Dry Fertilizer Barge Rates
| 8/17/2018 | Last Week | |
| Memphis | 8.00-9.00 | 8.00-9.00 |
| St. Louis | 8.50-9.50 | 8.50-9.50 |
| Peoria | 13.00-14.00 | 13.00-14.00 |
| Cincinnati | 14.00-15.00 | 14.00-15.00 |
| Minneaplis | 17.00-18.00 | 17.00-18.00 |
| Catoosa | 17.00-18.00 | 17.00-18.00 |
All Posts from August 17, 2018
K+S Q2 Earnings Off on Production Limitations; Prices,Volumes Up
K+S Group, Kassel, reported a 53 percent drop in second-quarter operating earnings (EBIT 1) to €13.4 million (approximately $15.2 million) on revenues of €811.9 million, down from the year-ago €28.5 million and €742.0 million, respectively. While the company noted a positive effect from higher prices and volumes, earnings were negatively impacted by production limitations in Germany. Group revenues were up 9 percent year-on-year.
The Potassium and Magnesium Products segment saw a 33 percent fall in second-quarter EBIT 1 to €21.1 million on revenues of €440.5 million, down from the year-ago €31.4 million and €387.1 million, respectively. The unit’s revenues were up almost 14 percent on higher sales volumes, due largely to the ramp-up of production at the Bethune potash mine in Saskatchewan.
Potash and Magnesium Products sales volumes increased to 1.71 million mt, up 11 percent from 1.54 million mt. Of this total, potassium chloride sales volumes reached 880,000 mt, up from the year-ago 710,000 mt, mainly due to the higher production at Bethune. But sales volumes of fertilizer specialties were essentially flat year-on-year at 650,000 mt against the previous period’s 640,000 mt.
Second-quarter operating profit (EBIT 1) for the Salt unit showed a significant recovery from a year ago, reaching €4.0 million on revenues of €326.9 million, up from €0.4 million and €315.7 million, respectively. The company noted that higher sales volumes in the de-icing salt business outweighed the impact of negative currency factors.
Six-month group operating earnings (EBIT 1) were off 3 percent at €160.4 million on revenues of €1.98 billion, down from the year-ago €165.9 million and €1.87 billion, respectively. Six-month operating earnings for Potash and Magnesium were marginally higher (0.4 percent), at €73.6 million on revenues of €929.2 million against the year-earlier €73.3 million and €860.8 million, respectively. The unit’s six-month sales volumes increased 9 percent to 3.66 million mt, up from 3.36 million mt.
Sales Volumes by Region
| Million mt | Q2 2018 | Q2 2017 | H1 2018 | H1 2017 |
| Europe | 0.89 | 0.86 | 1.99 | 2.00 |
| Overseas | 0.83 | 0.68 | 1.66 | 1.36 |
| Total | 1.71 | 1.54 | 3.66 | 3.36 |
K+S confirmed a significant EBITDA increase for the 2018 financial year. However, the range of €660-€740 million – against €3.6 billion in FY2017 – is below the capital market’s expectations (GM Aug. 10, p. 29), and also assumes no production outage days. However, the group had some 25 outage days in the first quarter, and according to K+S CEO Burkhard Lohr, the group previously has put the potential cost per outage day at roughly €1 million, but he said that figure would be slightly higher now as prices are higher. While the group expects a “significant” rise in EBITDA versus FY2017’s €269 million for Potash and Magnesium, mainly due to higher sales volumes from the Bethune operation, the chief executive conceded that some challenges were holding the group back somewhat longer than expected.
The Bethune operation is still in ramp-up mode, and Lohr noted that as the first greenfield [potash] mine in Saskatchewan in 40 years, it is “a learning process on production, processing, and shipping.”
In the company’s Aug. 14 earnings call, he said the hardness of the granulated product was “a challenge” until the second quarter, but that it is now fixed. Regarding the product caking issues, he said the group has developed the required binder and is making progress and expects “top-quality” product by the end of 2019 at the latest.
