With 2024 negotiations still unsettled, import prices continued at the week-ago $105-$110/mt CFR. Offers rumored below those levels remained unconfirmed.
US Imports:
Sulfuric acid imports for July-October rose 9.9%, to 1.28 million st from the year-ago 1.17 million st. October imports moved up 5.5%, to 259,548 st from 245,986 st in October 2022. July-October imports from Canada were 668,066 st, while Mexico sent 217,743 st and Spain added 128,417 st.
US Exports:
Sulfuric acid exports softened 59.2% in July-October, to 72,227 st from the year-ago 177,194 st. October exports were counted at 13,294 st, off 77.7% from the 59,538 st recorded one year earlier. July-October exports to Canada were noted at 43,813 st, ahead of 17,834 st to Mexico. Uruguay took 4,409 st.
Sens. Chuck Grassley(R-Iowa), Joni
Ernst (R-Iowa), and Tammy Baldwin (D-Wisc.) are leading a bipartisan push to
shed light on market factors driving the cost of fertilizer, which they
estimate accounted for more than 30% of farmer input costs for the last growing
season.
The Fertilizer Research Act of 2023 would require the USDA to conduct a
study on competition and trends in the fertilizer market to determine their
subsequent impacts on price. The senators plan to push to include the
legislation in next year’s five-year farm bill reauthorization, though they are
open to other paths for passage if opportunities arise.
“Farmers’ bottom lines thin as the price of fertilizer
rises,” said Grassley. “With fertilizer being one of the ag industry’s highest
input costs, it’s problematic [that] farmers have such a limited window into
market fluctuations. Our bill will provide farmers in Iowa and across the
Heartland with needed transparency and certainty as they navigate production
costs.”
“Wisconsin’s farmers work long hours year-round to provide
food for our families, but in recent years, they have faced tough economic
headwinds, including the high cost of fertilizer,” added Baldwin. “This hurts
their bottom lines, our rural communities, and American consumers, and we need
to do more to address rising input costs for our agricultural industry.”
The bill, which was filed Dec. 12, is endorsed by the
Iowa Corn Growers Association (ICGA) and Iowa Soybean Association.
“We appreciate that Senator Grassley has honored our request for a study to review the competition and transparency of the fertilizer industry,” said Jolene Riessen, ICGA President. “In recent years, the continued increase in input costs, especially fertilizer, has put pressure on Iowa’s corn farmers and our wallets. That’s why an assessment will provide clarity to better understand if there is adequate information on the pricing practices, tariffs, and exertion of market power by companies within the industry.”
Within one year of the bill’s passage, the Secretary of
Agriculture, in consultation with the Economic Research Service, would be
required to issue a report on USDA’s website regarding the US fertilizer
industry. Specifically, the report would include:
A description of impacts on the fertilizer market that influence price;
Market trends in the past 25 years;
A description of the imported fertilizer and market impacts;
Impacts of anti-dumping and countervailing duties;
A study of fertilizer industry concentration;
A study of emerging fertilizer technologies; and
A description of whether current public price reporting is sufficient for market transparency and whether the Secretary of Agriculture should establish a fertilizer reporting mechanism in which the fertilizer industry is required to report fertilizer prices at multiple levels of the supply chain on a daily, weekly, or monthly basis.
The Fertilizer Institute (TFI) said it supports transparency through improved data collection and analysis. The group also seeks the reestablishment of the position of Fertilizer Economist at the USDA to serve as a liaison between the agency and Congress on crop nutrient matters and also to develop reports on global supply, demand, and prices.
TFI noted that the
US has one of the most competitive fertilizer industries in the
world and is one of only three nations that has at least 20 unique companies
producing fertilizer products. It noted that many countries have only a single
producer or no domestic production at all.
TFI added that in 2022, the US held a 7.6% share of global fertilizer
production and 90% of
global fertilizer usage happens outside of the US. “The fertilizer market is
truly global and is impacted by geopolitical events, trade disruptions, supply
chain issues, weather, energy prices, and the natural ebb and flow of supply
and demand,” said the organization.
