All Posts from September 13, 2010

Middle East: Sales out of Iran are pushing the price up better than deals from Arab producers. At the same time, the most recent tender showed a softening in the regional market.

Mitsui bought a large cargo from Iran at $370/mt FOB. This came on the heels of Transammonia settling with FACT/India at $372/mt CFR for an estimated netback of $342-$345/mt FOB.

Traders were perplexed at the Trammo price. The offers from Arab Gulf producers were at least $40/mt higher. Sources said the producers’ offers were more indicative of where the market was going.

The Iranian sale adds fuel to the sentiment that the price should be closer to $400/mt FOB than somewhere in the mid-$300s/mt FOB.

Besides strong demand, sources say the continued shutdown of the Pardis I plant in Iran is adding to higher prices.

The plant was closed last month after an explosion disrupted the natural gas supply line. At the time, the company said repairs would be done quickly and the plant would be back online soon. Now, say sources, the plant is slated to be down for another month.

Ironically, just a few months ago the Arab producers were complaining that the Iranians were undercutting their efforts to move up the price. Now, with the only public deal from an Arab source showing a lower price, it is the Iranians leading the way to higher prices.

One Asian trader said that the Trammo deal to FACT took away the last of the low-cost ammonia from the area. Others were not so sure.

A sale of 5,000 mt to Gresik/Indonesia by Trammo at $410/mt CFR has an estimated netback of $360-$370/mt FOB. The deal comes on the heels of a 10,000 mt deal at $400/mt CFR – with a netback of about $350/mt FOB.

These deals came at or just after the sale to FACT. Sources say Trammo was clearing out some positions in the early sales.

Reportedly, the 15,000 mt to Gresik will be loaded at the same time as the cargo to FACT.

Arab producers, naturally, disagree, and say the high end needs to be closer to $400/mt FOB and that the FACT numbers should be discounted completely.

Despite what the producers are asking for, sources say nothing has been done above the $370/mt FOB level yet. All that has happened is that the low end of the price range has moved up to $360/mt FOB.

Asia: Transammonia sold a cargo of 5,000 mt to Gresik/Indonesia for $410/mt CFR. This is a $10/mt increase from a deal settled a couple of weeks ago at $400/mt CFR.

The netback on the material is put at $370/mt FOB, or at par with the most recent Iranian deal with Mitsui.

In total, Trammo is slated to deliver 15,000 mt to Gresik in the next couple of weeks. Sources say Gresik will continue to look for tons to supplement the material it gets from Kaltim.

Only occasionally will Gresik be able to get material from other Indonesian producers. The joint ventures run by Mitsui and Mitsubishi are exclusively for export and cannot help Gresik. Sources say occasionally PIM or Pusri will have a cargo for sale, but not on a regular basis.

The Gresik demand is estimated at twice what local suppliers can offer. That means, said one trader, that a lot of people will be watching the sales to Gresik for additional clues about where the market will be moving.

For now, the only direction for prices seems to be up.

Demand throughout the region remains strong.

Industrial buyers from South Korea and Taiwan continue to ask suppliers not only for full cargoes, but the “plus 10 percent” portion of their contracts. Suppliers are said to be hard pressed to fulfill those wishes.

India: All DAP producers and industrial ammonia buyers appear to be running at top form, say sources. Nothing seems to be standing in the way of increased demand for ammonia imports.

UREA

U.S.Gulf: Urea barges shot up last week, with most saying
the week began at $315-$320/st FOB and then moved up to
$330-$335/st or higher.

Sources listed several reasons for the higher prices – river closings in mid-October, higher international prices, and higher wheat and grain prices. However, others said when it all came down to it, it may have simply been supply and demand. Buyers came forward and there were not that many floating barges left on the river. Sources add, however, that a good lineup of vessels is due into NOLA in late September and early October. Others noted that urea has been in demand because it has continued to be a better value per unit of nitrogen compared to ammonia and UAN.

New prill trades were called $320-$325/st FOB.

