All Posts from April 13, 2015

Potash

China, Eastern Cornbelt, India, Market Watch, Potash Muriate, Russia, Southeast, Southeast Asia, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: The potash barge market continued to be called $345-$350/st FOB last week.

Eastern Cornbelt: Potash was pegged in a broad range at $390-$410/st FOB in the Eastern Cornbelt, depending on grade and location, with the low reported in the Cincinnati market.

Western Cornbelt: Potash was steady at $395-$410/st FOB out of regional terminals in the Western Cornbelt, depending on grade and location.

Southern Plains: Potash pricing had reportedly slipped to $380-$390/st FOB in the Tulsa market, down $5-$10/st from last report. “Potash keeps working a little lower every couple of week,” said one contact.

The Carlsbad, N.M., potash market remained at reference levels of $405/st FOB for 60 percent standard, $410/st FOB for 60 percent granular and 62 percent standard, and $417/st for 62 percent granular.

Effective March 30, Intrepid’s Trio postings FOB Carlsbad moved up $10/st, to $385/st for standard, $395/st for granular, and $400/st for premium.

South Central: The potash market had reportedly slipped to $385-$395/st FOB most warehouses in the South Central region, down $5-$10/st from last report, with the lower numbers quoted in the Memphis market last week.

Southeast: Imported potash tons remained at $385-$395/st FOB port terminals in the Southeast. Canadian tons were steady as well at $410-$417/st rail-DEL in the region, with the low for red and the upper end for 62 percent white granular.

China: Uralkali said April 10 that Uralkali Trading SA has reached an agreement to deliver some 850,000 mt of potash to a Chinese buying consortium, which includes Sinochem, CNAMPGC, and CNOOC, at a price of $315/mt CFR. The contract period is April-December 2015 and does not include optional volumes.

Arab Potash Co. (Jordan) said April 5 that it had reached an agreement with Sinochem Fertilizer Macao Commercial Offshore Ltd. (Sinochem Macao) for the supply of 600,000 mt minimum of potash to China during 2015. In addition to the firm quantities, the deal also includes optional quantities.

APC did not specify the price, but said the terms and conditions of the agreement reflect the current market prices and terms in China, and are also in line with the long-term agreement between the two sides signed in Beijing in September 2013.

Belarusian Potash Co. (BPC) concluded 2015 potash contracts with China at $315/mt CFR in mid-March, with Canpotex subsequently finalizing potash supply contracts last week. Pursuant to the agreement signed between BPC and the three major importers, a BPC spokesperson said the company’s potash exports to China could reach approximately 1.7 million mt in 2015. This volume includes both firm shipments and optional quantities.

Russia: Uralkali reported that it had produced 2.70 million mt of potassium chloride in the January to March period, down 8.5 percent from the 2.93 million mt produced a year earlier. It cited the November shutdown of the Solikamsk-2 mine and lower potash demand in its key markets for the drop in output. Production at the Solikamsk-2 mine, with capacity for 2.3 million mt/y, was stopped last November following the development of a sinkhole and subsequent increased brine inflow.

Uralkali’s first-quarter output came in above a number of analysts’ expectations, and the company said it may review its annual output target for 2015, depending on the demand in the market and further developments at the Solikamsk-2 mine. Uralkali’s 2015 production target is currently set at 10.2 million mt of potash.

“The spring high water season – expected from the middle of May to the end of June – as well as the success of the meas

ICL plans three blending plants in Ethiopia

News, News Briefs

Tel Aviv — Israel Chemicals Ltd. (ICL) is planning to build three fertilizer plants in Ethiopia, the company confirmed. ICL said that it is in discussions with the Ethiopian government about the construction of three or more fertilizer blending plants. The talks with the Ethiopian government come on the heels of a decision by ICL last month to purchase the outstanding shares of Allana Potash Corp. for $C137 million (GM March 30, p. 1). ICL already held a 16 percent stake in the junior company, as well as a potash offtake agreement. Allana has been focused on producing potash and potassium sulfate in Ethiopia, with the potash plans more advanced.

