offers.
Once freight and incidentals are removed, the new – if accepted – price hits the upper $250s/mt to mid-$260s/mt FOB.
The worst part for the producers is that they are moving a lot of cargo. It is mostly under contract and on a formula basis. Therefore, any sale reported in the industry press could greatly affect the price of each cargo.
Sources report there is a steady stream of vessels for Australia and the U.S. It’s just that each cargo seems to be getting cheaper than the previous one.
Granular urea is pegged at $255-$265/mt FOB. Prills are running at a premium at $265-$275/mt FOB.
Indonesia: The Pusri tender that closed a couple of weeks ago may end up being the last for a while. Sources say that export tender was the last authorized under a 2009 export permit.
Others in the industry, however, say we should expect to see another tender the end of this month.
Once June and July roll around, additional tenders from PIM and Kaltim might also pop up, if the government grants new export permits.
Sources report the government agencies are still looking at the numbers – first to make sure there are sufficient urea supplies for domestic use, and then to see how many tons might be made available for export.
Even if the government withholds the export permits, sources do not expect to see a strengthening in the market.
Any sales tenders after July 1 will have to compete against the lower-cost Chinese tons that will be available.
To the benefit of the Indonesian producers, however, is a strong bias for their product by many industrial users. These buyers are often willing to pay a small – emphasis on small – premium for Indonesian urea.
China: Sources report the domestic warehouses are rapidly filling with low-cost urea, and production is not easing off. At the same time, the bonded warehouses still hold a lot of expensive urea with no home.
Some holders of the bonded urea are just now agreeing to take a loss on their holdings as the price of Chinese urea now slides into the low $260s/mt FOB.
As the window closed on the lower export duty January 31, the price of the material heading into the bonded warehouses was $300-$310/mt FOB.
The local warehouses are filling up faster than expected because the weather has not been cooperating with the farmers.
Droughts in large portions of northern China are causing many farmers to delay application or even skip a crop rotation. Floods are playing a similar negative role in the south.
Urea plants are continuing to operate despite the lack of demand in the country, largely because to shut down – even temporarily – would cause unemployment problems that local and regional political leaders do not want to have to deal with.
The export duty on Chinese urea will drop to 7 percent July 1. Industry watchers expect to see a lot of Chinese urea offered in the Indian tender soon. Likewise, depending on the timing, Chinese material could play a role in the Pakistan tender.
Bangladesh: BCIC is expected to call a tender later this month. While the BCIC tenders are interesting to look at for a sense of how some traders view the market, the slow process of awarding winners in these tenders is frustrating to participants.
Sources say Bangladesh needs as much as 500,000 mt in the next four-to-five months.
NITROGEN SOLUTIONS
U.S. Gulf: The last done business was called $200-$205/st FOB ($6.25-$6.41/unit), with buyers still bidding sub-$200/st FOB.
Eastern Cornbelt: UAN was steady at $7.68-$8.13/unit FOB regional terminals to the dealer, with the low reported out of spot river locations in Illinois and Ohio.
Western Cornbelt: UAN-32 was quoted in the $245-$260/st ($7.66-$8.13/unit) range FOB regional terminals. An Iowa contact put the common dealer price at the $248/st ($7.75/unit) FOB level in his location.
California: The UAN-32 market continued to be quoted at $252-$253/st ($7.88-$7.91/unit) FOB Stockton on the low end. Agrium’s UAN-32 postings moved on April 19 to $268/st ($8.38/unit) FOB Sacramento, $290/st ($9.06/unit) truck-DEL in Central California, and $295/st ($9.22/unit) truck-DEL in Northern California.
Pacific Northwest: Sources tagged the UAN-32 market at $260-$270/st ($8.13-$8.44/unit) DEL in the region, down slightly from last report.
Western Canada: UAN-28 was steady at $294-$310/mt ($10.50-$11.07/unit) DEL, with the low in Manitoba and the upper end in Alberta. Dealer postings were reported in the $304-$320/mt ($11.43/unit) DEL range in the region.
AMMONIUM NITRATE
U.S. Gulf: The last done barge business continues to be called $250-$255/st FOB.
Western Cornbelt: Ammonium nitrate had reportedly firmed to $305-$325/st FOB in the region, where available, with the low reported in Missouri and the upper end in Iowa.
California: No market was reported for ammonium nitrate in California. CAN-17 was unchanged at $255-$275/st FOB in the state.
