All Posts from May 11, 2015

Sulfur

Market Watch, Sulfur, Tampa, U.S. Gulf, U.S. Imports, Vancouver, West Coast

Tampa: The second-quarter price of molten sulfur delivered to Tampa was $132/lt.

A proposed multibillion-dollar expansion at Exxon Mobile Corp’s Beaumont, Texas, refinery would make the facility the fourth-largest in the world, according to reports.

Early projections by the company revealed plans to double the facility’s current 344,600 barrel/d capacity by the end of the decade. Exxon’s revamped strategy, however, would grow capacity to a reported 850,000 barrel/d output by 2020, making it the largest refinery in the U.S.

U.S. refinery utilization increased last week, according to the U.S. Energy Information Administration. Capacity was logged at 93.0 percent for the week ending May 1, a 1.7 percent increase from the previous week’s 91.3 percent.

A number of refineries have made efforts to exit seasonal turnarounds earlier than in previous years, sources said, in order to take advantage of historically low oil prices. The week’s utilization rate was higher than last year’s 90.2 percent and the 87.7 percent five-year average.

Average daily crude inputs grew to 16.347 million barrels/d, a 247,000 barrel/d increase from the last reported 16.100 million barrels/d rate.

U.S. Gulf: Sources called the Gulf market unchanged at $130-$135/mt FOB.

U.S. Imports: March imports were up 15 percent, to 130,655 st from the year-ago 113,269 st. July-March imports were off 19 percent, to 1.28 million st from 1.57 million st.

Vancouver: The Vancouver sulfur market firmed last week. Citing renewed strength in the Chinese spot market along with steady demand from Latin America and Australia, sources called the price $145-$155/mt FOB, up from the previous week’s $135-$155/mt FOB.

Loading at Alberta refiner Syncrude 21 remain subdued last week, observers said. In addition to a planned 45-day turnaround now expected to last closer to 60 days, the refinery continued to battle with off-spec hydrogen sulfide in its finished product. “I understand there are a tremendous amount of empty rail cars sitting and parked in storage, waiting for production to come online,” said one observer.

Alberta sulfur was called (-)$10-$85/mt, unchanged from the previous week.

West Coast: West Coast prills were quoted at $130-$140/mt FOB, unchanged from the week before.

The price of California molten sulfur was $90-$130/lt FOB for the second quarter.

ADNOC: ADNOC announced a rollover in the price of Abu Dhabi sulfur. May offerings were listed at $140/mt FOB.

Aramco: The May price of Saudi Aramco sulfur was $140/mt FOB, $25/mt below the April price of $165/mt FOB.

Tasweeq: Qatar-produced sulfur was $139/mt FOB for May.

CF reports lower 1Q N sales, but remains upbeat for 89-90 M acres of corn

Featured, News

CF Industries Holdings Inc. reported first-quarter net income of $230.6 million ($4.79 per diluted share) on net sales of $953.6 million. Overall, CF reported a three percent year-over-year decrease in revenues from the sales of nitrogen products during the quarter, primarily driven by a decrease in overall sales volumes. Nitrogen sales volumes were 2.91 million st, down from the year-ago 3.02 million st.

While year-ago net income was much higher at $708.5 million ($12.90 per share) on sales of $1.13 billion, it included $461 million, or $8.39 per EPS, for the after-tax gain on the sale of the phosphate business. First-quarter 2015 gross margins were $415.8 million, compared to the year-ago $442.8 million (prior to the addition of the phosphate sale).

Going forward, CF remains upbeat that the U.S. will achieve 89-90 million of corn acreage, and it also cites a growing industrial market. It said its new Donaldsonville urea plant is on track to be up in the third quarter, and the UAN plant in the fourth.

CF said it expects a strong second-quarter performance relative to overall market conditions. It reports a robust set of orders for second-quarter ammonia, though it said first-half 2015 ammonia volumes will likely be slightly lower than the record first-half 2014’s due to lower inventories on hand at the start of 2015.

CF said those lower ammonia inventories at the start of the quarter spelled higher prices. While sales volumes were down at 531,000 st, average prices were up at $542/st compared to the year-ago 577,000 st and $472/st, respectively. Gross margins per ton were $226/st, up from $215/st. Overall, ammonia gross margins were $119.9 million on sales of $287.7 million, compared to the year-ago $124.3 million and $272.4 million, respectively.

