All Posts from August 12, 2013

ICL 2Q profit off 23 percent

News, News Briefs

Tel Aviv — Israel Chemicals Ltd. (ICL) reported a decline in revenues and net profit in the second quarter of 2013. Revenues totaled $1.770 billion, versus $1.907 billion in the corresponding quarter in 2012. Net profit fell by 23 percent, to $316 million from $408 million. ICL attributed the decline to lower potash and phosphate prices and a decline in sales to China, as well as a drop in the sale of bromine compounds. Israeli analysts are predicting that company revenues and profits will decline in coming quarters following last week’s announcement by Russia’s Uralkali pulled out of a joint venture with Belaruskali, its Belarus based partner. ICL said “the Uralkali announcement creates uncertainty about potash prices and increases the risk of a drop in prices in the short term. But the long term market trend points to higher demand, which will boost prices.” ICL revenues totaled $1.072 billion, versus $1.188 billion in the second quarter of 2012. Operating profit of the division fell to $306 million from $410 million in the same quarter last year. Potash revenues fell to $593 million, versus $718 million last year. The company produced 1.230 million mt of potash, compared to 1.303 million mt in the second quarter of 2012. Phosphate and fertilizer revenues actually rose slightly, to $517 million versus $498 million last year. Phosphate rock production totaled 855,000 mt versus 851,000 mt last year, and fertilizer production totaled 464,000 mt versus 384,000 mt. Meanwhile, Standard & Poor’s Maalot Ltd. has put ICL on its watch list, with a negative outlook following the Uralkali developments. Maalot gave ICL an AA+ rating. In its latest report the rating company said “we believe that direct sales by Uralkali are liable to have adverse repercussions on ICL’s financial ratios as a result of the expected change in the dynamics which prevailed in the potash market up to now.” Maalot cited the possibility of aggressive price competition.

Ammonium Sulfate

Ammonium Sulfate, Eastern Canada, Eastern Cornbelt, Market Watch, Northeast, Northern Plains, Western Cornbelt

Eastern Cornbelt: Granular ammonium sulfate was tagged at $270-$285/st FOB in the Eastern Cornbelt, with the upper end reported in the Ohio market on a spot basis. Delivered ammonium sulfate was reported in the $280-$290/st range.

The ammonium thiosulfate market remained at $350-$360/st FOB for the last business.

Western Cornbelt: Granular ammonium sulfate was pegged at $270-$290/st FOB in the region, with the upper end reported in western Iowa on a spot basis.

The ammonium thiosulfate market remained at $310/st FOB in Nebraska, $325-$330/st FOB in Iowa, and up to $355/st FOB in Missouri.

Northern Plains: Granular ammonium sulfate was pegged at $270-$275/st FOB and $280-$285/st DEL in the Northern Plains.

Ammonium thiosulfate remained at a nominal $360/st FOB and $370/st DEL in the region for the last tons sold.

Northeast: Granular ammonium sulfate pricing in the Northeast was down significantly from last report, with sources quoting delivered tons at $280-$285/st in Pennsylvania and New York.

On an FOB basis, the market was pegged at $250-$255/st FOB Hopewell, Va., and $285/st FOB East Liverpool.

Eastern Canada: The granular ammonium sulfate market was quoted at $415-$416/mt FOB in Ontario for summer fill tons, with reports of brisk business at that level.

Ammonium Nitrate

Ammonium Nitrate, Eastern Canada, Market Watch, U.S. Gulf, Western Cornbelt

U.S. Gulf: Barges remained under pressure and were called $310-$315/st FOB, with some expecting $305/st FOB for the next round of business.

Western Cornbelt: Ammonium nitrate was steady at $390-$400/st FOB in the region for the last tons sold. CAN-17 was quoted at $330/st FOB in Iowa.

Eastern Canada: The ammonium nitrate market had reportedly slipped to $430/mt FOB in Ontario on a spot basis, down some $25-45/mt from last report.

