Potash Corp. of Saskatchewan Inc. said May 13 that it has become aware of an unsolicited “mini-tender” offer made by TRC Capital Corp. (TRC Capital) to purchase up to 5,000,000 PotashCorp common shares, or approximately 0.60 percent of PotashCorp’s outstanding common shares, at a price of C$19.95 per common share. It says the offering price represents a discount of 4.41 and 4.68 percent, respectively, to the closing prices of PotashCorp common shares on the Toronto Stock Exchange and New York Stock Exchange on May 10, 2016, the last trading day before the mini-tender offer was commenced.
PotashCorp does not endorse this unsolicited mini-tender offer and recommends that shareholders do not tender their shares. PotashCorp said it is not associated with TRC Capital, its mini-tender offer or the mini-tender offer documentation.
PotashCorp said TRC Capital has made similar unsolicited mini-tender offers for shares of other public companies. It said these offers are designed to avoid many disclosure and procedural requirements applicable to most take-over bids and tender offers under Canadian and United States securities legislation.
PotashCorp said the Canadian Securities Administrators (CSA) have expressed serious concerns about mini‑tender offers, such as the possibility that investors might tender to a mini-tender offer based upon a misunderstanding of the terms of the offer, including the per securities price available under the offer relative to the market price of such securities.
The U.S. Securities and Exchange Commission (SEC) has also issued comments about mini-tender offers. The SEC states: “Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off-guard if the investors do not compare the offer price to the current market price.”
PotashCorp urges shareholders to obtain current market quotations for their shares, consult with their broker or financial advisor and exercise caution with respect to TRC Capital’s offer. PotashCorp recommends that shareholders who have not responded to TRC Capital’s mini-tender offer take no action. It says shareholders who have already tendered their shares should take actions to withdraw them including reviewing the withdrawal procedures in TRC Capital’s offering documents.
U.S. Gulf: Prompt granular barges continued to trend downward last week. While most put new business in the $200-$212s/t FOB range, others said prices were taking another dive on Thursday to sub-$200/st FOB levels. By late Thursday, some players were calling prompt as low as $195/st.
Prills were called $220-$225/st FOB.
Urea imports were up 30 percent in March, to 1.33 million st from the year-ago 1.03 million st. July-March imports were off 7 percent, however, to 6.1 million st from 6.54 million st.
Eastern Cornbelt: The granular urea market remained at $265-$280/st FOB in the Eastern Cornbelt, with the low confirmed at Cincinnati, Ohio, and Ottawa, Ill., and the upper numbers out of inland locations.
Western Cornbelt: Sources reported steady movement of UAN and urea in pre-emergent applications on corn. “It’s been an amazing spring that allowed us to make up the shortfall from last fall,” said one regional contact, who expects his business to “achieve almost 100 percent of our annual projected sales.”
The granular urea market remained at $270-$285/st FOB in the Western Cornbelt, with the low out of spot river locations and the upper end inland.
Northern Plains: The granular urea market at the Twin Cities had reportedly slipped to $260-$265/st FOB, down $15-$20/st from last report. Delivered pricing in the Dakotas had fallen as well, to $295-$310/st, with the FOB Carrington, N.D., market pegged at $297/st for limited tons.
Great Lakes: Granular urea pricing had reportedly slipped to $295-$300/st FOB Michigan terminals, down $10-$15/st from last report. Urea pricing in the Wisconsin market was quoted at $280-$290/st FOB, depending on location.
Michigan sources said there is still a long way to go for spring fertilizer work, both for preplant and sidedress applications. A Wisconsin source reported steady demand, noting that planting progress varied widely across the state, with “some growers done, some halfway, and some just starting.”
No supply or logistics problems were reported in the region at mid-month, thanks to the stop-and-go fieldwork pace. “When it rains, we catch up on supply and the price drops,” said one source.
Northeast: Granular urea pricing was quoted at $275-$295/st FOB in the Northeast, with the low at East Liverpool, Ohio, and the upper end FOB Baltimore, Md. Southern Pennsylvania sources also quoted delivered urea tons at the $302/st level from terminals in Pittsburgh.
