All Posts from January 12, 2015

Sulfur

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

Tampa: Sources said evolving fundamentals in the crude market, in flux for weeks as worldwide oil prices plunge amid ballooning supply, now threaten to spill into the sulfur market.

Noting some refiners’ recent shift toward processing crude slates of widely varying sulfur content, the domestic market could be faced with “significant decreases in sulfur production,” one contact said, despite early signs that 2015 could be a banner year in domestic refinery utilization. Additionally, supply could be further threatened thanks to “exceptionally high” supplies of finished products such as gasoline and diesel, which could trigger refinery slowdowns in the near future.

Others in the industry questioned whether sulfur supply could be so easily diminished, however, pointing to the sheer volume of crude barrels produced by the U.S. oil boom as likely to prolong the rise in U.S. refining capacity throughout 2015 and beyond. Even with reduced yields gleaned from the use of sweeter crude slates, domestic supply levels are likely to approach historic levels, they argued.

The supply debate caught fire as first-quarter negotiations for the price of molten sulfur delivered to Tampa kicked off last week. Sentiment in the market primarily pointed toward a rise in first-quarter prices based on unexpected strength in a number of international markets. Molten sulfur delivered to Tampa for the fourth quarter was $129/lt.

Domestic refinery utilization fell for the week ending Jan. 2, according to the U.S. Energy Information (EIA). Refining capacity was listed at 93.9 percent, a decline of 0.5 percent from the EIA’s Dec. 26 utilization rate of 94.4 percent. The number beat both the year-ago rate of 92.3 percent and the 89.5 percent five-year average, however.

Conversely, average daily refinery inputs rose during the same week, to 16.420 million barrels/d, up 43,000 barrels/d from 16.377 million barrels/d in the week ending Dec. 26.

U.S. Gulf: Traders continued to see significant tightness in material offered from Gulf Coast refineries. Coupled with the rise in international pricing, an increase from the last-done $135-$140/mt FOB was expected to accompany new business.

U.S. Imports: November sulfur imports were off 28 percent, to 130,349 st from the year-ago 181,460 st. July-November imports were down 21 percent, to 763,240 st from 966,564 st.

Vancouver: Spot prices in the Vancouver sulfur market exploded last week, thanks to firming in the Chinese market, where levels were largely quoted around $185/mt CFR. Sources attributed the price run-up to dwindling supply spurred by record DAP production in China.

Vancouver spot was called $160-$170/mt FOB, with average transactions registering around $165/mt FOB.

Off-spec hydrogen sulfide levels present in finished Syncrude 21 product prompted the suspension of loading on Dec. 24, sources said. The facility hoped to resume production as early as Jan. 8.

The price of Alberta sulfur was (-)$10-$75/mt, unchanged from the week before.

West Coast: Offshore transactions from the West Coast were predicted to follow Vancouver levels upward in the next round of business. For now, last done in the region was quoted in a range of $135-$140/mt FOB.

Negotiations were underway for first-quarter molten sulfur last week. Fourth-quarter 2014 contracts were quoted in a range of $90-$130/lt FOB.

Benelux: The price of sulfur at Benelux was $158-$172/mt FOB for the fourth quarter.

ADNOC: ADNOC sulfur was set at $158/mt FOB for January, an increase of $8/mt from the December 2014 price.

Aramco: The January price of Aramco sulfur was $

ICL workers halt K shipments

Breaking Industry News

The workers at Dead Sea Works have intensified their sanctions and halted all potash shipments from the Sdom plant. The move was in response to a decision by Israel Chemicals Ltd.’s management to summon 135 workers in advance of their being laid off. The layoffs are part of a reorganization plan being implemented by ICL management.

In recent weeks, workers have reduced shipments as part of sanctions imposed with the backing of the Histadrut Labor Federation to counter plans by ICL to implement its reorganization plan. The DSW said that 135 workers received notices yesterday and in response all shipments of potash out of the plant were halted.

Late last week ICL threatened a lock out if the ongoing sanctions continue. The company has yet to receive approval from Israel’s Economics Ministry to go ahead with the shutdown of the plant, one of the largest potash facilities in the world.