Nitrogen Solutions

California, Eastern Canada, Eastern Cornbelt, Market Watch, Northeast, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: The UAN barge market remained quiet at $245-$250/st ($7.66-7.81/unit) FOB. While some said there was weakness on the paper markets, the physical market remained quiet.

Eastern Cornbelt: Sources continued to quote the UAN-32 market at $288-$300/st ($9.00-$9.38/unit) FOB in the Eastern Cornbelt for fill or prompt tons, depending on location.

The UAN-28 market was pegged at $256.20-$262.50/st ($9.15-$9.38/unit) FOB in Ohio, with the low end FOB Cincinnati.

Western Cornbelt: The UAN-32 market was reported in the $295-$310/st ($9.22-$9.69/unit) FOB range in the Western Cornbelt region, depending on location.

Northeast: Sources continued to report reference pricing for UAN-30 at the $295/st ($9.83/unit) FOB level in Baltimore, Md. There were reports of lower numbers there as well, but no actual business to clarify what those lower numbers were.

The UAN-28 market FOB East Liverpool had reportedly slipped to $262.50/st ($9.38/unit), however, while UAN-32 pricing out of terminals in upstate New York was quoted at the $320/st ($10.00/unit) FOB level, down $32/st from last report. The UAN-32 market FOB Savannah, Ga., was pegged at $295/st ($9.22/unit) last week.

Eastern Canada: The UAN-28 market was lower in Eastern Canada, with sources quoting dealer pricing in the $310-$330/mt ($11.07-$11.79/unit), down some $30-$40/mt from last report.

UAN-32 was down as well, to $355-$377/mt ($11.09-$11.78/unit) FOB in the region.

California: Effective Aug. 1, Agrium’s UAN-32 postings in California dropped to $335/st ($10.47/unit) FOB Sacramento, and $365/st ($11.41/unit) truck-DEL.

Urea

Argentina, Bangladesh, California, China, Eastern Canada, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northeast, Northern Plains, Pakistan, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf: Granular urea prices were under pressure last week, with most sources saying the influx of expected imports was starting to hit the market.

The week started with prices quoted in the $315-$318/st FOB range. By Thursday, however, many were citing business at $300-$303/st FOB.

Chinese imports were also in the mix of imports, with sources generally agreeing that recent cargoes were higher quality product. Traders were keeping close tabs on the material as it was loaded onto vessels.

Players were closely watching to see if any of the new Algerian tons would make it to NOLA. Exports are slated to begin by late August.

Prills continued to be called $335-$337/st FOB.

Eastern Cornbelt: Granular urea pricing was lower in the Eastern Cornbelt, with sources quoting the dealer market at $335/st FOB Cincinnati, Ohio, at the low end of the range. Most other regional terminals were pegged at $345-$355/st FOB last week.

Those prices were down some $20/st from last report, but sources reported little new buying activity to test the market.

Western Cornbelt: The granular urea market continued to be quoted in the $350-$360/st FOB range out of regional terminals in the Western Cornbelt.

Northern Plains: The granular urea market remained at $350/st FOB the Twin Cities, with the North Dakota market pegged in the $390-$405/st DEL or FOB range, depending on location.

Northeast: The combination of heat and moisture made for very good crop conditions in the Northeast, with one source reporting that his location is seeing some of the best crops in decades.

“Everything looks actually too good,” he said last week. “When it’s this good, it makes you think something bad is going to happen.”

Sources reported little new buying activity in the Northeast to test the fertilizer markets.

The granular urea market had reportedly slipped to $380/st FOB Philadelphia, Penn., and $345/st FOB East Liverpool, Ohio.

Eastern Canada: The granular urea market was pegged at $460-$481/mt FOB in Eastern Canada in early August, down some $40/mt from last report.

California: Effective Aug. 1, Agrium’s granular urea postings in California dropped to $440/st FOB West Sacramento; $450/st FOB Richvale and Hanford; $475/st truck-DEL in Central California; $485/st truck-DEL in Northern California; and $510/st truck-DEL in the Desert California counties of Imperial, Orange, Riverside, and San Diego.