Eastern Cornbelt: Granular urea pricing had firmed to $350-$360/st FOB in the region. One supplier was referencing a solid $360/st FOB for cash tons in Illinois and Ohio, with forward contract urea in the $360-$370/st range for October through December.

Western Cornbelt: Granular urea had reportedly firmed to $355-$360/st FOB river points, with Iowa sources quoting inland warehouses in the $360-$375/st FOB range last week. One supplier was referencing cash market tons FOB St. Louis at the $360/st FOB level as of Sept. 9, with forward contract tons at $360-$370/st FOB for October through December.

California: Granular urea was steady at $385-$395/st FOB in California.

Pacific Northwest: Granular urea pricing had reportedly firmed to $360-$380/st FOB and $375-$400/st DEL in the region.

Western Canada: Urea pricing was steady at $436-$441/mt DEL in Manitoba and Saskatchewan, with Alberta pricing quoted in the $446-$461/mt DEL range.

India: Once again, eyes are turning to India for a way out of a quiet market. Sources in Asia say an Indian buyer is expected to step up and call a tender soon. One trader suggested the call may come as early as the TFI World Conference gathering this week. If that happens, he said, at least the participants will have something other than the rising price of ammonia to talk about.

Right now, the Indian government seems to be evaluating the urea stockpiles. Estimates of how much urea is in warehouses and the supply pipeline range from none to enough for a couple of months.

As always, politics plays as large a role in import orders as the actual reserves on hand do.

Media reports say farmers in some areas are complaining to their local government leaders that the local stockpiles are insufficient for the rest of the season. These politicians, in turn, are complaining to the national government.

So far this year the importing bodies have been successful in keeping the price below the $310/mt CFR target set by the government. The subsidy plan in place will only allow subsidy payments for urea that costs $310/mt CFR or less. Anything above that level is unsubsidized, leaving the holder of the material to absorb the difference between the imported cost and the lower maximum level farmers can be charged.

The current subsidy plan is based on the nutrient content instead of specific fertilizer. For example, the subsidy on urea is based on its N content, not the fact that it is urea.

Indian media now report that the government is looking to revamp the subsidy plan beginning in the new fiscal year that starts in March 2011.

The arrangement will take domestic urea out of the subsidy plan.

Currently all urea – imported and domestic – is included in the Nutrient Based Subsidy (NBS) plan. Now, an official from the Fertilizer Department said domestic urea will be provided subsidies separate from the NBS.

One media report said the urea industry is upset with the government over delays in regulations that would have allowed private importation of urea.

The suggested removal of domestic urea from the NBS is now confusing even more people in the industry as to how much will be subsidized, and how.

Black Sea: Once again, Fedcominvest is reportedly buying up cargoes as soon as tonnage is made available.

Sources say chances are Fedcom is moving to either cover deals already made with Latin American buyers, or to position itself as the main holder of Yuzhnyy urea once these same buyers come knocking on the door.

Sources say producers keep asking $290/mt FOB, and there are rumors that $290/mt FOB has been breached. One Asian trader said, however, that the higher-priced tons coming out of Yuzhnyy are more likely to be top-off tons rather than full cargoes.

Yet no one can deny that inquiries are coming in fast and strong from areas around the globe.

Rising prices in the Middle East and China mean higher pricing ideas from Yuzhnyy, said one trader.

For now, sources say the deals above $290/mt FOB do not reflect the whole market. Sources are comfortable calling the market $285-$290/mt FOB.

Middle East: Producers see no reason to lower their pricing expectations.

Even though none of the companies running tenders in India gave awards to Middle East producers, tons from the area are playing a dominant role in the Indian urea industry.

Analysis from Indian sources says 62 percent of the tons entering India in July came from Oman.

This is not surprising given the awards issued to Transammonia over the summer. Trammo seems to be supplying cargoes from Oman, with whom it has a long-term selling agreement.

Other tons from the Arab Gulf are not coming from Arab producers, but rather Iran.

Oman and Iran were willing to offer prices to Indian buyers that allowed the buyers to stay under the $310/mt CFR limit set by the Indian government. Meanwhile, the Arab producers were pushing prices into the mid $300s/mt FOB.