ICL has accused the union of dragging its feet in the negotiations to implement the reorganization plant. Management said that it is being forced to downsize as part of its strategy in light of the recommendations of the government appointed committee on taxation of the natural resources sector. In November, Israel’s Economic Cabinet approved the recommendations which are expected to increase the government take from minerals and will lead to the country’s largest chemical maker paying $110 million annually in additional taxes.

Meanwhile Haifa Chemicals, the world’s largest producer of potassium nitrate, said it has been forced to shut down its two plants at Mishor Rotem and Haifa due to a shortage of potash supplies from ICL.

Haifa Chemicals is totally dependent on ICL’s subsidiary Dead Sea Works for potash supplies. Haifa workers demonstrated today in front of the ICL headquarters in Tel Aviv demanding a resumption of potash shipments. The Haifa union leader Eli Elbaz charged that ICL is using Haifa workers as hostages in their dispute. He said the company’s 600 workers take unspecified action to restore potash shipments.

Haifa management noted that ICL holds a monopoly over a large part of Israel’s natural resources and has continued to supply foreign and even other domestic customers the necessary raw materials. The management said it had demanded an investigation by Israel’s Anti-Trust Commissioner David Gilo of ICL’s actions and specifically in regard to the use of its monopolistic power and its adverse impact on Haifa Chemicals.

CHS and West Central announce agreement

News, News Briefs

St. Paul, Minn. — CHS Inc. announced on Jan. 9 that it has purchased a 25 percent share of West Central, a full-service wholesale distributor headquartered in Willmar, Minn. The agreement will provide CHS Country Operations Service Centers with both private-label products marketed under the CHS brand, along with West Central’s current branded products. “Investing in West Central is one more way CHS is demonstrating its commitment to help its farmer-owners grow, by providing greater access to products and services across the supply chain,” said Rick Dusek, CHS Agronomy vice president. “CHS is the nation’s third largest agronomic retailer, and the largest domestic wholesale fertilizer distributor. By investing in West Central, we’re gaining access and market share within the crop protection products business segment.” Dusek said the alliance will also broaden both the scope and availability of CHS’s crop inputs, and allow the company to further expand its crop protection platform. West Central President Dale Engan said the agreement with CHS is a good fit for his company, which has a 40-year history of helping farm retailers grow their businesses. “This opportunity with CHS supports our strategic plans, which include expanding our distribution and service network to support customers, launching new West Central branded products, and investing in our people,” he said. Engan added that West Central will continue to focus on its retail customer base, providing a full range of crop protection products and agronomic services.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 99.78 95.12 90.57
CF Industries CF 294.78 273.52 233.56
CVR Partners UAN 10.27 9.13 17.09
Intrepid Potash IPI 14.28 14.12 15.74
Mosaic MOS 46.33 46.12 46.94
PotashCorp POT 36.49 35.75 33.49
Rentech Nitrogen RNF 11.58 9.84 19.78
Terra Nitrogen TNH 109.00 104.39 153.50
Distribution/Retail
Andersons Inc. ANDE 49.74 54.37 86.99
Deere & Co. DE 86.49 89.46 89.34
Scotts SMG 63.45 62.67 62.39

One dead, two injured at NH3 plant

News, News Briefs

Creston, Iowa — One worker was killed and two individuals suffered minor injuries Jan. 8 in an explosion at Green Valley Chemicals. The injured were treated at the scene and did not go to the hospital. Creston Fire Chief Todd Jackson told Green Markets that a pipe burst in the heating system as the company was trying to increase the heat to the building. He said damage to the facility was minor. Jackson said ammonia was not being produced at the time and that the explosion had nothing to do with the ammonia production system. There was no ammonia release. According to its website, Green Valley is one of the smallest anhydrous ammonia production facilities in the U.S. and has an average production rate of 100 st/d. It has been producing since 1966.

Green Markets analyst offers NPK outlook at Far West Conference

Featured, News

Nearly 500 industry representatives gathered in Twin Falls, Idaho, for the Far West Agribusiness Association conference on Jan. 5-7. The event’s opening day keynote address was given by Neil Fleishman, senior industry analyst for Green Markets, who said lower commodity prices and a strong U.S. dollar could strain global fertilizer demand in 2015.