CF said its first-quarter average cost of natural gas was $3.48/mmBtu, down from the year-ago $4.34/mmBtu. It said it has booked 20 percent of its April-December gas within a collar of $2.30-$3.20/mmBtu, and another 30 percent at an average strike price of $2.86/mmBtu. It has hedged 15 percent of its January-October 2016 gas at an average strike price of $3.04/mmBtu.

CF reported granular urea gross margins of $112.1 million on sales of $212.2 million, up from the year-ago $101.7 million and $216.2 million, respectively. CF volumes were 616,000 st with an average price of $344/st, compared to the year-ago 578,000 st and $374/st, respectively, with CF citing Chinese exports as pressuring pricing. CF noted that 2015 urea imports are some 32 percent above the five-year average through March. However, CF’s own margins per ton were up at $182/st from $176/st.

CF said a high level of UAN imports and low urea prices are expected to pressure UAN prices. First-quarter UAN gross margins were $158.7 million on sales of $355.7 million, down from the year-ago $182.1 million and $400 million st, respectively. Sales volumes were 1.32 million st, down from 1.45 million st, while average prices were $270/st, down from $276/st. Gross margins per ton were $121/st, down from $125/st.

CF’s Other segment, which contains ammonium nitrate, diesel exhaust fluid (DEF), and urea liquor, reported a gross margin of $25.1 million on sales of $98 million, down from $26.2 million and $99 million, respectively. Sales volumes were up at 448,000 st from 412,000 st, while average prices were down at $219/st from $240/st. Gross margins per ton were $56/st, down from $64/st.

CF’s board of directors has declared a quarterly dividend of $1.50 per common share.

BioNitrogen concentrating on two Florida projects; Pennsylvania not so much

News

BioNitrogen Holdings Inc., West Palm Beach, Fla., the junior company that wants to turn biomass into urea, said last week that it will continue to focus on building its first two plants in Florida, though it has not completely given up on a similar plant in Reading, Penn.

The Reading plant was proposed for a 50-acre site owned by the Reading Redevelopment Authority (RRA). However, RRA officials told the local LeHigh Valley Business that the $330 million project was shelved as BioNitrogen did not supply financial statements during the due diligence period. The RRA was seeking $5 million for the site, and says there are at least three other companies interested in the site in the Riverview Industrial Park.

BioNitrogen told Green Markets that the Pennsylvania deal was not “off,” but that it was instead concentrating its plans on two previously proposed plants in Taylor and Hendry County in Florida.

In a May 5 letter to shareholders, BioNitrogen Chairman and CEO Carlos Contreras reiterated that the plans for the construction of the Taylor County plant are proceeding well. “There is a significant level of engineering activity that is happening ‘behind the scenes’ that we are not at liberty to disclose. However, I can tell you that the Construction Air Permit application was submitted to the Florida Department of Environmental Protection on April 24th.” He also said that the Biomass Feasibility Study was completed and released, confirming the assessment that the supply of woody biomass in the Taylor County area is sufficient to meet BioNitrogen’s needs. He said those are two critical pieces of the project plan that had to be completed to allow for the continued progress towards completion of the engineering and EPC contracts.

Contreras said the engineering process related to Taylor County also applies to the Hendry County plant. “We have made significant progress in the permitting process, site analysis and site plan preparation,” he added. “The plans and evaluations for plant construction at Hendry County remain unchanged and have confirmed our expectations for the viability of the project.”

The Taylor County plant is in Perry, the Hendry in Clewiston.

Contreras said the company is diligently working at finalizing its audited financial statements, preparing all the required documentation for the up-listing from Pink Sheets to becoming a fully reporting entity. The company had a 52-week low of $0.01 per share on May 1, and has since bounced back to $0.02. The 52-week high is $0.08 per share.

While not mentioned in a while, BioNitrogen has also eyed Louisiana as a possible site for biomass-to-urea plants (GM March 17, 2014).