India: The next urea tender could come as early as the end of this month while the industry meets in Moscow at the annual IFA conference. Sources said any tender that includes June and July shipments would most likely be a replication of the MMTC that recently closed.
Sources said Chinese domestic demand remains strong enough that producers are looking at a better netback selling within the country rather than exporting. The summer application is expected to be strong enough to provide a steadying factor to Chinese prices. As a result, the producers have no incentive to lower their prices in the next tender.
Without China’s lead in price reduction, sources said Iran will most likely set the price tone for the next tender. Traders with Iranian backing led the way in the last tender and are expected to do so again, but the price is not expected to be lower than last time.
If the price remains the same, the tender could easily be dominated by Persian and Arab product. Sources even expect to see FSU urea tossed in once again, reflecting a stable price in Yuzhnyy. Chinese cargoes will then round out the orders from the other producers for a take of just under 1 million mt.
The closure of the Mangalore Chemical plant was seen by sources as a blip on the radar rather than a major issue. The plant closed because of limited water resources in the area. The company said it would restart once the water situation improves.
The monsoon rains are beginning to fall in parts of India. Government offices project stronger rains than in the past several years, returning the average rainfall to traditional levels. The weather predictions point to a strong urea application season.
China: Product remains dear at the ports as producers look to the tail end of the spring application season and anticipate good sales for the upcoming summer season.
Sources report that nothing under $220/mt FOB for prills is available. Some granular offers are coming in at a few dollars above the $220/mt FOB.
Sources said the producers are anxious to sell, but not enough to lower prices. More than 1 million tons were diverted from the ports to the domestic market, according to traders. The cost of the move was easily absorbed in the domestic price. May spot material is gone, according to sources, and any discussions of June cargoes start in the mid-$220s/mt FOB for prills and granular.
Traders said if the producers can hold off lowering their price for the rest of this month, they will be starting the summer applications and facing another Indian tender. While the June application season is not as large as the spring season, sources said demand appears to be strong enough that producers will not be under any pressure to lower prices for June-July shipments.
Middle East: Producers remain confident that they will not have to lower prices any time soon. Quotes for June spot sales are still at $218-$220/mt FOB for granular. The problem, said one trader, is that no one can find a buyer at that price.
Rumors of a June sale at $192/mt FOB circulated in the industry this week, but no one could name the seller or trader handling the deal. Sources said the price most likely came from a buyer looking at sales to Vietnam or current U.S. barge prices, and then working the math back for an Arab Gulf-equivalent price.
Contracted sales are lower than $218/mt FOB, but those are all based on long-term deals. Spot prices out of the region remain higher than the contract price.
Sources speculated that when the next India tender comes up, Iran will most likely lead the pricing, with China and then the Arab producers following.
Sources said prices have softened in Egypt to under $230/mt FOB. A selling tender is slated for sometime next week. Sources said the bids could be aggressive. At the same time, producers could play hard ball in an effort to move prices up.
Southeast Asia: The rains are just beginning in Thailand and Vietnam. Sources said the lateness of the seasonal rains could lead to a 20 percent reduction in urea consumption this year. One trader noted that the first application of the season has already been missed in Thailand.
Agricultural experts in Thailand discouraged farmers from planting any crops until the rains started. Sources said the experts are not sure if rice and other crops will be able to recover now that the rains are starting.
Indonesia held to its price of about $215/mt FOB for prilled urea. Granular product is still being offered at $221/mt FOB for contracted sales. Spot granular cargoes are being offered at $230/mt FOB.
Sources say a handful of 5,000-6,000 mt cargoes have been loaded and shipped to Vietnam.
Pakistan: The government announced that it would not be importing any urea under public tenders this year. It will still take some imported urea, though mostly from Saudi Arabia under government-to government deals.
The special arrangements, combined with the domestic production, means TCP will not need to conduct a tender or two to fill demand. Reserves of 1.2 million mt were built up when the government released more natural gas to the urea industry. Sources said the plants were able to operate at nearly full capacity. At the same time, demand so far this year dropped 13 percent compared to the same period last year. The combination gave the country an unprecedented set of reserves.