ICL strikes continue; talks resume April 13

News, News Briefs

Tel Aviv — Strikes at two of Israel Chemicals Ltd.’s (ICL) subsidiaries continue. No progress was made in ending the strikes, and no talks were held during the Passover holiday week, which ended on April 10. Talks are due to resume April 13. Some 850 Dead Sea Bromine workers have been on strike since Feb. 3, and the 1,500 workers at the Dead Sea Works potash operations joined the strike Feb. 19. The strikes at both plants were called to protest plans by management to lay off workers.

Green Markets nitrogen market update; indigestion, with no relief in sight

News

Urea prices have been under pressure this year, with over-supply, record Chinese exports, uneven demand, and a strong U.S. dollar all factoring in.

The bear market for nitrogen prices is set to continue. Over the past several years, Green Markets has been tracking a large number of global ammonia/urea projects. Many of these projects will finally begin to come online as 2015 progresses, and capacity will continue to expand well into the end of the decade. These projects will lead toward lower overall global utilization rates, which should keep a lid on pricing for the foreseeable future.

The key to our continued bearish outlook is both lower global utilization levels and increased localization of production. Key importers like North America, Brazil, and India are maturing markets that are reducing their need for traded product at the same time that export availability is rising. This is compounded by Chinese over-capacity with a loose export policy.

We reiterate our bearish outlook on nitrogen pricing, and believe urea prices have a distinct possibility to drop well below the tenuous floor of Chinese production (~$240/mt FOB) in the coming years.

North American expansion has been the centerpiece of the global rise in capacity, driven by an outlook for inexpensive natural gas that has spurred global interest in investment in nitrogen capacity in the region. A longtime net importer is now poised to become self-sufficient.

Green Markets currently projects that North America is highly probable to stop importing both urea and UAN, while ammonia imports should fall by at least half. Outside of North America we are tracking ~22 high probability urea projects that will come online by the end of 2018. Capacity is set to rise in Russia, Brazil, Argentina, Saudi Arabia, Bangladesh, India, Indonesia, Vietnam, Romania, Slovakia, Mexico, Nigeria, Malaysia, Azerbaijan, and Iran.

Brazil is one of the largest importers of urea, but that market could be maturing as the economy cools. Multiple projects have been in the works for the country, although several have met with delays in the past few years.

The most advanced project is Petrobras’s Tres Lagoas with capacity of ~1.2 mln mt of urea, which was ~82 percent complete at the end of 2014. While the plant has reportedly seen contract issues, there is a high probability it could begin production this year and displace imports. Petrobras also has other projects that have met with delays, such as the Linhares plant, which could still be completed toward the end of the decade. Petrobras’s standalone ammonia plant, Uberaba, will likely start up in 2017.

India is also a major consumer, producer, and importer of urea, and imports will likely fall in the future. For the past several years the country has continually set its goal on becoming self-sufficient on product. Multiple projects and restarts continue to get suggested under ever-changing plans. In the past few years we’ve tracked up to 15 project proposals in India, although currently we see less than five with any realistic probability of getting built by the end of the decade. The biggest obstacle for India remains a source of hydrocarbons, but the recent pooling of costs, lower global oil prices (LNG linked), and the long-run potential for a TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline could begin to alleviate those concerns.

It is likely that two things could happen over time that will lower imports into the India. Capacity will eventually rise, and demand could fall. The government’s strategic intentions could lead to some restarts by the end of the decade, and projects could also be located in Iran and/or Turkmenistan.

While India’s capacity increases could take much longer than anticipated, it is now more a matter of when and not if. The Indian government is also likely

Transportation

Market Watch, U.S. Gulf

U.S. Gulf: Elevated water levels persisted in the Gulf region, shippers said, leading to delays in barge pickup and drop-off. Shippers warned of increased transit times and reduced tow lengths.