Pacific Northwest: Ammonium nitrate pricing remained at a nominal $348-$365/st rail-DEL in the region. CAN-17 was unchanged at $245-$250/st FOB and $260/st DEL.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate had reportedly
firmed to $250-$260/st FOB or rail-DEL in the region,
with reports of tight supplies.
Western Cornbelt: Granular ammonium sulfate was reported in the $248-$260/st FOB range, and in tight supply. An Iowa source quoted the market firmly at the $250/st FOB level in his trade area.
California: Ammonium sulfate pricing remained at $220-$247/st FOB in California, depending on grade and location, with the low for standard and the upper end for granular in desert locations.
Pacific Northwest: Granular ammonium sulfate was steady at $240-$245/st DEL in the Pacific Northwest.
Western Canada: An increase in canola acres has reportedly put pressure on ammonium sulfate supplies in Western Canada, with several sources reporting very limited availability in the region. “We’ve been buying every ton we can get our hands on and we still don’t have enough,” said one.
The dealer market for granular ammonium sulfate was pegged at $325-$330/mt DEL, with dealer postings roughly $10/mt higher.
PHOSPHATES
Central Florida: Although the spring season was winding down last week, some prompt new phosphate sales were being made from Central Florida last week. Prices for DAP were holding steady, while the price differential for MAP was more variable, between $10/st FOB and $15/st FOB. Although some new railcar sales were done, most of the business was done for trucks, which was not surprising considering the time of year. Sources said shipments were mainly to nearby locations and into Canada.
Few dealers, if any, want to have inventory at the end of the season out of fear prices will deteriorate before stocking up for the fall season begins, but there were no signs that will occur. Producers already have a strong book of export DAP business, which will keep them busy and their inventories low for the next few months. A sulfur shortage has also helped keep inventories in check by limiting production – at least somewhat – and was believed to be around 85 percent of capacity. Production in March was 1.087 million st.
The Central Florida DAP price range last week was unchanged from the previous week at $410-$415/st FOB. Mosaic’s posted price was $415/st FOB, but national accounts could purchase product for about $5/st FOB less, while CF’s price was $410/st. PCS Sales was charging market-based prices. Prices from Agrifos were $440/st FOB for DAP and $450/st FOB for MAP, but railcars were about $5/st FOB less, if available.
U.S.Gulf: Asking prices for NOLA DAP and MAP barges were showing significant differences between barges to be loaded at New Orleans and those already on the river and near buyers. However, actual sales were limited to those near their final destinations.
Activity from terminals was also showing wide differences, because some areas farther north were still in the planting phase. Prices at warehouses were running from $445/st FOB to $455/st FOB. Warehouses were still busy along the Arkansas River and probably will be for another week or so, and the same was true in the Dakotas and Nebraska, where corn planting was still underway.
At the end of the spring season everyone’s goal was to have a clear view of the bottom of their bins, and most will not start restocking until July and August. Many of the large, national buyers were looking to pay a price of $375-$380/st FOB in the summer, but that was not likely to actually happen, said some. Phosphate producers have a large book of export business, and the loadings, especially for the biggest customer – India – will not lower domestic prices, because inventories can easily be controlled.
Fertilizer sales will continue for soybeans and rice and, somewhat surprisingly, for pastureland, which used very little during the past few years. However, phosphates will not be their primary choice.
Sellers were asking as low as $410/st FOB for barges to be loaded at New Orleans, while those with barges in upriver locations had asking prices as high as $428/st FOB. The NOLA prices were based on the purchase price minus the transportation cost from New Orleans. However, no new transactions at either end of the asking range were actually found this week – only sought. Actual sales were done for barges close to their buyers at $417-$420/st FOB.
Based on those actual sales, the NOLA DAP barge price range last week was $417-$420/st FOB NOLA, compared to $410-$428/st FOB the previous week. This week the price will likely continue to stabilize and trading may be limited to barges in place, especially in the upriver area, but prices are not likely to rise much – if at all – due to the desire to have empty bins at the end of the season.
Eastern Cornbelt: DAP remained at $450-$470/st FOB, with the low out of river locations in Illinois and the upper end at inland warehouses in Ohio. MAP was $10-$15/st higher than DAP. 10-34-0 was steady at $340-$360/st FOB, with the low in Illinois.
Western Cornbelt: DAP remained at $450-$460/st FOB regional warehouses, with MAP $10-$15/st higher. 10-34-0 remained at $335-$355/st FOB in the region, with the low in Nebraska and the higher numbers in Iowa.