The government took advantage of the large reserves and lower production costs for the producers to cut the price to farmers. The price was RS37,000/mt (US$353/mt) to the farmer. The new price is RS35,800/mt (US$342/mt). Sources told local media that the price could fall even more, depending on demand and domestic output.
Tampa: The second-quarter contract price of molten sulfur delivered to Tampa was $70/lt, $25/lt below the first-quarter price of $95/lt.
Refinery runs fell last week, according to the U.S. Energy Information Administration (EIA). Refiners operated at 89.1 percent capacity for the week ending May 6, a decline of 0.6 percent from the previous week’s 89.7 percent, and also below last year’s 91.2 percent, but equal to the 89.1 percent five-year average.
Despite the reduced utilization, daily inputs jumped higher, EIA said. Crude inputs averaged 16.179 million barrels/d, 193,000 barrels/d above the previous week’s 15.986 million barrels/d.
U.S. Gulf: Gulf cargoes were quoted at $65-$70/mt FOB, unchanged from the previous week.
U.S. Imports: March imports were down 23 percent, to 100,260 st from the year-ago 130,655 st. July-March were off only 6 percent, to 1.21 million st from 1.28 million st.
Vancouver: With supply constrained by the Alberta wildfire, Vancouver export players were faced with difficult choices, sources said.
Unable to meet demand, many sellers prioritized contract shipments over spot commitments, leading to a number of spot export shipments “not being met,” said one seller. A mild bump was reported in offshore pricing for the week, with last-done called $70-$78/mt FOB, up from $70-$75/mt FOB at last report.
Domestic Canadian prices were also on the rise thanks to the limited supply. “Canadian business can be done today at multiples above contract price, if supply was available,” said one market player.
Suncor Energy Inc.’s Fort McMurray-area operation, which was reportedly still offline as of May 13 due to Alberta’s devastating wildfire, contributes 500,000 mt/y to the North American market, while Syncrude Canada Ltd. is capable of an additional 600,000 mt/y.
Syncrude’s sprawling facility was shut down the previous week following a large-scale evacuation, although sources said a skeleton crew was onsite to prepare for a restart. Suncor was also preparing to restart operations, possibly as soon as May 13. Canadian Natural Resources Ltd. (CNRL) continued production through the fire, but was forced to block material because of limited freight access.
“With regard to Canada, there would not be enough sulfur to meet the needs of domestic Canadian business, offshore business, and U.S. business” in a long-term outage, said one industry veteran. “Extended losses would be crippling for export, as 600,000 mt are needed for the Alberta domestic market alone,” echoed another source. “There are no other sources big enough to compensate for Canadian supply.”
Access to Fort McMurray remained a primary impediment to operations, sources confirmed. Fort McMurray travel was limited to “essential services,” according to the Alberta Ministry of Transportation. Oil Sands commercial vehicles were treated as “essential” as of May 10 and allowed to pass through Fort McMurray to industry operations located north of the city, although access to the city itself was off limits to all but emergency responders.
Despite early-week reports that the fire was growing, the threat to oil and sulfur operations was diminished on May 12. Reports said the fire was moving to the southeast, away from Fort McMurray.
“I think all are hopeful that the reduction in shipments ex-Oil Sands is just a short-term phenomenon, with roads and plant operations opening imminently,” one source commented. “Things are likely returning to normal in the next week or so,” another added.
Alberta prices were called in the (-)$55-$5/mt FOB range for the week.
Last-done at China was quoted in the neighborhood of $85/mt CFR.
West Coast: West Coast prills were unchanged at $65-$70/mt FOB. Molten contracts fell in the $55-$85/lt FOB range for the second quarter.
ADNOC: May formed sulfur offers from the Abu Dhabi National Oil Co. were priced at $85/mt Ruwais, a rollover from April. March tons ran $3/mt higher, at $88/mt FOB.
Aramco: Industry players put Saudi Aramco prices for May loading at $85/mt FOB Jubail, unchanged from April. The April and May rates represent a $5/mt decline from the $90/mt FOB March price.