Waits of 24-26 hours were seen at Industrial Lock, and navigation through Algiers Lock was delayed 18-24 hours on average. Boats traveling through Bayou Sorrel Lock described wait times of 12-16 hours, and Port Allen Lock saw passage delayed by about an hour. Localized morning fog holdups of 4-8 hours were reported in the West Canal.

Daylight traveling through Calcasieu Lock was expected to remain sporadically unavailable through April 1. Bayou Sorrel Lock will go offline July 15 through Sept. 15, effecting major delays with traffic rerouted through Algiers.

Lower Mississippi River: High flows continued to interrupt transit on the Lower Mississippi River last week, and a High Water Advisory was in effect for Miles 232-237. Barge pickup and drop-off were delayed throughout the area, and southbound passage through Vicksburg-area bridges was available during daylight hours only. Shippers reduced tow lengths by one loaded string, and extra tug boats were deployed as an added measure of control.

The river was closed on April 6 from Mile 154-163 due to a collision and resulting oil spill, but was partially reopened to allow staggered one-way traffic on April 7 while cleanup efforts were underway. Morning fog delays were also reported.

Upper Mississippi River: Shippers described 2-4 hour waits on navigation through Locks 20 and 27 on the Upper Mississippi for the week.

The Lock 27 main chamber was closed to daylight transit April 6-7 for protection cell painting, and was scheduled to close again on April 16, effectively closing the river on those dates. Lock 27’s auxiliary chamber is offline through April 20. The auxiliary chamber at Mel Price Lock is shuttered through April 30.

Illinois River: Delays of about an hour were reported at the Chicago-area T.J. O’Brien Lock last week.

Ohio River: Locks 52 and 53 had lowered dams last week, shippers said, allowing traffic to pass without locking.

Montgomery Lock’s river chamber was closed indefinitely due to debris buildup in the lower lock gates, forcing all traffic through the site’s land chamber. The auxiliary chamber at New Cumberland Lock, closed for repair since March 10, is set to reopen April 18.

Shippers warned of impending delays at Belleville and Racine Locks, both scheduled to shutter their main chambers from May 26 through July 24.
Newburgh Lock auxiliary chamber maintenance was scheduled to run April 6-27, followed by a main chamber closure on April 28-May12. Major delays are expected from Aug. 31 through Sept. 11, and Sept. 14-25 for main chamber repairs at Lock 52, followed by an auxiliary closure at the site from Oct. 1-30.

The Kanawha River’s Winfield Lock is out of commission through June 10, with major transit delays reported.

On the Monongahela River, the Maxwell Lock river chamber will be out of operation April 24 through May 29, and Elizabeth Lock and Dam’s river chamber will close for maintenance April 27 through May 29. Passage restrictions through the Masontown Bridge Project were expected to ease following a full channel closure on April 8-9, and the river chamber at Braddock Lock and Dam remains offline indefinitely due to ongoing equipment failure.

The Tennessee River’s Wilson Lock will close its main chamber for repairs between May 5 and June 11, with the auxiliary chamber available during daylight hours only. Intermittent closures at Guntersville and Pickwick Locks were announced for Aug. 17 through Sept. 30.

On the Cumberland River, Old Hickory Lock wi

Crops/Weather

Eastern Cornbelt, Market Watch, Southeast, Southern Plains, Western Cornbelt

Grain Futures: As of 4 p.m. on April 9, corn, soybean, and wheat futures were all lower compared to the week before.

May 2015 corn was posted at $3.78/bushel, down from $3.865/bushel, and corn for July 2015 was $3.8575/bushel, a decrease from $3.945/bushel the week before. Contracts for December 2015 corn were $4.035/bushel, also down from the prior week’s $4.105/bushel.