LSB Chem volumes up, income down

News, News Briefs

Oklahoma City, Okla. — LSB Industries Inc.’s Chemical unit reported first-quarter operating income of $16.7 million on sales of $126.8 million, compared to the year-ago $28.8 million and $115.2 million, respectively. “Chemical sales grew more than 10 percent compared to the 2014 first quarter, driven by greater on-stream rates at our facilities, particularly at our Pryor facility, where the reliability initiatives we’ve been implementing over the past 18 months are increasingly translating into more consistent production levels,” said Barry Golsen, LSB president and CEO. He said the unit benefited from higher selling prices and lower natural gas costs. However, the company did have a $4 million operating loss at its El Dorado, Ark., facility which still buys ammonia as its primary feedstock. Profits are expected to return to the plant once a new ammonia plant is up and running in first-quarter 2016. On the Ag side of the Chemical business, volumes sold were up 13 percent, to 214,925 st from the year-ago 190,533 st. UAN sales were up 40 percent to 116,922 st on lower prices averaging $251/st, compared to the year-ago 83,516 st and $261/st, respectively. Ammonia sales more than doubled, to 30,766 st at an average price of $513/st from the year-ago 15,057 st and $419/st, respectively. Ammonium nitrate sales were off 26 percent to 63,831 st from 86,403 st, though prices were up slightly to $315/st from $308/st. LSB is projecting second-quarter ag-related sales of 105,000-115,000 st for UAN, 60,000-70,000 st for ammonium nitrate, and 20,000-25,000 st for ammonia. Company-wide, LSB reported first-quarter net income of $6.65 million ($0.28 per diluted share) on net sales of $193.8 million, down from the year-ago $11.6 million ($0.49 per share) and $178.5 million.

IRS proposes new regs on MLPs

News, News Briefs

Deerfield, Ill. — CF Industries Holdings Inc. noted this week that the Internal Revenue Service on May 6 issued proposed regulations on the types of income and activities which constitute qualified income of a Master Limited Partnership (MLP). The proposed regulations would have the effect of limiting the types of income and activities which qualify under the MLP rules, subject to certain transition provisions. The IRS proposal specifically highlights companies that perform chemical processing and transformation activities as one of the focuses of the proposed changes, but the proposed regulations do not contain specific proposals regarding fertilizer-related activities. CF holds a 75.3 percent stake in Terra Nitrogen Company LP, an MLP that owns a nitrogen fertilizer manufacturing complex in Verdigris, Okla. Currently, no federal income taxes are paid by Terra due to its MLP status. CF noted that any change in the tax treatment of qualified income of fertilizer-related activities could have a material impact on the taxation of Terra and could have a material adverse impact on unit holder distributions for unit holders, who would not be entitled to a dividends received deduction or other similar offsetting deduction. CF said that under current law, if Terra were taxed as a corporation, due to its current ownership interest, CF would qualify for a partial dividends received deduction on the dividends received from Terra. Therefore, CF said it would not expect this proposed change to have a material impact on CF’s financial condition or results of operations. CF said it will continue to monitor the IRS regulatory activities. Other fertilizer MLPs include Rentech Nitrogen Partners, CVR Partners LP, and OCI Partners LP.

Fertilizer plant layoffs irk Iowans

News, News Briefs

Wever, Iowa — Recent layoffs at OCI NV’s Iowa Fertilizer Co. project continue to be in the news, with unions and politicians honing in on the fact that contractors are seeking to pull in out-of-state workers while native Iowa union workers were laid off. Local union officials told the Des Moines Register that more than 3,000 workers were onsite in mid-April when Iowa Fertilizer changed contractors (GM April 27, p. 12) and that about 1,500 workers were laid off, with only about 300 of those rehired. They cited reports that contractors are now looking to hire workers in Texas, instead of rehiring the many that were let go. Politicians have spoken out since state incentives were used to pave the way for the plant’s construction. Iowa Fertilizer last week issued a statement: “As previously reported, a portion of the construction work on the Iowa Fertilizer plant has been reassigned from one out-of-state firm to three firms already working onsite, including Ryan & Associates, a Davenport-based union shop. Throughout the project, Iowa Fertilizer has committed to hiring subcontractors based on safety record, skill, ability to meet the construction schedule, and price. We fully expect the subcontractors to hire the best workers available who meet that criteria. Work on the project continues to progress and remains on schedule for completion in the fourth quarter of 2015.”