A spokesperson for top fertilizer maker Nutrien Ltd. said the
company would review the legislation and declined further comment. Crop
nutrient producers CF Industries Holdings Inc. and The Mosaic
Co. didn’t immediately respond to requests for comment.
The push for a sweeping study of the fertilizer market follows
intense scrutiny of US meatpackers, as well as the Biden
administration stepping up its oversight of competition within the
seed industry.
A bipartisan group of House and Senate members, led by Sen. Roger
Marshall (R-Kan.), on Dec. 12 sent a letter to the US International Trade
Commission urging it to consider the input of farmers and agricultural
retailers as it weighs a final decision on tariffs on phosphate imports from
Morocco (GM Nov. 3, p. 1; Sept. 22, p. 1).
“The Commission has only narrowly opened the record after its previous
determination to put tariffs on phosphate was remanded back to the Commission
by the US Court of International Trade,” said the group. “The Court gave the
Commission wide latitude to reopen the record, yet the Commission is not
allowing commodity organizations and agriculture retailers to provide
information about the US fertilizer market.”
“Since this process began in 2020, growers, retailers, and suppliers have
provided information to the Commission and the US Department of Commerce about
the US fertilizer market and the worsening challenges we face obtaining
adequate domestic supply,” the group continued. “We believe that the Commission
is arbitrarily limiting both the information allowed to be submitted and the
parties permitted to respond.”
They noted that the questionnaire was sent only to US producers and US
importers of phosphate. “We believe additional parties, namely the farmers who
need phosphate fertilizer to grow crops, the retailers who sell phosphate
fertilizers, and the organizations who represent them, should be given the
opportunity to respond,” they said.
Some 58 agricultural groups, led by the National Corn Growers Association,
sent a letter to the ITC on Dec. 7 on the same topic. “We urge the ITC to
consider impacts on family farms as it works to reconsider its determination of
material injury to domestic industries,” the earlier letter stated.
Congressional members joining Marshall included Sens. Bill Hagerty
(R-Tenn.), Cindy Hyde-Smith (R-Miss.), Pete Ricketts (R-Neb.), Deb Fischer (R-Neb.),
and John Boozman (R-Ark.), as well as Reps. Tracey Mann (R-Kan.), Jake LaTurner
(R-Kan.), John Rose (R-Tenn.), Greg Pence (R-Ind.), Julia Letlow (R-La.), James
Baird (R-Ind.), and Jim Costa (D-Calif.).
OCI NV and UAE state-owned oil giant Abu Dhabi National Oil Co. (ADNOC) on Dec. 15 announced that they have entered into a binding sale and purchase agreement for ADNOC to acquire OCI’s 50% + 1 share stake in Abu Dhabi-based Fertiglobe Plc for a total consideration of $3.62 billion.
Following the completion of the transaction, OCI will have fully exited the Fertiglobe joint venture while ADNOC’s shareholding in the jv will increase to 86.2%. The free float traded on the Abu Dhabi Securities Exchange will remain at 13.8%. The transaction is expect to close in 2024, subject to regulatory conditions and antitrust approvals.
OCI said the purchase price paid of AED3.20 per share represents an 8% premium on Fertiglobe’s closing price as of Dec. 11, 2023, and a 25% premium on the price at the jv’s $795 million initial public offering (IPO) in 2021(GM Oct. 22, 2021).
The
purchase consideration additionally includes a two-year earn-out mechanism for
FY2024 and FY2025 linked to free cash flow metrics and commodity pricing that
may allow OCI to participate in future nitrogen market upside. OCI said it will
seek shareholder approval for the transaction at an extraordinary general
meeting to be convened in due course.
The
announcement follows media speculation and reports this past week that ADNOC
was exploring a potential takeover of Amsterdam-based OCI NV as part of the
latest push by the oil major to expand beyond oil.
According
to a Dec. 14 Bloomberg report, citing
unnamed sources familiar with the matter, the parties were working with
advisors and had held preliminary talks about a possible transaction. Some of
the unnamed sources cited by the report believed ADNOC could also opt to
acquire significant assets from OCI instead of acquiring the entire company.