Soybean prices for May 2015 were $9.535/bushel, down from $9.86/bushel one week earlier. July 2015 soybeans slipped to $9.5825/bushel from the prior week’s $9.9125/bushel, and November 2015 soybeans were quoted at $9.4525/bushel, a decrease from $9.7425/bushel the week before.

May 2015 wheat punched in at $5.1875/bushel, down from $5.3625/bushel, while July 2015 wheat contracts traded at $5.175/bushel, also down from the previous week’s $5.3575/bushel. Wheat for September 2015 was $5.255/bushel, down from $5.4425/bushel one week earlier.

Eastern Cornbelt: Strong storms pounded the Eastern Cornbelt on April 7-9, bringing damaging winds, hail, and heavy rains to many areas.

Flash flood warning were in effect in southern Indiana on April 7 due to powerful thunderstorms that produced torrential rains and baseball-sized hail in some locations. There were also midweek reports of wind damage in Evansville.

Ohio was also hit with lightening, hail, and damaging winds on April 8-9. “It’s very wet, with no field activity whatsoever,” said one Ohio contact at midweek. “It’ll probably be a week before we could get back in the fields, as wet as we currently are.”

Forecasts on April 9 had nearly all of Illinois at some risk of hail, damaging winds, heavy rains, and possibly tornados. There were reports of 70 mph wind gusts in some northern areas of the state, with flash flood warnings in effect in eastern Illinois.

Sources reported minimal fieldwork in the region due to the weather conditions, although there were reports of heavy preplant ammonia moving in Illinois early in the week. “We just need to get to the fields to support the markets,” said one source. “I think we could potentially see some major logistic problems building if this all breaks wide open at the same time.”

Western Cornbelt: A powerful storm system kept things wet and windy for much of the Western Cornbelt late last week, and brought most field activities to a stop as the week progressed.

Thunderstorms were reported across southern and central Iowa on April 9, with reports of 50-60 mph winds and large hail in some areas. One source said rainfall had been spotty in his immediate area, but some locations nearby had received up to 3 inches. More thunderstorms were in Iowa’s weekend forecast.

The same system also produced damaging winds and large hail in central and eastern Missouri, with reports of a tornado in Potosi, Mo., and torrential rain and hail in the St. Louis area. Dutzow, Mo., received 2.25 inches of rain in just 30 minutes on April 9.

Nebraska was also in the storm’s path, with forecasts calling for up to 3 inches of snow in western areas of the state, and a mix of rain and snow in the eastern counties.

Southern Plains: Sources reported “moderate” activity in the Southern Plains region last week, but weather continued to limit fieldwork in some areas. As the week progressed, forecasters warned of severe storms and possible tornado activity in northern Oklahoma and southeastern Kansas.

Areas of extreme to exceptional drought persisted last week across much of western Oklahoma, northern Texas, and parts of southern Kansas.

Texas growers had 1 percent of the cotton, 23 percent of the sorghum, and 21 percent of the rice planted by April 5,

Sulfuric Acid

Market Watch, Sulfuric Acid, U.S. Gulf

U.S. Gulf: The Gulf sulfuric acid market was primed for a climb, sources said.

European producers offered product at higher rates in the face of an expected supply dip during the upcoming European turnaround season, though currently favorable freight rates have taken the edge off prices for now, one contact said.

Observers were “anxiously awaiting” heavy-hitter Brazil’s potential reentry into the market and the price adjustment that could accompany such volumes. Meanwhile, domestic prices have inched higher in recent weeks, led by sulfur burners reportedly paying up to $100/st FOB.

Market watchers continued to quote Gulf acid imports unchanged at $75-$80/mt CFR, but believed new business had inched closer to the high side of the range.

Sulfur

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

Tampa: Market sentiment regarding the second-quarter price of molten sulfur delivered to Tampa exhibited a newfound lack of consensus last week.