AN barge capsizes off Costa Rica

News, News Briefs

Puntarenas, Costa Rica — Heavy waves capsized a barge carrying some 180 tons of ammonium nitrate about one kilometer from shore here the afternoon of May 2, according to the Costa Rican press. Two crew members were rescued from the barge, which was reportedly carrying product for Fertilizantes de Centroamerica (FERTICA). The government issued a red alert some 17 hours after the incident, though that was lifted to a yellow alert late May 3, which allowed swimmers to return to the beaches. Fishing was banned until May 6. In the meantime, officials reported seeing only a few dead fish and were watching to see if a red tide developed.

Transportation

Market Watch, U.S. Gulf

Atlantic: Shippers were watching on a low-pressure system over the northwest Bahamas ahead of the official start of the 2015 hurricane season. Forecasters gave the system a 60 percent chance of developing tropical storm-force winds before moving up the Eastern Seaboard. The storm was projected to move onshore over the Carolinas on or around May 10.

The 2015 Atlantic hurricane season will run June 1 through Nov. 30.

U.S. Gulf: An ongoing high-water advisory in the Gulf region was projected to continue through May 21-22, shippers said. A fleet of extra tug boats will remain deployed for precautionary reasons until the advisory expires.

Wait times of 24-26 hours were reported at Algiers Lock, with an average queue of 23 boats. Industrial Lock reported 17 boats queued with delays of 18-24 hours. Navigation through Bayou Sorrel Lock required an extra 10-12 hours, and Port Allen Lock reported 6-8 hour waits.

Daytime closures at Calcasieu Lock, in effect since March 17, eased on May 4. The lock will be open regular hours on weekends from May 5 through June 30, with daylight closures continuing during the week. Intermittent closures at Colorado Floodgates are expected to remain in effect through June 30.

Shippers continued preparations for the upcoming Bayou Sorrel Lock closure, timed to run from July 15 through Sept. 15. Tagged to shutter for dewatering, maintenance, and repairs, boats will detour through Algiers Lock in the West Canal, with significant delays expected.

Lower Mississippi River: Elevated river flows persisted on the Lower Mississippi River last week, leading to pickup and drop-off delay warnings for barges located between Vicksburg, Miss., and the Gulf. Tow sizes were reduced as well, and a high water advisory was in effect for Miles 232-237.

Full or partial daytime closures are anticipated due to weir dike construction at Mile 643 from June 24 through Oct. 8. Service interruptions are also scheduled at Mile 893 from Sept. 5-9, Mile 714 from Sept. 17-22, and Mile 418 from Nov. 7017.
Upper Mississippi River: Passage through Lock 20 on the Upper Mississippi was delayed by 1-2 hours for the week, shippers said, while Lock 27 saw waits of about an hour.

Lock 17 at Mile 437 will shut down entirely between the hours of 7:00 a.m. and 7:00 p.m. on May 14, and Lock 12 will be closed for the same schedule on May 15. Lock 20 will shutter between 3:00 a.m. and 3:00 p.m. on May 11 for the installation of temporary miter gate wiring.

The auxiliary chamber at Mel Price Lock, which has been shut down since early in the year, reopened on May 1.

Illinois River: Peoria Lock was offline for approximately 36 hours on May 1-2 for lock gate repairs. Sources reported a complete daytime closure at Lockport Lock on May 6, and further delay warnings were announced for the lock thanks to increased flows through the site measuring upwards of 6,500 cubic feet per second.

High flows opened the Peoria and LaGrange Locks for the week. Vessels were allowed to pass without locking.

Ohio River: Flows on the Ohio River returned to normal levels last week, ending an episode of minor flooding experienced throughout the Ohio system during the past several weeks.

The flooding required main chamber maintenance at Newburgh Lock to be pushed back several days, with work at the site now expected to continue through May 18-19 and transit delays of 12-24 hours anticipated. The site’s auxiliary chamber is scheduled to close for approximately four days following the completion of main chamber repairs.