With the quality issue situation at Bethune is improving month-by-month, the group expects to be back on the ramp-up phase by 2020, and said it will reach full capacity of 2.86 million mt/y by 2023 as originally planned.
Still, Lohr conceded that there will be an impact on this year’s Canadian products. Bethune produced slightly more than 700,000 mt of standard and granular product in the first half of the year, and K+S now expects full-year production at Bethune in the range of 1.4 to 1.5 million mt. This is down from the expected output of 1.7 million mt for 2018 that the group cited late last year (GM Nov 17, 2017).
“We intend to start secondary mining at Bethune next year, with a volume of 100,000-200,000 mt, making us confident to reach a total production of about 1.7 million mt to 1.9 million mt in 2019,” said Lohr. He confirmed the group’s previous given target to achieve a positive EBITDA contribution from Bethune already in 2018, and to reach EBIT breakeven in 2019.
But the chief executive said K+S operations in Germany remained “challenging,” and that some issues were taking longer to be resolved.
“Shortage of staff, high interest rates, and the lack of motivation are still issues at the Werra site, which need to be managed,” said Lohr. “After changing the management team, vacancies have been partly filled, and the sickness rate already has been halved.” The group said it hopes to fill the remaining vacancies by the end of this year, which includes moving experienced personnel from Sigmundshall to the Werra site.
The group also hopes to improve production downtimes at the site, following a change in maintenance schedules and the replacement of outdated machinery. Of the latter, 50 percent is expected to be fixed by the end of this year, and the remainder by the end of 2019.
However, the chief executive noted that the overall K2O content of its German mines – all of which are mature mines – is diminishing, and compared to last year, the annualized impact in 2018 will be about 100,000 mt.
But K+S is evaluating counter-measures via an operational excellence program on a site-by-site investigation basis, and already has identified opportunities to increase the efficiency across all sites. The current schedule sees these being implemented starting next year, which Lohr said would stabilize the group’s current production in Germany on the back of a significantly increased efficiency showing compensation of the effect as of 2020.
The group noted that its Neuhof mine lost about 50,000 mt of production in the second quarter due to lower roof stability. New additional safety measures have now been implemented at the site, and production is expected to improve there in the current quarter. The Werra site lost 100,000 mt in the first quarter and the same amount in the second quarter, but production losses are expected to be down to zero in the third and fourth quarters.
In 2018, K+S expects German production of about 6.4-6.6 million mt, plus the expected 1.4-1.5 million mt from Bethune. Next year, after the closure of the Sigmundshall operation – which is scheduled by the end of 2018, with a production loss of 600,000 mt/y – the group said it has scheduled a German production of 6.1-6.2 million mt. It said this latter number includes about 300,000 mt on the back of the planned efficiency measures. As previously indicated, Bethune should add 1.7 to 1.9 million mt to the group’s output in 2019.
Lohr noted that with the impending closure of Sigmundshall, productivity at the site “is far from normal business.” The group already provisioned a negative EBITDA contribution of €40 million at the end of last year for the site closure, and is expecting a €20 million negative EBITDA contribution in 2018.
K+S said it produced some 700,000 mt of potassium sulfate last year, and, given the declining K2O content of the group’s German ore, expects output volumes this year to be around that level. SOP capacity will remain at 800,000 mt/y. It will not be affected by the closure of Sigmundshall as the kieserite, a magnesium sulfate, produced at the site, is not used for SOP production.
The chief executive noted that the record hot summer in Germany was stretching its logistics, mainly at the Werra site, with inland shipping capacities short and freight rates increasing. The group expects the additional logistic costs to impact the group’s profitability this year by about €20 million.
European Union Opens UAN Dumping Inquiry; U.S., Russian, Trinidad Shipments Eyed
The European Union (EU) has opened an inquiry into whether producers in the U.S., Russia, and Trinidad and Tobago are dumping UAN. The inquiry will determine whether shipments from those countries to the EU are “being dumped, and whether the dumped imports have caused injury to the union industry,” the European Commission (EC), the bloc’s trade authority in Brussels, said in the Aug. 13 issue of the Official Journal.