Fleishman said the supply and demand structures are still set to loosen across all major nutrients in 2015. He said demand growth and prices for potash and phosphates in 2015 could be challenged by lower crop prices, while demand for nitrogen products is likely to stay steady.

Fleishman said potash demand in 2015 is most at risk due to lower commodity prices, particularly in North America, but he projects steady demand if product is available “at the right price.” Going forward, he described the global potash market as “controlled oversupply.”

Fleishman also projected a “neutral” view on phosphate pricing in 2015, noting that the market should be well supplied. He said lower commodity prices present a “challenge” to DAP/MAP demand, but a radical drop-off in usage is unlikely.

As for nitrogen, Fleishman presented a “neutral to cautious” view on ammonia prices in 2015. “While ammonia prices have likely peaked, continued curtailments in the near term will likely keep ammonia prices high relative to urea," he said. He said urea capacity will begin to expand outside of China in 2015 with global projects taking shape, resulting in a urea oversupply for the foreseeable future that will likely cap prices.

Fleishman elaborated on these global nitrogen capacity expansion, noting that the market will see increased localization as a result. He detailed the many nitrogen projects slated for North America, claiming that “more projects will likely go ahead than the market expects.” As a result, he said North America is “currently poised to become self-sufficient in both urea and UAN, while ammonia imports could drop by two-thirds.”

Fleishman stressed the importance of India in the global supply and demand picture, noting that the country is an “unpredictable buyer,” and that its imports “continue to disappoint” because of a weak currency, an unbalanced subsidy scheme, and late monsoon rains. He cautioned attendees to keep a close eye on the Indian nutrient based subsidy (NBS) program, noting that any changes could quickly impact global prices.

As for China, he said the country showed strong potash imports in 2014 and demand is expected to remain strong in 2015 as well. China’s urea and DAP/MAP production and exports remain governed by oversupply, however.

Closer to home, Fleishman said ongoing logistics challenges will likely impact domestic distribution again this year. He said this problem is compounded by “lean inventories” at the terminal level, so he cautioned attendees to “plan for longer lead times.”

Fleishman noted other major economic themes as well, saying lower oil prices could impact economic growth in the U.S. as consumers opt to save or pay down debt. He said the natural gas outlook is unchanged by the lower oil prices.

Rentech Nitrogen Partners LP – Management Brief

Management Briefs

John Ambrose, chief operating officer of Rentech Nitrogen GP LLC, the general partner of Rentech Nitrogen Partners LP, notified Rentech Nitrogen Jan. 5 of his intention to retire effective Jan. 9, 2015. Following his departure, Rentech Nitrogen will eliminate the position of chief operating officer as part of a reorganization of its management structure. John Diesch will continue overseeing day to day operations in his capacity as president of Rentech Nitrogen, with the plant managers at the LP’s East Dubuque, Ill., and Pasadena, Texas, facilities reporting to him.

Trial begins for former Yara executives

News Briefs

Four former Yara International ASA executives went on trial in Oslo Jan. 5 on corruption charges related to bribery of officials in Libya and India. These include former CEO Thorleif Enger, former Head of Upstream Tor Holba, former Chief Operating Officer Daniel Clauw, and former Chief Legal Officer Kendrick Wallace. The four defendants, who face up to ten years in prison if found guilty, all pleaded not guilty. The trial is expected to take three months.

The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim) announced the indictment of the four in January 2014 (GM Jan. 20, p. 14). Økokrim said the criminal acts concern bribery of a minister in Libya and a high-ranking public official in India.

Also in January 2014, Yara itself issued a statement (GM Jan. 20, p. 14) acknowledging guilt and accepting a corporate fine and confiscation totaling NOK 295 million (roughly US$48 million) related to Økokrim’s investigation. In addition, Økokrim imposed a confiscation of NOK 25 million related to earlier phosphate deliveries. “Our acknowledgement of guilt and acceptance of a fine reflect that the Økokrim findings are in line with those of our own investigation,” said Bernt Reitan, Yara chairman of the board said at the time. “The penalty is severe, but we accept it.”