The last Indian tender had Arab offers at $315-$318/mt FOB. Producers now say the price should be closer to $370/mt FOB.

With prices that high, the Indian government has to keep turning away from the Middle East suppliers.

Egypt concluded a cargo late last week at $350/mt FOB. Sources speculate the material is going to Europe.

Sources say nailing down the producers as to their reserves is difficult. Industry watchers do agree, however, that there are a lot of operating contracts covering most of the Arab production.

The Egyptian business provides a good indicator of the upper end of the market. It can often get a better netback on its tons from customers in Europe and northern Africa.

The lower end of the Middle East range has to come from the offers made in the last Indian tender. One trader said even rounding up to $320/mt FOB still creates an unusually large gap between the Arab Gulf and Egypt.

The regional price range is now pegged at $320-$350/mt FOB.

Correction: The year-ago price for Caribbean granular urea on page 4 of the issue dated Sept. 6, 2010, should have read $259/mt FOB.

China: Sources report the market in China is moving ever upward. Late last week, sources confirmed prills selling at $295/mt FOB and granular at $330/mt FOB. The price rise comes as more Chinese tons are being offered in international tenders.

The first indication of how many excess tons were available came in the IPL tender that gave almost all its awards to companies offering Chinese material. The just-closed Sri Lankan tender also seems to be dominated by Chinese product.

The tons that leave port after Sept. 15 will either have to have been sitting in a bonded warehouse or be part of a larger order for a nominated vessel to escape the higher export duty.

From Sept. 16 through Oct. 15, the export duty on urea will be 110 percent. Beginning Oct. 16, the rate drops back to 7 percent.

Sri Lanka: An agriculture ministry tender for two cargoes of 12,000 mt of bagged urea closed Sept. 9.

Sources said all the offered tons are from China, with prices indicative of the current Chinese market.

Validity for the tender was until Sept. 17. Some of the offering companies, however, picked quicker dates for the validity of their offers. For example, the validity of Valency’s offer is Sept. 17. Transammonia’s, however, expires a day earlier.

NITROGEN SOLUTIONS

U.S. Gulf: New trades were hard to find. Most were putting the market at $235-$240/st FOB ($7.34-$7.50/unit), with others saying the next sale might be in the $260-$270/st FOB range.

Eastern Cornbelt: UAN-32 had reportedly moved up to $275-$285/st ($8.59-$8.91/unit) FOB regional terminals, depending on location. One supplier was referencing forward contract tons at $8.95-$9.15/unit FOB Illinois and Indiana terminals for October through February.

Western Cornbelt: The UAN-32 market in the Western Cornbelt was up to $270-$275/st ($8.44-$8.59/unit) FOB spot river locations for limited prompt tons, with new dealer reference levels as high as $295/st ($9.22/unit) FOB out of some river terminals in Missouri. An Iowa source quoted spring prepay at the $285/st ($8.91/unit) FOB level last week.

California: UAN-32 remained at $270-$285/st ($8.44-$8.91/unit) FOB California terminals to the dealer, with the low from Yara FOB Stockton. Company sources said an increase is likely in the near term. Simplot was referenced at the $290/st ($9.06/unit) level FOB Helm and El Centro, and $285/st ($8.91/unit) FOB Stockton. Aug. 13 reference prices from Agrium included $283/st ($8.84/unit) FOB Sacramento, $305/st ($9.53/unit) truck-DEL in Central California, and $310/st ($9.69/unit) truck-DEL in Northern California.

Pacific Northwest: Sources quoted UAN-32 at $290-$295/st ($9.06-$9.22/unit) DEL in the Pacific Northwest region, which was up from last report. One regional supplier moved its postings up on Aug. 25 to $295/st ($9.22/unit) DEL in eastern Oregon and Washington.

Western Canada: UAN-28 remained at $261-$276/mt ($9.32-$9.86/unit) DEL in the region, with the low end in Manitoba and the higher numbers to dealers in Alberta.