According to the report, the investigation was prompted by a June 29 complaint filed by Fertilizers Europe on behalf of producers that account for more than 50 percent of the EU’s output of UAN. Fertilizers Europe told Green Markets that they do not comment on prospective or active proceedings under investigation, while the EC said it won’t comment beyond the documents that have been made public.
The complaint alleges that UAN volume and prices under investigation have had a negative impact on the prices charged and the market share held by the EU industry, resulting in substantial adverse effects on the overall performance and financial situation of the EU industry.
The investigation of dumping and injury will cover the period July 1, 2017, to June 30, 2018. The examination of trends relevant for the assessment will be Jan. 1, 2015, through June 30, 2018.
All interested parties wishing to comment on the complaint or any aspects regarding the initiation of this investigation must do so within 37 days of the Aug. 13 notice. Any request for a hearing with regard to this investigation initiation must be submitted within 15 days.
Under new EU rules that speed up dumping probes, the commission has eight months to decide whether to impose provisional antidumping duties against the three countries, and 14 months to decide whether to apply “definitive” levies, which usually last for five years. The provisional date is put as May 13, 2019, and definitive as Nov. 9, 2019.
Major U.S. UAN producer CF Industries Holdings Inc., Deerfield, Ill., had already prepared analysts for the possible inquiry (GM Aug. 10, p. 25), telling them that its UAN exports to the EU account for about only 1 percent of EBITDA, and that it can readily market its product elsewhere no matter what the EC may or may not do.
Referring to the economic challenges facing EU producers, a CF executive, in a call with analysts, said “life is tough in the fourth quartile.” The company said European producers already have a 6.5 percent protectionist tariff for imported products, and yet they are struggling economically. CF noted its own challenges in the U.K., where it must pay much higher natural gas prices, and said that it has been bringing in lower-priced ammonia to the U.K.
CF saw any antidumping action as a move to try to prop up European nitrogen producer economics, but at the end of the day, it said it would be at the expense of European farmers.
The U.S. exported 1.63 million st of UAN in the fertilizer year ending June 30, 2018, up 9 percent from the prior year 1.49 million st. Most, if not all, of those exports were presumably made by CF. Exports to France were up 18.4 percent, to 660,263 st from the prior year 557,392 st, while exports to Belgium were up 18.6 percent, to 167,770 st from 141,491 st. Much smaller quantities went to the U.K., at 27,551 st versus the year-ago 40,812 st, and Ireland – 1,177 st versus 639 st.
After France, Argentina was the second largest taker of U.S. UAN at 413,374 st, up 44 percent from the prior year 287,453 st.
BPC, Sinochem Ink Major Potash Deal
Belarusian Potash Co (BPC) and China’s Sinochem Group have signed a five-year exclusive memorandum on the supply of granular potash fertilizers. The deal was inked on Aug. 12 for the supply of a new type of potash fertilizer – granular white muriate of potash with the addition of zinc and sulfur, BPC said in an Aug. 13 statement.
According to the terms of the memorandum, the product will be supplied to the Chinese market for a five-year period starting from 2019 through to 2023, with “the right to sign annual contracts based on the current market situation,” said the Belarusian supplier.
According to the terms of the memorandum, the total supply volume for the five years will be 700,000 mt, with delivery volumes allocated according to the market situation. The statement made no reference to pricing, and a BPC source confirmed that the price would be settled annually and at a level not lower than for ordinary granular product. Global suppliers have yet to settle the new annual seaborne potash supply contract price with China’s Buying Consortium, of which Sinochem Corp. is a member.
BPC said the memorandum follows and develops the mainstream line of cooperation between the companies, contained in the existing memorandum on other types of Belarusian potash, signed on May 10, 2015 (GM May 18, 2015).