Those levels are down $15-$20/st from Agrium’s July 1 urea postings in the state, depending on location.

India: The IPL tender closed with the buying house taking 1.4 million mt from 10 companies. The price paid ranged from $303.50-$306.68/mt CFR, depending on the port of discharge.

Sources said IPL worked hard to get suppliers to agree to Overseas’ price of $303.50/mt CFR, but to no avail. Eventually the buying house had to settle for different prices for different ports.

The varied price formula is not unusual for Indian buyers, but one that the importers have been trying to avoid as much as possible. In the end, sources said suppliers were unwilling to lower their prices further, even in a weak market.

A tally of the awards follows.

Ammonia

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

U.S. Gulf/Tampa: The markets remained quiet last week. NYMEX natural gas continued to move down, however, closing at $3.297/mmBtu on Aug. 8, versus the prior week’s $3.387/mmBtu.

Eastern Cornbelt: Strong storms hit parts of northern Ohio at midweek, producing locally heavy rains, hail, damaging winds, and at least one tornado. Spotty rainfall was also reported in parts of Indiana last week.

Sources continued to report very favorable crop conditions in the region, thanks to ample moisture and generally cooler-than-normal summer temperatures. “We need a bit more heat to finish things up, but we’re looking at an extremely good corn crop,” said one Ohio contact.

Sources reported no change to the regional ammonia market last week. Ammonia prices in Illinois remained at $540-$570/st FOB for prompt or fill tons, depending on location, with the Indiana ammonia market $10/st higher.

Western Cornbelt: Heavy rains early in the week were reported in parts of Nebraska, but by far the strongest storm activity was reported in Missouri.

Torrential rains during the first half of the week caused extensive flooding along central Missouri’s Gasconade River. The rainfall caused the river to rise 32 feet in some locations, resulting in power outages and closures to parts of Interstate 44, and prompting an emergency declaration and evacuation order from Gov. Jay Nixon. Thunderstorms also swept through southern Missouri, dumping 10 inches overnight on Aug. 7 in some locations.

A patch of exceptional drought that had lingered in central Nebraska was mostly erased by early August, although areas of severe to extreme drought persisted in the western half of the state. Abnormally dry to moderate drought conditions were reported in northern Missouri, and in central and western Iowa last week.

Sources continued to report the anhydrous ammonia fill market at $510-$525/st FOB in Nebraska, $525-$540/st FOB in Iowa, and up to $550/st FOB in the Missouri market. One Iowa contact quoted the market last week at $530/st FOB for fill tons and $560/st FOB for prepay.

Northern Plains: Severe thunderstorms pounded Minnesota on Aug. 6, with reports of large hail, damaging winds, and heavy rains in some locations. Three-inch hail was reported near New London in south-central Minnesota.

Sources reported extensive crop damage in the areas affected by the storm. Region-wide, however, crop conditions remained good overall, though crop development continued to lag behind the average pace. Growers were harvesting oats and barley in the region last week, and the spring wheat harvest was close.

The anhydrous ammonia market remained in the low $500s/st FOB Minnesota terminals for fill tons. In North Dakota, delivered ammonia was pegged at $570-$590/st, with the low for fill tons and the upper end for limited prepay offers.

Eastern Canada: Generally favorable crop conditions were reported in Eastern Canada in early August, although Ontario sources noted some cases of weather-related yield losses expected in corn fields.

Mid-July storms caused some spotty crop damage in eastern Ontario and Quebec, and another round of powerful storms was expected in parts of southern Ontario late last week.

Sources reported little in the way of fertilizer movement in the region in early August.

Anhydrous ammonia pricing had fallen to $635-$645/mt FOB Courtright, Ont., for August shipments, down roughly $165/mt from late June pricing levels, and some $215/mt lower than spring ammonia pricing.