AMMONIUM NITRATE

U.S. Gulf: The last done business is referenced at $255-$260/st FOB; however, sources are now saying the next round of business may be closer to $270/st FOB.

Western Cornbelt: Ammonium nitrate remained at $290-$305/st FOB, with the low in Iowa and the upper end in Missouri.

California: No market was reported for ammonium nitrate in California. CAN-17 was unchanged at $242-$255/st FOB in the state.

Pacific Northwest: Ammonium nitrate was pegged at $340-$355/st DEL in the region. No current pricing was reported for CAN-27.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was quoted at $190-$200/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate was pegged at $190-$200/st FOB regional terminals.

California: Ammonium sulfate remained at $220-$247/st FOB, with the low for standard and fluid grade and the upper end for granular product in desert locations. Effective Aug. 23, IRM moved its fluid grade ammonium sulfate postings up to $220/st FOB Sacramento and $225/st FOB Chico, Calif.

Pacific Northwest: Granular ammonium sulfate was quoted at $245/st FOB and $250/st DEL in the region, reflecting a sizable increase from last report. Effective Aug. 23, IRM moved its granular and regular grade ammonium sulfate postings up to $245/st FOB and $250/st rail- or truck-DEL in Oregon, Washington, Idaho, and Montana. The company’s fluid grade ammonium sulfate postings moved on that date to $215/st FOB and $220/st rail- or truck-DEL in the region.

Effective Sept. 13, Agrium was slated to firm its ammonium sulfate postings to $245/st FOB in Washington, Idaho, Oregon, Utah, and Nevada, and $250/st DEL in those same states plus Montana and Wyoming.

Western Canada: Granular ammonium sulfate was quoted at $290-$295/mt DEL in the region, with dealer reference prices roughly $5/mt higher.

PHOSPHATES

Central Florida: Inventories in Central Florida simply do not exist, which makes it difficult to do buys and sales.

The big question for the industry was the lost production Mosaic will have after closing its South Fort Meade Mine. The mine produces about 5 million/st of rock a year, which would amount to about 3 million/st of phosphate product a year.

Although the NOLA DAP barge market was on a huge market upswing, mostly from dealers in the Cornbelt, that was not happening in Central Florida. The biggest problem was that no new DAP was being made available for sale on a prompt basis. Mosaic and CF were loading trains only under contract, and had nothing left to sell on the market. If they did, the price would probably move up $10/st FOB or more.

A Central Florida trader said he passed on buying two railcars of DAP, which was selling for $465/st FOB. He had sold the same two railcars earlier at $430/st FOB. Another trader sold two railcars at the current market price of $465/st FOB.

The Central Florida DAP price range became flat at $465/st FOB last week, a change from the previous week’s $465-$473/st FOB. Neither Mosaic nor CF had anything available for prompt delivery this month, and probably will not for October either. CF’s posted prices were $470/st FOB for DAP and $495/st FOB for MAP, a $25/st FOB premium. Mosaic had no posted prices, and was loading railcars for customers under contract and charging the market rate. PCS was making sales at “competitive prices.” Agrifos was asking from $495/st FOB for DAP and $515/st FOB for MAP for truck sales, and railcars were about $5/st FOB less.

U.S. Gulf: Fasten your seatbelts and hang on tight – the NOLA DAP barge market was wild last week. With inventories in short supply and farmers putting phosphate on their fields, dealers were in the market looking for enough to meet their customers’ needs.

By Monday, the prices moved up to $485/st FOB. By Wednesday, prices were moving up rapidly – $490/st FOB, $495/st FOB, and so on. As of last Thursday afternoon, sellers were asking $500/st FOB, which was the highest price since the big run-up two years ago.

Large producers were wondering what the break price would be – when farmers stop buying. If the price gets too high and farmers do stop buying, the market would come to a screeching halt. That has not happened yet.

The domestic market, and especially the NOLA DAP barge market, competes against the export market. Lately, the export market has fallen because the price was too low and the domestic market was too high. Assuming the $500/st FOB happens, the export market would have to rise to at least $550/mt FOB. Last week, the range was set at only $502/mt FOB Tampa, a far cry from the $550/mt FOB needed to be competitive.