Agrellus Online Platform Reports Rapid Growth
Agrellus, an e-commerce sales company for crop inputs that was founded in 2015, announced on Aug. 9 that its online sales platform – which was launched in the first quarter of 2017 – has now grown to include more than 50 participating ag retailers and over 250 ag retail locations, with grower members located in 25 states.
The company, which is headquartered in Lubbock, Texas, said it has built a “national platform” that now surpasses its e-commerce competitors in product offerings, participating members, and locations. Agrellus currently offers seed, fertilizer, crop chemicals, irrigation parts, and other products from its website and via a free app for Android and Apple. In late July, the company announced that it was adding diesel exhaust fluid (DEF) as a new ag input category on its online marketplace.
“We’re the leading ‘Ag meets Silicon Valley’ ag inputs marketplace,” said James Ferraro, Agrellus marketing director. “Using propriety technology, we now have more products available, more growers and dealer members, and more quotes and sales volume than other ag input marketplaces.”
The company’s largest presence is in the central U.S., with a majority of participating retailers located in Texas. The company is owned by Texas farmers, ag retailers, Silicon Valley technology executives, and independent investors.
Unlike Farmers Business Network (FBN), the much publicized Google-backed startup (GM Sept. 9, 2016) that was launched in 2014 to disrupt the conventional ag retail network by offering discounted crop inputs and farm analytics online to paying members through its own distribution network, Agrellus utilizes existing ag retailers and retail locations on its online and mobile platform, and charges no membership fee for participating retailers or grower members.
“Agrellus is founded and operated by actual growers and former ag retailers with decades of experience to help both groups,” the company said, noting that its grower members report savings of 14-26 percent on ag inputs. “It’s not a technology exercise by a group who wants to get into the ag biz without field knowledge.”
Other new e-commerce competitors are also utilizing existing retailers, including AgVend and CommoditAg. AgVend launched in January as an online marketplace for agriculture inputs that allows farmers to purchase products and services from participating ag retailers in their own community. The company reported this spring (GM April 13, p. 1) that it had 10 ag retail partners in the Pacific Northwest and Midwest.
CommoditAg officially launched in December 2017 (GM Jan. 5, p. 1) as an online platform for existing ag retailers who are partners in the venture. CommoditAg was founded by The Equity in Illinois and Sunrise Cooperative in Ohio, and has since added Landmark Services Cooperative in Wisconsin (GM Feb. 2, p. 1) and MKC in Kansas as partners (GM March 2, p. 1).
Agrellus said it is differentiated by its broader product categories, as well as its functionality and other services. “Growers can also review manufacturer labels, SDS, and EPA info. They can make custom requests and get application services, and also upload soil tests and other info in a single location,” Ferraro told Green Markets. “Now any time or place, growers can use the Agrellus app to check labels, set GPS delivery locations, upload permits, and make brand name or custom requests.”
Agrellus also stressed its value for existing retailers. “Both groups get online reporting dashboards, better price transparency, and product/sales data to help dealers with their suppliers,” the company said. “It’s free for dealers to join and see current growers’ requests. We are a channel-friendly way to expand their markets. We don’t sell anything direct like some others, or try to break existing distribution networks.”
PCI Nitrogen Moves Up Pasadena Turnaround
PCI Nitrogen reported on Aug. 15 that it is moving up the 2019 turnaround at its Pasadena, Texas, production facility due to an unscheduled maintenance event. The turnaround is now taking place in August and will last approximately 17 days.
The PCI Pasadena facility is the largest producer of synthetic granular ammonium sulfate in North America, and also produces liquid ammonium thiosulfate and sulfuric acid. Annual production volumes are estimated at more than 500,000 tons of ammonium sulfate, 100,000 tons of ammonium thiosulfate, and 640,000 tons of sulfuric acid, according to Green Markets Director of Research Neil Fleishman. All products are marketed exclusively by Interoceanic Corp. (IOC).