OCI,
backed by Egyptian billionaire Nassef Sawiris, has been evaluating a range of
options, including asset disposals, as part of a strategic review.
OCI
and ADNOC established the Fertiglobe jv in 2019, combining ADNOC’s fertilizer
business into OCI’s Middle East and North Africa nitrogen fertilizer platform (GM Oct.4, 2019). Following the
subsequent IPO on ADX, OCI’s shareholding was reduced to half of the jv
company’s shares, down from the original 58% stake, while ADNOC’s stake dropped
to 36.2% from the original 42% holding.
Fertiglobe
is the largest export-focused nitrogen fertilizer platform globally and the
largest producer in the MENA region, with a production capacity of 5 million
mt/y of urea and 1.5 million mt/y of merchant ammonia. The jv is comprised of
OCI’s companies in Egypt, EBIC and EFC, and its Algeria-based Sorfert company,
and ADNOC’s Fertil fertilizer production facilities in Ruwais, UAE.
ADNOC
said the Fertiglobe transaction supports its “ambitious chemical strategy and
its plans to establish a global growth platform for ammonia, a key lower carbon
fuel and hydrogen carrier that is expected to play an important role in the
energy transition.”
For
Fertiglobe, this transaction supports the company’s future growth plans, “enabling
it to accelerate the pursuit of new market and product opportunities and expand
its focus on clean ammonia as an emerging fuel and hydrogen carrier.”
Additionally,
OCI and ADNOC on Dec. 15 announced a roadmap to explore opportunities for
global strategic collaboration on future joint investments, including
development projects outside of the Middle East in decarbonization and product
distribution across North America and Europe, according to the OCI statement.
In its statement, ADNOC reported the two companies had also signed a Memorandum
of Understanding to explore opportunities to cooperate on projects in the US,
on ammonia imports into Europe, and on broader development of the low-carbon
ammonia market.
Separately, according to a Bloomberg report earlier this week, OCI is also working with advisors to gauge buyer interest in its Wever, Iowa-based Iowa Fertilizer Co. (IFCo) and is seeking more than $3 billion for the business. IFCo has 195,000 mt/y of sellable anhydrous ammonia capacity, and production capacity for 1.5 million mt/y of UAN, 420,000 mt/y of urea, and 315,000 mt/y of diesel exhaust fluid (DEF).
OCI’s
shares have taken a 38% dive in Amsterdam trading this year, giving the company
as a whole a market value of about €4.4 billion (about $4.8 billion), according
to Bloomberg.
Commenting
on the media reports, OCI in a Dec. 14 statement said it continually considers strategic
initiatives regarding its portfolio, including potential divestments, and
previously has disclosed its ongoing strategic review. Within this context, the
company confirmed that discussions with multiple potential buyers for certain
of its nitrogen assets are ongoing.
OCI
reported in its third-quarter earnings release in November (GM Nov. 10, p. 27) that it had hired
financial advisors to explore asset monetization opportunities and was engaged
in “active discussions” with a focus on “attractive value propositions.”
OCI
also reported in November that its strategic review, which has focused on the
identification of value accretive monetization opportunities while prioritizing
growth in its fast-growing clean fuels business, was nearing completion.
The strategic review, announced in March, followed a request by one of its largest shareholders, activist investor Jeff Ubben of Inclusive Capital Partners, which owns 5% of OCI. Ubben urged OCI to explore strategic options, including asset sales, especially for its IFCo unit, amid shareholder concerns about the company’s stock prices.
OCI
reported adjusted third-quarter EBITDA of $242 million, a 75% decline from the
year-ago $961.8 million and a big miss on the average analyst estimate of
$360.3 million (Bloomberg Consensus).
Some 82% of OCI’s third-quarter adjusted EBITDA was generated by Fertiglobe, as
noted by Morgan Stanley analyst Lisa De Neve in a Bloomberg report.