For farmers and some dealers, the good news was warehouses were lagging behind on the price rise, because the product still in the bins had been purchased at significantly lower prices. In general, most of the warehouses were still charging between $495/st FOB and $520/st FOB. For those who have the option to purchase in September or October, the decision will be difficult. Once the new product is sold to farmers or dealers, the price will be higher.

Farmers in the Cornbelt and wheat farmers were as concerned about taxes as they were about getting their needs filled. After what appears to be a really good year, they will have more income and they need to spend money to put fertilizer down on the fields now, to help reduce total income and record the fertilizer as a business expense before the end of the year.

Corn prices remained high, along with wheat and soybeans. The Russian ban on wheat exports has hit the market hard. Last week, corn was selling at $4.65/bushel for December 2010 on the futures boards, while wheat was bringing $7.19/bushel for July 2011, and soybeans were $10.37/bushel for November 2010. At those prices farmers simply cannot afford to skimp on fertilizer – and won’t.

Based on sales last week, the NOLA DAP barge price range jumped up from $475/st FOB the previous week to $480-$498/st FOB last week. Asking prices were $500/st FOB late last week and will probably be higher this week, say sources. Activity at the TFI World Conference could firm the market.

Eastern Cornbelt: DAP had reportedly firmed to $515-$525/st FOB, with MAP $10-$15/st higher. One supplier firmed its DAP postings on Sept. 10 to $525/st FOB Peoria, Ill., and $530/st FOB Cincinnati, Ohio. The DAP barge market firmed rapidly last week, with inventories in short supply. Barge prices moved from $480/st FOB the Gulf as the Labor Day weekend began to $498/st FOB by Sept. 9.

10-34-0 remained at $365-$385/st FOB in the region.

Western Cornbelt: Sources said DAP pricing had firmed to $515-$520/st or higher FOB most river points. MAP was hard to find and pricing covered a broad range, from $530/st FOB spot river locations to $550/st FOB inland warehouses in Iowa. One Missouri source put the market in his location at $520/st FOB for DAP and $530/st FOB for MAP, while DAP pricing out of the Catoosa, Okla., market was pegged in the $510-$520/st FOB range.

One supplier reposted DAP on Sept. 10 at $525/st FOB St. Louis, Mo., and $530/st FOB Inola, Okla., and Pine Bend, Minn., with MAP moving to $555/st FOB Inola and Pine Bend. Forward contract prices for DAP at St. Louis ranged from $515-$520/st for October through January.

California: The DAP and MAP markets were quoted at $550-$570/st FOB or DEL, up $30-$35/st from last report, with the low reflecting Sept. 13 postings from Agrium. Simplot was slated to move its postings up to the $570/st FOB or DEL mark on Sept. 10.

16-20-0 was pegged at $349-$369/st FOB, with the upper end reflecting Simplot’s Sept. 10 reference price. The company’s postings in the desert firmed on that date to $399/st FOB.

10-34-0 was pegged at $380-$400/st FOB in the state, also up from last report.

Phosphoric acid pricing as of Sept. 1 firmed to $8.75/unit DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA). Simplot was also referencing MGA at $8.95/unit FOB in the state as of Sept. 1. Agrium’s postings for SPA and MGA moved on Sept. 1 to $875/st rail-DEL in Arizona and California.

Pacific Northwest: Effective Sept. 13, Agrium’s MAP postings will firm to $560/st DEL in Montana; $565/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $565/st FOB and $570/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County. Those postings were up $15/st from Agrium’s Sept. 3 reference levels, and $40/st higher than Aug. 18 postings. Since July 1, Agrium’s MAP postings have firmed $95/st in the region.

Simplot was slated to move its DAP and MAP postings up $35/st on Sept. 10. New postings include $555/st DEL in Montana, $560/st DEL in Idaho, and $565/st DEL in Washington, Oregon, and Nevada. 16-20-0 postings from the company firmed on Sept. 10 to $366/st DEL, up $20/st from the previous level.