The allegations concern the time period of 2004-2009. According to the Norwegian press, defendants reportedly paid at least $5 million to the son of Libya’s former oil minister. In India, the three defendants allegedly paid $3 million in bribes to the son of an official, though no joint venture was ever concluded.

The matter stems from historical irregularities linked to the establishment of Libyan Norwegian Fertilizer Co. (Lifeco), an unrealized project in India, and Yara’s activities in Switzerland. All four former executives were indicted for bribes in Libya, an Økokrim prosecutor reported, while Enger, Clauw, and Wallace were also indicted for corruption in India. Enger, who was Yara’s CEO from 1999 to 2008, was implicated in the case back in May 2012, along with Holba (GM May 21, 2012). The alleged corruption came to light after Enger left office and was succeeded by Jørgen Ole Haslestad, who is expected to testify at trial. Haslestad, who was to retire from Yara in February, 2015, was edged out of office early last fall (GM Oct. 13, p. 1).

Yara first reported the case in April 2011, when it launched its own external investigation and notified Økokrim of possible irregularities (GM April 18, 2011). Yara said it has cooperated with Økokrim throughout the process.

“This is a serious case,” said Haslestad when Yara accepted the penalties. “Both the company’s external investigation and the Økokrim investigation have uncovered unacceptable and disappointing behavior. We have throughout the process cooperated with Økokrim and given them access to all material. The incidents in question took place several years ago. We have since invested considerably in our compliance processes, based on our clear zero tolerance for corruption. Most importantly, we have worked with culture and attitudes to ensure that such incidents do not occur in the future.”

“Yara has zero tolerance for corruption, and the company initiated an investigation and contacted the authorities in 2011,” Esben Tuman, Yara vice president, communications, told Green Markets Jan. 9. “We have developed our compliance systems and routines to minimize the risk of something similar taking place again. Yara is not a party in the trial.”

Ammonia

Ammonia, Eastern Canada, Eastern Cornbelt, Market Watch, Northern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: Tampa for January is $545/mt CFR, down some $80/mt from December’s $625/mt CFR. Sources are predicting another drop for February.

Anhydrous ammonia imports were off 18 percent in November, according to the U.S. Department of Commerce, a statistic that may reflect fourth-quarter cuts in phosphate production by Mosaic. Imports were 404,981 st, down from the year-ago 492,841 st. July-November imports were off only 3 percent, however, to 2.38 million st from 2.46 million st.

February NYMEX natural gas closed Jan. 8 at $2.927/mmBtu, compared with Dec. 29’s $3.199/mmBtu. Despite it being the middle of winter, gas appears to be following oil prices downward.

Eastern Cornbelt: Sources reported minimal activity on the fertilizer front. “I believe winter is officially here and any fertilizer applications are now history until springtime,” said one regional contact.

The anhydrous ammonia market remained at $610-$625/st FOB in Illinois for prompt or prepay, depending on location. In Indiana and Ohio, the ammonia market was pegged at $625-$645/st FOB, with the upper end FOB Lima, Ohio, for spring prepay.

Western Cornbelt: The ammonia market was steady at $585-$610/st FOB for spring prepay tons out of most regional terminals in the Western Cornbelt. With minimal prompt demand to report, the low end of the regional market remained at the $570/st level FOB Nebraska terminals for prompt pull.

Northern Plains: Sources pegged the anhydrous ammonia market at $615-$625/st FOB in the Northern Plains, with the low FOB the Twin Cities and the upper end for spring prepay FOB Velva and Grand Forks, N.D. Delivered ammonia tons in the North Dakota market were quoted in the $595-$615/st range, with the low for fill and the upper end for limited spring prepay offerings.

Dakota Gasification confirmed that its Beulah, N.D., plant was now running at full capacity for anhydrous and ammonium sulfate. The facility experienced an unplanned outage in November that kept production offline for several weeks (GM Dec. 1, 2014).

Eastern Canada: The ammonia market was pegged at $830-$835/mt FOB Courtright, Ont., for spring prepay tons shipped from March through June.

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