California: Effective Aug. 1, Agrium’s anhydrous ammonia postings dropped to $695/st truck-DEL in Central California, and $705/st truck-DEL in Northern California. Those prices reflect a $65-$70/st

Doyle downplays Uralkali actions, Baumgertner says not a temporary fall-out

Featured, News

Potash Corp. of Saskatchewan Inc. President and CEO William Doyle on Aug. 7 downplayed OAO Uralkali’s recent exit from trading via the Belarusian Potash Co. (GM Aug. 4, p. 1). Doyle, speaking in a virtual meeting on the PotashCorp website, said spats between Russian and Belarusian entities in the past were not uncommon. In those instances, they were less public and they patched up their differences.

Asked about whether this was a temporary break-up, Doyle said he thought it would be “shorter rather than longer,” and that logic would prevail. However, Uralkali CEO Vladislav Baumgertner was also giving interviews last week, with one posted on the company’s website, and he took a contra position to Doyle. “People will need some time to adapt to the fact that it is not a temporary fall out between Uralkali and Belaruskali.” Baumgertner said the market needs to re-evaluate and calm down, and volatility should go down as well.

Baumgertner said Uralkali’s choice was to stand back and watch the collapse of BPC or to take preventative action. Uralkali said Belaruskali, Uralkali’s partner in BPC, was selling product outside BPC.

Baumgertner also pointed to Canpotex Ltd.’s conclusion of a first-half 2013 contract with the Chinese in late December 2012. BPC in the past has often taken the lead in price negotiations; however, in this case, it was Canpotex that concluded business first. Baumgertner said the Canpotex action was unexpected. “I cannot say for sure, but I can assume that this irrational step was caused by concerns that BPC was on the brink of collapse and Canpotex had therefore decided to act first.” As a result, he said BPC lost a significant part of its market share, mainly to Canpotex. He said the Belarus position was to catch up on market share by using independent traders. “Thus, the market was weakened from several angles, and we have essentially found ourselves between a rock and a hard place.”

As for Uralkali’s assertion that prices may drop 25 percent, Doyle said no one producer can determine price, noting that supply and demand determines that. Baumgertner reiterated that the volumes over price strategy could soon lead to prices around $250/mt.

Doyle said that North America was PotashCorp’s largest market, and that Uralkali was not going to determine the price there. He said it might have influence in some places, but not others. He noted that PotashCorp has extensive infrastructure throughout North America, while Uralkali has no infrastructure and is only a minor player selling barges at the U.S. Gulf.

Baumgertner said it is Uralkali’s new strategy to sell maximum volumes in every market.

Doyle and Baumgertner gave different analogies on lower prices. Doyle said potash is not like shoes, where if the price is cut the buyer takes two pairs. Doyle said the farmer will not buy twice as much, or more than he needs. Baumgertner said there has been an enormous price discrepancy in the potash market. While crop prices have been high, he said potash has seen no growth in consumption. “Probably one of the main reasons for this was the relatively high price of potash compared to nitrogen and phosphate fertilizers in a complicated macroeconomic situation.” He, like Doyle, both believe that global consumption can soon get to 60 million mt, with annual growth rates at 3 percent or above. Baumgertner, however, believes lower prices are what will move the industry to that level.

Going forward, Baumgertner said greenfields have to be eliminated, low-cost producers will deteriorate and shrink, and then probably there will be consolidation. Simultaneously, he said demand would be stimulated by lower prices and active promotion of balanced fertilization.