Simplot’s phosphoric acid postings firmed on Sept. 1 to $8.75/unit DEL for both SPA and MGA in the region. Agrium’s SPA and MGA postings firmed as well on that date, to $875/st rail-DEL in Idaho, Montana, Nevada, Oregon, Utah, and Washington.

10-34-0 was quoted at $390-$395/st FOB in the region.

Western Canada: MAP had firmed $35/mt from last report. Sources quoted the dealer market at $657-$662/mt DEL in Manitoba, $662-$672/mt DEL in Saskatchewan, and $667-$692/mt DEL in Alberta, depending on location.

10-34-0 was pegged at $500-$513/mt DEL in the region last week, up $20/mt from last report.

U.S. Export: The export DAP market was not competitive
with the domestic market, and those who had anything available
were sending to the NOLA DAP barges market instead.

One source said he would have to charge or be offered $530/mt FOB, but he probably would not do the deal at that price. To match the NOLA DAP price of $500/st FOB, which was probable this week, an offshore buyer would have to offer about $550/mt FOB to match the domestic price.

A source said a small amount was added to a vessel, but no price was available. None of the major exporters of phosphate made any sales last week. As a result, the range that was set several weeks ago, $502/mt FOB, did not change.

POTASH

Eastern Cornbelt: Sources quoted potash at $410/st FOB regional warehouses on the low end, with most saying brokered sales at the $390/st FOB level had dried up as producers trotted out still higher postings. PCS Sales on Sept. 7 announced new granular potash postings at the $440/st level FOB terminals in Illinois, Indiana, Wisconsin, and Ohio. In the Eastern U.S., PCS’s postings firmed to $447/st FOB Chesapeake, Va., and $450/st FOB Baltimore, Md.

Western Cornbelt: Potash pricing had firmed as well. Sources quoted the dealer market at $410-$417/st FOB, depending on grade, with the upper end reported in Missouri for white granular potash. Effective Sept. 7, PCS Sales upped its granular potash postings to $440/st FOB Ft. Dodge and Waterloo, Iowa, and St. Louis.

California: Potash was quoted in a broad range at $440-$487/st DEL in the state, depending on grade and supplier, with the upper end reflecting new reference levels from PCS Sales after a recent $50/st increase.

Potassium nitrate remained at $929-$996/st FOB, with the low for bulk tons and the upper end for bagged product. Sulfate of potash (SOP) was quoted at $620-$630/st FOB for bulk tons.

Pacific Northwest: Potash postings from one producer firmed $50/st in the region in early September, bringing reference levels to $448-$465/st FOB in the region for new sales. The low was quoted for 60 percent potash in Idaho, and the upper end for 62 percent in Washington. Delivered potash postings were quoted in the $460-$475/st range in the region, with the low for 60 percent and the upper end for 62 percent.

Postings from another potash producer remained at $425-$430/st FOB and $435-$440/st DEL in the region for 60 percent muriate.

Western Canada: Potash pricing was on the move in Western Canada. Effective Sept. 7, dealer prices moved up some $42/mt, with regional warehouses quoted in the $471-$502/mt FOB range, depending on grade and location. Sources tagged the market FOB Saskatchewan mines at $462-$471/mt FOB to Canadian customers, depending on grade and location. The low end of both ranges reflected pricing for 60 percent muriate, with the upper end for 62 percent.

SULFUR

Tampa: Supply and demand remained in balance last week, but supplies were tight. Sources said it was likely another price hike would happen for the fourth quarter, although few were ready to make a guess on how high it would go.

The price for prill was between $120/mt FOB and $125/mt FOB, which certainly beats the Tampa delivered price of $95/lt.

Refinery rates were running about 88.2 percent of capacity, an increase from the 87 percent the previous week, according to the U.S. Department of Energy.

Vancouver: One of the two docks used for handling and shipping sulfur at Vancouver was closed last week. When it reopens, the other will close for two weeks for maintenance. As of late last week, prices had not been affected.