Tasweeq: Qatar state oil producer Tasweeq offered sulfur cargoes at $79/mt FOB Ras Laffan for May, a $1/mt increase from April’s price of $78/mt FOB.
U.S. Gulf: Vessels imported to the Gulf were expected to see pricing in the $35-$45/mt CFR range, unmoved from the prior report. Price ideas were based on Northwest European smelter netbacks quoted in the (-)$5-$5/mt FOB range.
In the domestic market, fundamentals were described as balanced-to-long. Delivered Midwest pricing was reported in the $80-$90/mt range, with Gulf rates in the $90-$95/mt DEL range. West Coast sales fell in the $95-$105/mt DEL range.
Observers put the Brazil acid market at $35-$45/mt CFR, and vessels to Chile ran $45-$60/mt CFR.
London Metal Exchange prices were mixed at the May 11 close. Lead and zinc were firm compared to the week before, but aluminum, copper, and nickel were down.
Aluminum closed at $1,560.00/mt, down from $1,611.00/mt a week earlier, and copper slipped to $4,748.00/mt from the previous week’s $4,892.00/mt. Lead values firmed to $1,784.50/mt from $1,765.50/mt, but nickel fell sharply, to $8,780.00/mt from $9,390.00/mt the week before. Zinc closed at $1,890.50/mt, up from $1,875.00/mt at last report.
U.S. Imports: March imports were down only 1 percent, to 320,672 st from the year-ago 322,985 st. July-March were up 6 percent, to 2.94 million st from 2.76 million st.
Thailand: Padaeng Industry (PDI), Southeast Asia’s sole zinc smelting operation, announced plans to cease operations at its 110,000 mt/y facility in 2017, according to reports.
Sources attributed the shutdown to the depletion of PDI’s Mae Sot mine, in operation since 1989, along with a failure to obtain permits for replacement mining operations in Thailand or neighboring countries.
U.S. Gulf: Shippers quoted Algiers Lock wait times in the 8-10 hour range last week. Peak hours were once again higher than average due to the Harvey Lock closure, which prompted the Corps to route vessels through Algiers instead. The Harvey Lock shutdown was extended through May 15.
Waits at Bayou Sorrel fell in the 10-12 hour range, with an average of seven boats in line for service. Port Allen Lock reported 10-hour waits with 10 tows waiting to lock, and Industrial Lock transits required just 4-5 hours last week.
A tentative 120-day Industrial Lock closure is looking closer to reality, shippers said. With funding in place to dredge the Baptiste Collette channel for use as an alternate route, the sole remaining hurdle is for water levels to drop low enough to allow work to begin. Recent river forecasts predict suitable conditions in early August. Dredging of the channel is slated for late May through early June, with the lock closure itself penciled in for Aug. 1 through Nov. 29.
The Baton Rouge gauge returned to action stage last week, reading 30.41 feet and rising on May 11, with a peak of 31 feet forecast for May 15. Flood stage begins at 35 feet. The gauge at Natchez read 43.57 feet, up from 37.94 feet the week before, with flood stage starting at 48 feet.
Calcasieu Lock reported delays in the 3-4 hour range, and the Charenton, East Calumet, and West Calumet floodgates were unavailable for the week due to high water.
The Brazos River floodgates remained under restriction due to high flows, with delays pushed to 6-12 hours on May 10, sources said. Dredging at Brazos River Crossing is expected to trigger intermittent daylight-hour lock closures through May 16.
Colorado Lock wait times were noted in the 2-3 hour range. Guidewall repairs on both the east and west locks began May 9 and will likely spark closures during work hours, the Corps said. The repairs are due to run during daytime hours, Monday through Friday, through June 30.
Lower Mississippi River: Southbound Tows running 6,000 horsepower or more were subject to restrictions last week. Shippers said barge counts were being determined on a tow-by-tow basis, with reductions of up to 20 percent reported.
Levels at Vicksburg were noted at 35.38 feet on May 12, above the 35-foot action stage. The gauge was expected to hover around 35.3 feet through May 16. Memphis depths were recorded at 20.19 feet, up from 16.77 feet the week before.
