All Posts from February 18, 2013

Nitrogen Solutions

California, Eastern Cornbelt, Market Watch, Pacific N.W., U.S. Gulf, UAN, Western Canada, Western Cornbelt

U.S. Gulf: UAN barge prices continued to be called within the $330-$335/st ($10.31-$10.47/unit) FOB range, although some were predicting higher numbers in the next round of trading. Urea last week was reported to have taken all the attention away from other nitrogens.

December UAN imports were up 11 percent, to 332,180 st from the year-ago 298,926 st. July-December imports were off 12 percent, to 1.64 million st from 1.87 million st.

Eastern Cornbelt: The UAN-32 market continued to be quoted at $375-$380/st ($11.72-$11.88/unit) FOB in the Illinois market, with UAN-28 reported in the $330-$335/st ($11.79-$11.96/unit) range FOB most terminals in Ohio and Indiana. Dealer reference prices in the region were quoted as high as $12.30/unit FOB on a spot basis.

Western Cornbelt: UAN-32 was steady at $375-$384/st ($11.72-$12.00/unit) FOB most regional terminals, with the low in Nebraska and the upper end in the Iowa market.

California: The UAN-32 market had reportedly firmed to $375-$400/st ($11.72-$12.50/unit) FOB in California, with the upper end FOB El Centro. Dealer pricing FOB Stockton was pegged at the $385/st ($12.03/unit) level as of Feb. 11. Rail-delivered UAN-32 was quoted at $400-$410/st ($12.50-$12.81/unit) in California.

Effective Feb. 1, Agrium’s UAN-32 postings firmed to $380/st ($11.88/unit) FOB Sacramento and $410/st ($12.81/unit) truck-DEL in the California market.

Pacific Northwest: Regional sources quoted the UAN-32 market at $395-$415/st ($12.34-$12.97/unit) FOB in the Pacific Northwest, with delivered tons pegged in the $415-$425/st ($12.97-$13.28/unit) range. Those delivered prices were up approximately $40/st from last report.

Effective Feb. 1, Agrium’s UAN-32 postings firmed to $415/st ($12.97/unit) rail-DEL in Washington, northern Idaho, and Oregon excluding Malheur County; $420/st ($13.13/unit) rail-DEL and $425/st ($13.28/unit) truck-DEL in southern Idaho, Nevada, Utah, and Oregon’s Malheur County; $425/st ($13.28/unit) rail- or truck-DEL in Montana and northern Wyoming; and $420/st ($13.13/unit) rail-DEL and $435/st $13.59/unit) truck-DEL in the Klamath Basin sales area. Agrium’s UAN-28 postings in Montana and northern Wyoming moved on Feb. 1 to $365/st ($13.04/unit) rail- or truck-DEL.

Western Canada: The UAN-28 market was steady at $439-$445/mt ($15.68-$15.89/unit) DEL in Manitoba, $445-$448/mt ($15.89-$16.00/unit) DEL in Saskatchewan, and $448-$454/mt ($16.00-$16.21/unit) DEL in Alberta.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 111.14 114.06 81.40
CF Industries CF 217.86 225.33 177.90
CVR Partners UAN 26.32 26.99 27.81
Intrepid Potash IPI 22.03 23.24 24.28
Mosaic MOS 61.98 61.16 54.92
PotashCorp* POT 41.80 42.09 44.49
Rentech Nitrogen RNF 43.96 47.48 21.97
Terra Nitrogen TNH 239.57 243.99 207.53
Distribution/Retail
Andersons Inc. ANDE 47.86 46.73 42.57
Deere & Co. DE 90.57 92.17 87.06
Scotts SMG 43.73 43.96 48.95
* represents three-for-one stock split

OCI due diligence called into question; Iowa booted small upstart for 2012 revelation

Featured, News

Orascom Construction Industries (OCI), Cairo, which is building a huge nitrogen plant in Wever, Iowa, has a subsidiary that is involved in long-simmering litigation with the U.S. government. The OCI-owned entity – Contrack International – is accused of fraud in procuring a construction contract in Egypt that was supposed to only go to U.S. companies.