Doyle reiterated that there would be no change at Canpotex Ltd., the Saskatchewa

Agrium 2Q earnings off 13 percent

News, News Briefs

Calgary — Agrium Inc. reported a 13 percent in drop in net earnings for the second quarter ending June 30, 2013, to $747 million ($5.02 per diluted share) on sales of $7 billion, down from the year-ago $860 million ($5.44 per share) on sales of $6.77 billion. While volumes remained strong, lower prices for some products impacted results, particularly urea, phosphates, and potash, with other products – ammonia and ammonium sulfate – showing higher pricing. Agrium said that despite the less than ideal spring weather in many of its key markets, it had the second highest quarterly earnings in history. Retail reported record second-quarter sales at $5.6 billion, up 7 percent from the year-ago $5.2 billion. Crop nutrient sales were $2.48 billion, up from $2.36 billion. Retail net earnings were $562 million, up from $556 million. Total Retail crop nutrient volumes were up, at 4.1 million mt with an average price of $607/mt versus the year-ago 3.74 million mt ($631/mt). Wholesale net earnings were $453 million on sales of $1.5 billion, versus the year-ago $628 million and $1.65 billion, respectively. Total sales volumes were 2.89 million ($518/mt), down from the year-ago 3.05 million ($540/mt). Six-month net income was off 13 percent, to $888 million ($5.96 per share) on sales of $10.2 billion, down from the year-ago $1 billion ($6.41 per share) on sales of $10.3 billion. Six-month Retail earnings were $534 million on sales of $7.7 billion, down from the year-ago $613 million and $7.67 billion. Crop nutrient sales were $3.29 billion versus the year-ago $3.39 billion, with volumes up at 5.5 million mt ($598/mt) from the year-ago 5.45 million mt ($623/mt). Six-month Wholesale earnings were $780 million on sales of $2.6 billion, down from the year-ago $957 million and $2.8 billion, respectively. Total volumes were 5.2 million mt ($507/mt), down from the year-ago 5.3 million mt ($529/mt).

Agrium files for permit for proposed mine

News, News Briefs

Boise — Nu-West Industries, doing business as Agrium Conda Phosphate Operations, has filed a request with the Idaho Department of Environmental Quality (IDEQ) for an air quality permit to construct an open pit phosphate mine in Caribou County that would extract three million st of ore. The proposed Lanes Creek Mine would be located on the eastern slope of Rasmussen Ridge, about 25 miles northeast of Soda Springs. It is an inactive phosphate mine proposed for re-development. The North Rasmussen Ridge Mine is now Agrium’s sole source of phosphate in southeastern Idaho. Mining at Agrium’s Dry Valley Mine ended in May 2011. The phosphate reserves are contained within a J.R. Simplot Co. lease and on private land owned by Bear Lake Grazing Co. Nu-West would take over the lease. The mine would operate for about four years, from the fall of 2013 to the spring of 2017. Reclamation activities would ensue from 2017 to 2019. No ore crushing or smelting are planned. Mining will be consistent with Agrium’s other open pit operations. After it is drilled and blasted, the rock would be loaded onto tractor trailer trucks and hauled about 30 miles via county and private roads to Agrium’s Wooley Valley Tipple site for transportation to its Conda processing plant. A network of access and haul roads would be developed on the lease.

ICL to reduce dependence on potash

News, News Briefs

Tel Aviv — Israel Chemicals Ltd.’s (ICL) board of directors has approved a new strategy dubbed “Next Step Forward” to lead the company into the next stage of growth. The plan calls for reducing dependence on potash, balancing the company’s sources of income through diversification, and broadening its global presence. ICL is also planning efficiencies that will lead to a savings of $400 million over three years. ICL plans to list its shares on a major foreign stock exchange. At present, ICL shares are traded only on the Tel Aviv Stock Exchange. ICL is also considering a buyback of shares or the distribution of a one-time dividend of up to $500 million. “The Uralkali announcement creates uncertainty about potash prices and increases the risk of a drop in prices in the short term,” ICL President and CEO Stefan Borgas said. However, he added that the long-term market trend points to higher demand, which will boost prices. He said ICL continues to believe in the potash market, both in the short- and long-term, and will explore options for increasing its potash production both in its existing mines and in new locations around the world. This includes expansion of existing mines in Israel, Spain, and Britain, as well as cooperation with other parties. ICL is also planning investments in phosphate mines, and the company confirmed that teams are currently studying a number of options and investments outside Israel would likely take place even if the government approves mining at the Sde Barir field in the Negev region of Israel. He said ICL will focus its activity in the areas of agriculture and food by increasing its phosphate operations, while simultaneously increasing the company’s position in markets for bromine, phosphorus, and phosphate-based engineered materials.

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IPL Tender Awards
Supplier Quantity (‘000mt) US$/mt Port of Discharge
Overseas