Upper Mississippi River: Wait times at the Mississippi River’s Lock 27 fell in the 1-3 hour range for the week, while Lock 20 delays were reported at 1-2 hours. Mel Price Lock navigation required an additional 1-3 hours.
St. Louis levels were at 23.39 feet on May 12, and were forecast to peak around 23.8 feet before starting a rapid descent. A reading of 14.8 feet was predicted for May 25.
Illinois River: Marseilles Lock transits ran about an hour for the week, and waiting at Starved Rock Lock was reported in the 1-2 hour range. The Corps halted locking operations at Peoria Lock last week, joining the LaGrange Lock dam in the down position. Vessels were able to transit both locks freely.
Ohio River: Racine Lock delays were just over an hour for the week, and Greenup Lock wait times fell closer to two hours on May 11.
The Corps put Emsworth and Montgomery Lock wait times at 1-2 hours for the week. A main chamber shutdown is scheduled at Montgomery Lock starting on May 16. Plans call for the lock to open to traffic on May 28-30, and once more on June 4-5, before reopening June 10.
The main chamber at Emsworth Lock is slated for closure July 5 through Aug. 10, with delays expected. The Corps issued a notice that the lock would reopen temporarily on July 16-17 and July 30-31 to clear waiting traffic. The auxiliary chamber will remain available throughout.
High-water conditions paused locking at Locks 52 and 53 for the week, allowing vessels to pass freely, but Lock 53 still required 1-2 hours for passage. Vessels continued to access the Olmsted pass last week.
Depths at Cairo were recorded at 35.22 feet and falling on May 11, higher than the 32-foot action stage, but levels were expected to descend to 33.1 feet by May 15. The Cincinnati gauge showed 31.4 feet and falling, lower than the 40-foot action stage.
Greenup Lock main chamber maintenance is scheduled to continue through Sept. 30, with major delays anticipated. Sources described peak wait times of up to 10 hours for the week while traffic was routed through the lock’s auxiliary unit.
The auxiliary chamber at New Cumberland Lock is closed through May 27. The Corps plans to make the chamber available on May 15-16 to clear accumulated traffic.
Repairs shuttered the Tennessee River’s Pickwick Lock on May 5-6, and Watts Bar Lock will see sporadic shutdowns on June 3-23 while repairs are performed. With no auxiliary chamber at Watts Bar, the closures will effect a total river shutdown. Chickamauga Lock is slated to close July 11 through Aug. 11, closing the river. Machinery repairs will force intermittent service interruptions at Fort Loudon Lock on June 3-11.
The Monongahela River’s Braddock Lock and Dam river chamber remained unavailable last week due to equipment failure, forcing traffic through the site’s land chamber instead. Repairs closed the land chamber between 9:00 a.m. and 3:00 p.m. on May 11.
Arkansas River: Bottom seal replacement at Webbers Falls Lock will stop upstream locking on May 16-22. Structural rehab and painting work will shutter the lock’s downstream side from Aug. 22 to Sept. 12.
The Sulphur Institute (TSI) reports that Harold H. Weber Jr.‚ P.E.‚ vice president‚ regulatory affairs and special projects‚ will retire June 30‚ 2016. TSI said he is departing after 32 years of diligently advocating responsible and beneficial resolution of issues associated with international sulfur transportation and logistics. Prior to joining TSI in 1984, he managed road construction programs‚ including sulfur asphalt paving‚ for six years with the U.S. Federal Highway Administration, and spent six years with the Pennsylvania Department of Transportation managing road and bridge construction.