Significant delays are predicted at Emsworth Lock, where main chamber work will run June 8 through July 10, and again from Aug. 3 through Sept. 18. The Montgomery Lock river chamber remain

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 108.67 103.63 94.63
CF Industries CF 300.09 287.47 244.86
CVR Partners UAN 14.10 14.56 20.89
Intrepid Potash IPI 12.65 12.53 16.86
Mosaic MOS 44.49 44.00 48.75
PotashCorp POT 32.64 32.64 36.16
Rentech Nitrogen RNF 14.34 15.06 16.41
Terra Nitrogen TNH 128.51 133.76 143.32
Distribution/Retail
Andersons Inc. ANDE 43.13 42.69 61.81
Deere & Co. DE 89.63 90.52 94.53
Scotts SMG 65.88 64.51 61.49

Crops/Weather

California, Eastern Cornbelt, Market Watch, Pacific N.W., Western Canada, Western Cornbelt

Grain Futures: As of 4 p.m. on May 7, corn, soybean, and wheat futures were all lower compared to the week before.

Corn was $3.615/bushel for July 2015, down from $3.6625/bushel at last report. The September 2015 price for corn was $3.6725/bushel, and trading of December 2015 corn contracts checked in at $3.77/bushel, down from $3.835/bushel the week before.

The July 2015 soybean price was $9.75/bushel, down from the prior week’s $9.76/bushel. Soybeans for August 2015 were $9.685/bushel, and soybeans for November 2015 were posted at $9.51/bushel, down from $9.5225/bushel at last report.
Wheat for July 2015 was $4.7275/bushel, down from the prior week’s $4.74/bushel. September 2015 wheat slipped to $4.8075/bushel from the prior week’s $4.8375/bushel, and July 2016 wheat contracts were reported at $5.31/bushel.

Eastern Cornbelt: Growers continued to make good planting progress in Illinois, with both the corn and soybeans pace tracking ahead of the five-year average. Wet weather slowed progress in Ohio and Indiana, although sources said growers were making significant progress as the week advanced.

As of May 3, USDA estimated corn planting at 69 percent complete in Illinois, 21 percent in Indiana, and 15 percent in Ohio. While Illinois was tracking more than 20 percentage points ahead of the average pace, Indiana and Ohio remained well behind. The regional soybean crop was 12 percent planted in Illinois by May 3, compared with just 4 percent in Indiana and Ohio.

Western Cornbelt: Strong storms pounded parts of Missouri early in the week, bringing heavy rains that prompted flash flood warnings in Kansas City and St. Joseph. One source said parts of his trade area received five inches, with more in the forecast as the week advanced.

By midweek, another powerful system brought tornadoes and flash flooding to southern Nebraska, where as much as a foot of rain on May 6-7 caused extensive flooding along the Big and Little Blue Rivers. Most of Iowa saw an active period of fieldwork last week, but storms were expected in that state over the coming weekend.

Despite the week’s weather hurdles, growers were able to make significant strides in planting during the first days of May. Corn planting as of May 3 was 57 percent complete in Nebraska, 61 percent in Missouri, and 68 percent in Iowa, with all three states tracking well ahead of the five-year average pace. Soybean planting was also underway, with progress rated at 11-12 percent complete in Iowa and Nebraska, and 5 percent in Missouri.

California: In response to the ongoing drought, California’s Water Resources Control Board on May 5 adopted sweeping water restrictions across the state, ordering cities and water agencies to cut water use by 4 to 36 percent from 2013 levels, depending on the area.

The board warned that it could impose fines of up to $10,000 a day on water agencies who failed to meet the targets. The board also chose to exempt agriculture, which accounts for up to 80 percent of human water use in California.

Although farmers escaped the latest state restrictions, California’s agriculture industry – which is the country’s largest producer – has endured significant cutbacks in federal water supplies. Sources report that acreage is down for corn, cotton, and rice as a result. One source said the rice fertilizer season was in full swing in early May, but “will be short lived as rice acreage is off dramatically from two years ago due to the drought.”

As of May 3, USDA reported that 38 percent of the rice and 50 percent of the cotton had been planted in California, with the former tracking ahead of the average pace and the latter falling well behind. Sources continued to report an overall early

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.