Third-quarter
revenue was off 54% from the prior year, with the company citing much lower selling
prices across both nitrogen and methanol segments, and a front-loaded order
book. OCI posted an adjusted net loss of $95.2 million for the quarter versus a
net profit of $257.1 million for the same prior-year quarter.
In
addition to IFCo, OCI also has nitrogen fertilizer and methanol production
assets in The Netherlands, including 1.1 million mt/y of ammonia and 0.73
million mt/y of UAN capacity, according to the Green Markets database. OCI also has ammonia and methanol
production facilities in Beaumont, Texas, with 0.3 million mt/y of ammonia
capacity.
The
company is also developing a 1.1 million mt/y blue ammonia production facility
at Beaumont, which is on track to start production in early 2025. OCI reported
in November that discussions were underway for long-term product offtakes and
potential equity participation.
In
2022, OCI sold some 8.63 million mt of ammonia and nitrogen fertilizers as well
as 1.26 million mt of methanol, 917,200 mt of DEF, and 84,000 mt of melamine.
In addition, the company sold 3.6 million mt of traded third-party nitrogen
products, including ammonia, urea, UAN, and ammonium sulfate.
Separately,
ADNOC is close to finalizing a deal with Austrian oil and gas group OMV AG to create
a petrochemicals company worth more than €30 billion (approximately $32.4
billion at current exchange rates), according to Bloomberg. The Abu
Dhabi oil giant is also working on a potential acquisition of German chemicals
company Covestro AG for €11.6 billion (GM
Sept. 15, p. 26; Aug. 18, p. 29).
Gulf Coast Ammonia LLC’s (GCA) new 1.3 million mt/y Texas
City ammonia plant (GM Jan. 10, 2020) is expected to start production
soon, according to knowledgeable sources, though major players in developing
the project either had no updates or did not respond to inquiries.
Those players include Lotus Infrastructure Partners (formerly Starwood Energy Group Global LLC), Greenwich, Conn., Mabanaft GmbH & Co. KG, Hamburg, Germany, and Air Products, Allentown, Penn. The project was initially expected to come up in first-half 2023.
When the GCA project was announced, the company said it had
already concluded long-term offtake agreements for all 1.3 million mt/y of
capacity, with Mabanaft, which will be acting as GCA’s operating partner,
expected to market some 500,000 mt/y. While never officially confirmed, major
industry players believe that OCP has a sizeable offtake agreement with GCA, if
not the entire remainder (GM March 18, 2022) of the capacity.
Melbourne-based
fertilizer and explosives company Incitec Pivot Ltd. (IPL) announced on Dec. 12
the appointment of Mauro Neves de Moraes
as CEO and Managing Director following a comprehensive search process. De
Moraes will assume the role on Jan. 22, 2024.
Paul Victor, IPL’s Chief
Financial Officer, has been serving as the company’s Interim CEO since early
June after IPL’s former CEO and Managing Director Jeanne Johns stepped down
(GM June 9, p. 26). Johns had served
as IPL’s CEO and Managing Director since 2017.
IPL
said De Moraes has executive leadership experience in the mining and logistics
sectors across multiple geographies over 30 years. He joined BHP in 2017 as
Asset President at the company’s Escondida operations in Chile, the world’s
largest copper mine. In 2021 he was appointed Asset President for BHP
Mitsubishi Alliance (BMA) in Queensland, Australia’s largest producer and
supplier of seaborne metallurgical coal.
From
2014 to 2017, De Moraes served as Executive Vice President – Commercial and
Marketing – at Aurizon Holdings Ltd., one of the largest rail freight operators
in Australia.
Oslo-based
Yara International ASA announced on Dec. 13 that it is acquiring the
organic-based fertilizer business of Agribios Italiana srl, the company’s
second bolt-on acquisition supporting its organic strategy in Europe. Yara has
not disclosed the value of the acquisition.
Based
in Villafranca Padovana in northern Italy, Agribios has a broad portfolio of
organic-based fertilizers produced using animal and agricultural byproducts. With
a volume of approximately 60,000 mt produced in 2022, Agribios has a market
share of around 10% of the organic-based fertilizer market in Italy, Yara said.