No other details about the unscheduled maintenance were available. The facility sustained damage in September 2017 due to flooding from Hurricane Harvey (GM Sept. 8, 2017), which disrupted operations for several weeks. PCI reported in May 2017 (GM May 12, 2017) that it planned to increase granular ammonium sulfate capacity at the plant.
Wilbur-Ellis / Connell Bros. Co. LLC – Management Brief
Connell Bros. Co. LLC (CBC), part of the Wilbur-Ellis family of companies and the largest marketer and distributor of specialty chemicals and ingredients in the Asia-Pacific region, announced on Aug. 7 that Brian Scutt has been named as the company’s first chief operating officer. Scutt will be based out of CBC’s Singapore office, but will travel extensively throughout the Asia-Pacific region to CBC’s other 47 locations in 18 different countries, as well as to its headquarters in San Francisco.
Scutt began his career in 1998 with Bayer HealthCare as an animal health technical manager, and later was named division manager of vitamins and fine chemicals at Roche. He then transitioned to DSM, where he served as general manager of DSM nutritional products in Australia. He later became general manager, Asia-Pacific, in Malaysia for Fortitech.
“I am thrilled to welcome Brian to our family,” said CBC President Dr. Azita Owlia. “Brian has demonstrated flexibility, cultural sensitivity, open communication, thoughtfulness, and curiosity throughout his career. His rich experience will further strengthen our leadership capabilities, which is essential for delivering success today while preparing for an even brighter future.”
Judge Rules in Favor of Nebraska Ammonia Facility
Gage County District Judge Julie Smith ruled on Aug. 13 that the Gage County Board of Supervisors (BOS) should have granted a motion by Mike Holtmeier and Dustin Gronemeyer to construct an anhydrous ammonia storage and sales facility in Lincoln Township, Neb., according to the Beatrice Daily Sun. Judge Smith said public opposition was not enough to overcome local zoning codes, which allowed the development.
The BOS had voted 3-4 against the construction in 2017 (GM April 14, 2017), even though the Gage County Planning and Zoning Commission had voted 6-0 for the project to proceed.
The proposed facility includes two 30,000 gallon tanks, a scale, and an outbuilding.
The BOS voted 4-2 on Aug. 15 not to appeal Judge Smith’s ruling, therefore allowing the facility to begin construction.
K+S Potash Canada Sues Tech Firm Over Bethune Collapse, Delay
K+S Potash Canada has launched a C$180-million lawsuit against Veolia Water Technologies, according to Canadian media reports. Veolia, which is headquartered in Paris, France, designed and supplied the HPD evaporation and crystallization technologies to the group’s Bethune potash mine, under a contract signed in early 2013.
One of the plant’s crystallizers was being prepared for testing when its steel frame collapsed on July 17, 2016 (GM July 22, 2016). No significant injuries were reported following what K+S Potash Canada described as “vessel support structure failure.” According to media reports, citing court documents, K+S is now seeking damages of more than C$180 million, including C$65 million in physical damage and an estimated loss of C$85 million due to an inability to produce potash.
While the commissioning of the Bethune processing plant remained on schedule for the end of August 2016, production of the first ton of potash at the site was delayed until the second quarter of 2017 (GM June 16, 2017) from the end of 2016, as originally planned (GM Aug. 11, 2016).
Nutrien Moving on Brazil Retail Greenfields; Three in Works, Two More Planned
Nutrien Ltd., Saskatoon, has confirmed that it is moving forward with plans to build greenfield retail outlets in Brazil. The company told Green Markets last week that it has three greenfields in the early stages – ground preparation and permitting for construction. The company also has two more on the drawing board ready to submit for approval.
While Nutrien did not identify the locations for these greenfields, it has said in the past that southern Brazil, with its large number of small farmers, is an ideal location for Nutrien’s North American retail model.
Nutrien told analysts earlier this month (GM Aug. 10, p. 25) that it plans to spend up to $2 billion in Brazil over the next five years to establish a retail business. Its ultimate goal is to develop a retail presence second only in size to its existing North American retail segment.
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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.
For additional details visit our Terms of Use.