All Posts from November 17, 2014

Phosphates

Central Florida: Sources continued to report a tight unit train market in the Central Florida region. Logistics conditions had not gotten measurably worse, however, which sources described as a positive sign given the ongoing predictions of an especially difficult season for rail movement.

One source put railcar delays at 12-13 days for the week. The tightness was not believed to be universal, he said, as cars transporting oil ran just three days late on average.

The price of DAP in the Central Florida market was quoted at $425-$435/st FOB, with truck-loaded product accounting for the higher end of the range. MAP was expected to command a $20/st FOB premium over DAP.

Producer postings were $425/st FOB for DAP and $445/st FOB for MAP.

U.S. Gulf: The NOLA barge market suffered through another slow week, sources said. Phosphates garnered a minimum of interest on the river, but a number of industry contacts took the week’s relatively firm prices as a positive sign.

Most trader-offered domestic tons were valued in a range of $405-$410/st FOB, which was comparable to the previous week’s numbers.

Also echoing the previous week, one producer claimed a number of barges sold at $415/st FOB. The sales were subject to “customer freight rates,” one source said, but to what extent those rates differed from the rest of the market was impossible to ascertain.

Earlier in the season, a number of market participants were viewed as attempting to game the system, as one source put it, using above-market freight charges to push stated FOB numbers down in hopes of leveraging lower offers. Most sources said these tactics were on the wane, however, as the imported material often attached to the inflated, noncontract barge rates has largely filtered through the market.

Mosaic’s fourth-quarter phosphate production curtailment has opened the door for imported product, sources said. The company estimated that production would run at 70-80 percent of capacity for the quarter.

Because of both the lengthy transit time and a likely dearth of phosphate inventories at bonded warehouses, however, sources said the possibility of Chinese phosphates appearing in the market this year is unlikely.

At least two vessels were believed to be en route with an expected November discharge date. One source speculated that the material was of Moroccan origin, though another observer claimed current domestic market conditions would tend to dissuade OCP from offering at NOLA until the mid-to-late first quarter. Cargoes from Mexico, Russia, and China were expected for January or February arrival.

November- and December-arriving imports are timed to coincide with the conclusion of the record corn harvest. Many industry participants remained hopeful that demand would hold through the market’s customary late-fall buying push. The sheer size of the harvest gave many sources confidence that end-user demand would empty warehouses and terminals, but whether replacement demand will be robust enough to refill bins was up for debate.

Should demand flag due to bad weather or other conditions, sources said the influx of imported material could overwhelm the market and send prices tumbling. But if the weather improves and grain prices continue to strengthen, DAP levels should stay north of $400/st FOB for the remainder of the season, some sources believed.

Last week also saw the reappearance of Mississippi Phosphates DAP offered at NOLA, a number of sources said. After filing for Chapter 11 bankruptcy late last month, Miss Phos was believed to resume production on Oct. 30.

Rumors and speculation continued to circulate regarding the company’s future. Some pointed to a perceived reluctance by Miss Phos to forward-sell DAP in the export market as evidence