“By acquiring Agribios, Yara will gain a strong foothold in Italy – the second largest organic-based fertilizer market in Europe,” Yara said. “Agribios’ solid market position, combined with our strong commercial presence, will allow Yara to increase sales in the organic-based fertilizer market in Italy and neighboring countries by around 30% within the next three years.”
Yara
said it will also be able to offer Agribios’ products to customers outside
Italy thanks to its well-established sales and distribution platform in Europe.
“We are committed to further expand our offering in the organic fertilizer
sector as a complement to our mineral fertilizers to help promote regenerative
agriculture and improve soil health,” Yara said.
Yara
already sells organic-based fertilizers in many European countries, including
France, Spain, and Germany, as well as in the Nordic and Baltic regions. In
2021 (GM Sept. 3, 2021), Yara’s
Finnish subsidiary, Yara Suomi Oy, acquired a Finnish producer of organic-based
fertilizers, Ecolan Oy (now renamed Yara Eco Oy).
According
to global market research firm Kings Research, the organic fertilizer market in
Europe is expected to grow at a compounded annual growth rate of 11.53% from
2023 to 2030.
Brussels-based
industry association Fertilizers Europe appointed Leo Alders, CEO of LAT Nitrogen Austria GmbH, as its new President
at the trade group’s Dec. 5 Extraordinary General Assembly, effective
immediately.
“I
am very pleased to welcome Leo Alders as our new President,” said Director
General of Fertilizers Europe Antoine
Hoxha. “Given the challenges of high and volatile energy prices, the
transition to low-carbon economy, and the upcoming EU elections, the fertilizer
industry needs a strong and experienced leader like Leo Alders.”
Fertilizers
Europe represents the major fertilizer manufacturers in the European Union
(EU), with its members accounting for approximately 70-80% of the bloc’s
fertilizer production capacity. Hoxha said Alders’ belief in cooperation and
outreach will help Fertilizers Europe strengthen its ties with all Plant
Nutrition actors to become a key partner with European institutions on the
future of agri-food systems in Europe.
London-based
junior miner Kore Potash Plc, which is pursuing projects in the Republic of
Congo, announced that acting CFO Amanda Farris has resigned, and that Andrey
Maruta has been appointed as CFO (non-board), effective Dec. 11. Maruta
will report directly to the CEO and is not joining the company’s Board of
Directors at this stage.
Maruta
was previously Kore CFO from August 2019 until June of 2021 when he left for
another role within the mining industry. Farris will remain available for a
brief period to facilitate a smooth handover. The Board expressed its gratitude
to Farris for her contribution to the company.
Kore
said Maruta is a Chartered Certified Accountant with over 25 years’ experience
in the mining industry, including as CFO at Petropavlovsk Plc, which had a
premium listing on the LSE. He also worked in the audit function at accountancy
firm Moore Stephens International in the UK and internationally.
Novaphos, Fort Meade, Fla., on Dec. 14 announced the appointment of Navy Vice-Admiral Andrew “Woody” Lewis (ret.) as Chief Development Officer, a newly created senior executive position responsible for managing and directing the company’s relationships and engagement with strategic partners, including policymakers, regulators, and industry. He will report to Novaphos CEO Timothy Cotton.
The
company said Lewis had a long and distinguished 36-year military career as a
three-star senior officer, serving in the US Navy. He most recently served as
Commander of the US 2nd Fleet and NATO Joint Force Command in Norfolk, Va.
The
announcement is the second significant senior addition to the Novaphos team in
the last few months. The company previously announced the appointment of Evgeny
Fedoseev as its Chief Operating Officer. He had served in the same capacity
at EuroChem Group.
Novaphos is a privately-owned
company that has developed proprietary processes for use in the phosphate
industry. The technology allows phosphate producers to use low-quality
phosphate rock to make high-quality phosphoric acid for use in agriculture and industry
without producing any phosphogypsum wastes. The company said the process is
scalable, energy-efficient, and produces a useful construction aggregate
byproduct – J-Rox™ – instead of phosphogypsum.
Disclaimer of Warranty
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.