California: Phosphoric acid pricing was steady at $8.45/unit DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA). Simplot was also referencing MGA at $8.65/unit FOB in the state.
DAP and MAP remained at $490-$495/st FOB or DEL in California. 16-20-0 was quoted at 324-$331/st FOB, and 10-34-0 was steady at $378-$390/st FOB in the state.
Pacific Northwest: SPA and MGA pricing remained at $8.45/st DEL in the region. DAP and MAP were unchanged as well, at $485-$490/st FOB or DEL, with 16-20-0 quoted at $319-$325/st DEL in the region.
10-34-0 was pegged at $365-$385/st FOB in the region, with the low end reflecting a $10/st drop from last report. Sources talked of tight 10-34-0 supplies on a spot basis in the region last week.
Western Canada: MAP was unchanged at $582-$617/mt DEL to the dealer, with the low in Manitoba and Saskatchewan and the upper end in Alberta and British Columbia. Dealer reference levels remained in the $590-$625/mt DEL range, depending on location.
10-34-0 was steady at $470-$483/mt DEL in the region.
U.S. Export: No new DAP or MAP export deals were found last week, although export shipments were likely to keep producer inventories low for the next several months, especially those to India.
India was said to be seeking shipment of the DAP it has already ordered for a number of sources, including PhosChem, to be shipped as soon as possible. In May and June, PhosChem expects to ship six or seven panamax-sized vessels to India, rather than the 11 in May, as reported earlier.
The export DAP price range last week was unchanged from the previous week at $472-$473/mt FOB.
POTASH
Eastern Cornbelt: Potash was generally reported in the $395-$405/st range FOB regional warehouses, depending on grade and location. Agrium said in a conference call last week that it, like PotashCorp, had achieved half of a scheduled $30/st potash pricing increase, putting the granular potash market from producers at the $405/st FOB level.
Western Cornbelt: Potash was pegged at $395-$415/st FOB regional warehouses, depending on location.
California: Potash continued to be quoted at $440-$460/st DEL in California, depending on grade. Potassium nitrate was unchanged at $929-$996/st FOB, with the low for bulk tons and the upper end for bagged product. Sulfate of potash (SOP) was quoted at $635-$650/st FOB for bulk tons.
Pacific Northwest: Potash was steady at $440-$450/st
FOB regional warehouses, with delivered tons quoted at the
$448-$455/st range, depending on grade and location.
Western Canada: Potash to Canadian customers FOB Saskatchewan mines was steady at $423-$432/mt FOB, depending on grade and supplier. Out of warehouse locations in the region, the market was tagged in the $438-$463/mt FOB range, depending on grade and location.
SULFUR
Tampa: After finishing the difficult task of negotiating with the phosphate industry for new second-quarter Tampa sulfur molten prices, the sulfur industry returned to quiet last week.
Meanwhile, world sulfur prices began to sag a bit, because China has pulled out of the market for the next few months. However, that may not make much difference for the following quarter, when China was expected to return to its buying mode.
The disastrous oil spill in the Gulf of Mexico at a well being drilled for BP continued to gush oil, and was still on the move toward estuaries on the coast of Louisiana, Mississippi, Alabama, and Florida. The weather was overcoming efforts to contain the oil. The sulfur industry’s deliveries to Tampa were not being affected, but preparations were being put into place just in case the oil moves toward the central west coast of Florida. If that happens, the vessels would be cleaned at wash stations. However, a more likely scenario would be an oil slick slowing shipping from Texas. Some refineries along the coast were said to be preparing to reduce production of fuel and sulfur, just in case their shipments of crude cannot reach them.
The supply/demand situation was said to have improved somewhat, as some phosphate producers were planning turnarounds. Phosphate producers in Florida would like to be able to build inventories of molten prior to the beginning of the hurricane season next month, but that may not be possible.
Martin loaded another vessel at Beaumont, but its inventories of prill were still in excellent condition.
Correction: In the May 3 issue of Green Markets, it was reported that Martin had loaded a 40,000 mt sulfur vessel, and that its inventory of prill sulfur was at a historical low. It has since been learned the vessel was significantly smaller and the inventory of prill at that facility was not at a historical low.
Vancouver: Spot prices at Vancouver were said to be down somewhat as a result of China’s lack of participation in the market, and were still in the $120-$125/mt FOB range.