Iowa government authorities said they did not uncover the lawsuit in their due diligence for the plant. Iowa is credited with giving some $200 million in aid to the project, one of the largest such awards in state history. Iowa also shepherded a $1.26 billion federal disaster bond to help fund the project.

“The authority made an award to the Iowa Fertilizer Co., which is a subsidiary of Orascom,” Tina Hoffman, Iowa Economic Development Association spokesperson, told Green Markets. “We don’t have a signed contract yet, but that is in process. What our contract does will put in the number of permanent jobs the organization will be creating, as well the amount of capital investment they promised to make. As part of the application the company signed an affidavit indicating they are not party to any current lawsuits, and so the lawsuit that the AP story is referencing is with a company that is a subsidiary of the parent company that we made the award to. So the company we made the award to, there aren’t any issues with that company.

"The other important thing to point out is that majority of the award is a tax credit, so that is money that doesn’t come out of the state’s pocket. What it means is this company has to make the capital investment. They have to make a profit, and they have to have a tax liability in the state of Iowa to get any of these credits, and that process will be ongoing for several years. So what our contract does, if at any point there are concerns with the company not doing what they say they are going to or if there are violations of law, the state can go back in and relook at the award, and if we need to we can recapture the money or the tax credit.”

Opponents were quick to criticize. “Iowans demand that any time state dollars are given to a company the government does its due diligence,” said Iowa Democratic Party Chair Rep. Tyler Olson. “Someone did not find this information, and now Iowans are left to wonder what else we don’t know about the Governor’s deal.”

This comes shortly after Indiana authorities suspended a nitrogen project (GM Feb. 11, p. 1) sponsored by Pakistan’s Fatima Group after it was discovered that the company had allegedly been less than cooperative with U.S. authorities in thwarting the use of its products for improvised explosive devices (IEDs) that have been used against U.S. troops.

OCI has broken ground on the complex, and as noted above, authorities have downplayed the importance of the revelation. Ironically, just last year, small upstart SynGest Inc., a California-based company that sought to turn corn cobs into anhydrous ammonia, quickly lost its state backing when the IEDA discovered that SynGest failed to note in its application for a grant that SynGest Chairman Serge Randhava had been accused in a federal lawsuit in Illinois of racketeering and fraud (GM May 21, 2012, p. 15).

Innophos reports 4Q slowdown

News, News Briefs

Cranbury, N.J. — Specialty phosphate maker Innophos Holdings Inc. reported a 36 percent drop in net income for the fourth quarter ending Dec. 31, 2012, to $13.4 million ($0.60 per diluted share) on sales of $208.8 million, compared to the year-ago $20.9 million ($0.93 per share) on sales of $209.2 million. While CEO Randy Gress said he was satisfied with the progress the company had made during the year, he said that results reflected challenging market conditions, particularly in the fourth quarter, when there was a pronounced seasonal slowdown in the U.S. and Canadian specialty phosphate markets. However, he said volumes recovered strongly in January, and this gives the company confidence the slowdown was limited to the fourth quarter. Full-year net income was $74.2 million ($3.30 per share) on sales of $862.4 million, down from 2011’s $86.5 million ($3.83 per share) on sales of $810.5 million.

Hintzsche acquires Walter Seed and Fertilizer

News, News Briefs

Troxel, Ill. — Hintzsche Fertilizer Inc. acquired Walter Seed and Fertilizer Inc., located in Grand Ridge, Illinois, effective Feb. 8. Founded by Walter siblings John, Roger, Larry, and Joanne, the well-established agriculture retailer has been in business for almost forty years, serving growers in LaSalle and surrounding counties. John and Roger will continue to manage and oversee the operations. “We are excited about this opportunity and look forward to the expansion of our business and the synergies it will provide,” commented David Hintzsche, CEO and president of Hintzsche Fertilizer, Inc. “Our ultimate goal is to gain the trust and respect of the Walter growers, and provide them with excellent products and services now and in the future.”