Fredericton, N.B.—The New Brunswick provincial government said May 11 that it will conduct a resource assessment of the Penobsquis potash deposit, which was idled by Potash Corp. of Saskatchewan Inc. last November (GM Nov. 2, 2015). “Our government believes in the safe and responsible development of our natural resources to help create jobs and grow the economy,” said Energy and Mines Minister Donald Arseneault. “As responsible managers of our province’s resources, we have an obligation to review and fully understand what, if any, potential resource remains in the Penobsquis potash deposit.” The Department of Energy and Mines is working to finalize a contract to hire a third-party consultant to carry out an assessment of any remnant potash resource and its potential for development in the event potash prices recover to suitable levels. It is anticipated that the assessment will take several months to complete. More details will be provided once the contract is finalized. Not only did PotashCorp idle the Penobsquis mine, citing its uneconomic status, but also its replacement mine, Picadilly, saying its Saskatchewan mines were more economic in today’s market (GM Jan. 22, p. 1). Earlier this month, PotashCorp registered for an environmental impact assessment (EIA) to officially decommission the mine, a process which the company said normally takes 90-120 days. While the EIA process can continue, PotashCorp told Green Markets last week that the mine cannot be decommissioned until after the province completes its resource assessment, which could be longer than the EIA timeline. In the meantime, until the mine is decommissioned, PotashCorp is expending some C$50,000 per day to pump water from the mine and truck it for disposal in the Bay of Fundy at Saint John. PotashCorp believes the Penobsquis mine should be allowed to flood, adding that should mining economics return, the ore could be accessed via the existing Picadilly mine.
Washington—The Occupational Safety and Health Administration (OSHA) on May 6 informed Congress that it intends to conduct formal rulemaking to change the retail exemption to its Process Safety Management (PSM) standard. In a separate letter to the District of Columbia Court of Appeals, which is handling litigation filed by the Agricultural Retailers Association (ARA) and The Fertilizer Institute (TFI) challenging the revised retail exemption, OSHA said it will establish a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel to evaluate the impact of the regulation on small businesses, and that it may take up to five years for the rulemaking process to be completed. OSHA also informed Congress that it intends to enforce the existing Oct. 1, 2016, deadline for compliance with the revised PSM retail exemption while the rulemaking process is underway, and asked Congress to “not take further action that would limit the scope or applicability of the guidance during such time as OSHA conducts rulemaking.” ARA said it would work with TFI to respond to both communications, but said it was baffled that OSHA would attempt “to enforce an amended regulation up to five years before they complete the legally-required rulemaking to establish it,” while also imploring Congress “to not prevent them from violating the Administrative Procedures Act in this manner.” ARA also reported that the Court of Appeals has agreed to a joint request to dispense with oral arguments in its legal challenge to the revised PSM exemption, and instead decide the case based on the briefs that have been submitted. ARA said this decision would speed up the outcome considerably and limit legal fee costs to ARA and TFI.
Melbourne—Orica reported net profit after tax (NPAT) of A$149 million on sales revenues of $2.55 billion for the six months ending March 31, 2016, down 33 percent from the year-ago $222.1 million and $2.81 billion. Before a $41 million tax-related expense, NPAT was $190 million, which was down only 10 percent from the year-ago period. Ammonium nitrate volumes were down 8 percent, to 1.71 million mt from the year-ago 1.86 million mt. “Market conditions deteriorated more than we anticipated during the half marked by increased volatility,” said CEO Alberto Calderon. “It is expected the market will remain challenged for the foreseeable future. Regardless, our continued focus will be on business improvement initiatives, capital discipline, and customer relationships.”
Nederland, Texas—OCI Partners LP reported a first-quarter net loss of $6 million on revenues of $70 million, compared to year-ago earnings of $893,000 and revenues of $38 million. However, first-quarter EBITDA was $18.2 million, up from $9.6 million. The company was still in the process of debottlenecking its operations during the year-ago period. The first-quarter saw utilization rates of 99 percent for methanol and 107 percent for ammonia. Sales prices for both commodities were down for the quarter. The company produced 88,000 mt of ammonia at an average price of $295/mt, compared to the year-ago 21,000 mt and $509/mt, respectively. It produced 225,000 mt of methanol at $189/mt, down from 57,000 mt and $366/mt, respectively. However, natural gas costs were down at $2.13/mmBtu from the year-ago $3.21/mmBtu. The company has approved a quarterly cash distribution of $0.06 per common unit. Going forward, the company said tight ammonia supplies in the Midwest could help support prices in the next few weeks. It also noted that USDA is reporting that corn planting is slightly ahead of year-ago levels despite recent rain and cold weather and fieldwork in several states.
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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.