As recently as two weeks ago, sources speculated that a rollover or small price decline was a likely outcome for the updated contracts. International softness spearheaded by stagnating demand in the Chinese spot market saw those expectations adjusted downward in the previous report, however, with most of them declaring an expected settlement to come in $10-$20/lt below the first-quarter price of $147/lt CFR.

With Chinese inventories said to be hovering below comfort levels at around 1 million mt, some market watchers are now saying that a demand surge in that market is inevitable.

Timing would be the key, they argue. A quick second-quarter settlement at current market conditions would likely produce an outcome lower by $10-$20/lt, but should China reenter the market en masse, the fresh demand would drive international markets higher, minimizing a decline to the quarterly price at Tampa.

Sources have increasingly pointed to international currency markets as a primary factor in the Chinese sulfur market’s recent cooling. Though international sulfur markets are down in terms of overall dollar amounts, the strength of the U.S. dollar relative to many international currencies has left many foreign netbacks relatively unchanged, market watchers say.

Other factors are at play in the second-quarter agreement as well, including perceived oversupply in the NOLA phosphate market, which has pushed prices down around $405-$410/st FOB as a result. Declines in the price of corn futures were also a factor, some believed. Should those influences hold, sources argued, raw material input prices would necessarily be impacted.

U.S. refinery utilization continued its recent hot streak, according to the U.S. Energy Information Administration, climbing for the fifth consecutive period. Domestic capacity was tabbed at 90.1 percent for the week ending April 3, a 0.7 percent increase from the previous week’s 89.4 percent, and also higher than the year-ago rate of 87.5 percent and the five-year average of 86.0 percent five-year.

Daily crude inputs also rose to an average 15.929 million barrels/d, a 201,000 barrel increase from the previous week’s 15.728 million barrels/d.

U.S. Gulf: The Gulf offshore market was called $130-$135/mt FOB, unchanged from the week before.

Vancouver: Prices in the Chinese spot market continued to float in the $150s/mt CFR, sources said, leading to Vancouver spot being quoted in a wide range of $135-$155/mt FOB. That range was unchanged from the previous report.
Alberta-based refiner Syncrude 21 prepared to enter a 45-day turnaround period that is expected to begin around the middle of the month, one contact noted. The turnaround will see production at the facility cut in half.

Alberta sulfur was unchanged at $5-$85/mt FOB.

West Coast: West Coast prill was quoted in a range of $130-$145/mt FOB. Second-quarter molten contracts fell in a range of $90-$130/lt FOB.

ADNOC: ADNOC sulfur was posted at $140/mt FOB Ruwais for the month of April, a decline of $35/mt FOB from March levels of $175/mt FOB.

Aramco: Saudi Aramco was listed at $165/mt FOB Jubail for April. A new May price was expected to be announced in the middle of the month.

Tasweeq: Qatar sulfur was put at $145/mt FOB for April, $19/mt below the March price of $164/mt FOB.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 106.23 104.83 94.19
CF Industries CF 284.81 280.22 255.41
CVR Partners UAN 13.80 13.05 21.59
Intrepid Potash IPI 11.60 11.51 14.82
Mosaic MOS 46.00 45.87 48.48
PotashCorp POT 32.53 32.70 34.21
Rentech Nitrogen RNF 14.09 14.62 17.98
Terra Nitrogen TNH 147.50 147.10 154.43
Distribution/Retail
Andersons Inc. ANDE 39.96 40.90 59.11
Deere & Co. DE 88.45 87.98 93.38
Scotts SMG 66.23 65.57 61.05

SQM chair may step down

News, News Briefs

Santiago — Sociedad Química y Minera de Chile SA (SQM) Board Chairman Julio Ponce may offer to resign his post, but will not give up his 32 percent stake in the embattled company, according to a report in Chile’s La Tercera newspaper last week. This was seen as a way in which the three Potash Corp. of Saskatchewan Inc. board members who resigned last month (GM March 23, p. 1) could return to the board when new members are selected April 24 (GM March 30, p. 12).

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