Eastern Farmers Co-op eyeing new S.D. site

News, News Briefs

Colton, S.D. — Minnehaha County officials indicated that Eastern Farmers Cooperative has a few hurdles to clear with their plans to consolidate two older facilities into a larger fertilizer and seed plant at a site located two miles north of here. Co-op officials said it was too early to talk about the details of the project, but have told the local press that they are looking to close seed and fertilizer operations at Baltic and Crooks and consolidate them in the new facility, expected to cost in the millions of dollars. They pointed out that that the two small facilities are at a disadvantage without rail access, and that the new location would have access to the 85-car trains that bring in large quantities of fertilizer. “They’ve submitted a request for an agronomy center which would handle ammonia,” Scott Anderson, Minnehaha County’s planning director, told Green Markets. “They went to the planning commission, which recommended approval Jan. 28 with parking requirements, lighting requirements … pretty much the usual conditions.” Some 70 were in attendance at the meeting, where three or four parties – including surrounding property owners – indicated their opposition. “Anyone has the right to appeal to the planning commission decision, and the hearing on the conditional use permit is scheduled on Feb. 19,” Anderson said. “When we have big projects like this there’s always someone who is opposed to it.” One resident is concerned about the increased truck traffic, and another questioned whether the site would be appropriate for an ammonia tank.

Koch Nitrogen fined for clean air violations

News, News Briefs

Wichita — Koch Nitrogen Co. LLC has agreed to pay a $380,000 civil penalty to settle alleged violations of the Clean Air Act at facilities in Iowa and Kansas, according to the U.S. Environmental Protection Agency. Inspections of three of Koch’s facilities in 2007 and 2009 revealed violations of the risk management program required by the Clean Air Act, EPA reported. The inspected facilities are in Fort Dodge and Marshalltown, Iowa, and Dodge City, Kan. The Fort Dodge and Dodge City facilities manufacture ammonia and UAN. The Marshalltown facility is a pipeline terminal at which anhydrous ammonia is removed from an interstate pipeline or from highway tank trucks and stored on the property. As a part of the risk management program, facilities must develop a management system, assess hazards, develop a prevention program, address emergency response, and submit a risk management plan. Inspectors found that the facilities had issues with the management system, had not fully implemented the prevention program requirements, had not adequately coordinated with local first responders, and failed to include all required information in the risk management plan. As a result of this settlement, Koch Nitrogen has certified that it is in full compliance with the Clean Air Act.

Water ruling goes for PotashCorp

News, News Briefs

Fredericton, N.B. — New Brunswick Mining Commissioner Roderick Duguay issued a decision this week absolving Potash Corp. of Saskatchewan Inc. from blame in a long-standing case (GM July 4, 2011) where residents alleged the potash producer had ruined their water wells and caused sinkholes on their property. In the meantime, PotashCorp had supplied water to the residents, some 60 in all, but gave no compensation for their loss. According to the local press, only a few complainants remained in the case when Duguay issued his decision.

Mosaic probes roof collapse at Sask. mine

News, News Briefs

Colonsay, Sask. — The Feb. 11 roof collapse on a building used as part of the operation is still under investigation at The Mosaic Co.’s potash mine in Colonsay, according to a Mosaic spokesman. “All of the people are accounted for and no injuries have occurred,” stated Brad Deloray, director of public affairs with Mosaic. Deloray said the older structure is 2,500 feet in diameter and is referred to as the thickening building. Deloray didn’t know if there would be any impact on Colonsay operations, adding “We have not assessed the full impact and are still waiting for the investigators to arrive on the scene.” The investigation will be under the jurisdiction of the Provincial Mine Safety Branch of Saskatchewan, and as of early in the week Mosaic had not assessed the full impact of the incident. "The building is a very low traffic area where there were no employees at the time," the spokesman said. Colonsay is 65 kilometers southeast of Saskatoon. More than 300 miners were trapped underground two weeks ago for most of the day at Mosaic’s potash mine near Esterhazy, Sask., when a fire broke out at the K2 facility. The miners assembled in the refuge center to wait until the fire had been extinguished and the smoke was cleared. A piece of mobile mining equipment was said to be the cause.

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