Tokyo-Toyo Engineering Corporation, MAN Ferrostaal A.G. (MFS), and a consortium formed by two Venezuelan engineering contractors – VEC Ingeniería y Construcción (VEC) – have jointly been awarded a contract from Petroquímica de Venezuela, S.A. (PEQUIVEN) for a large-scale fertilizer project in Venezuela. Scope of work under the contract includes grant of license, engineering, procurement of equipment and materials, construction, and commissioning assistance on a lump sum turnkey basis. The project is scheduled to be completed in the second quarter of 2010. The natural gas-supplied facility will serve the domestic market. This complex is composed of an ammonia unit (1,800 mt/d), urea unit (2,200 mt/d), and utility and offsite facilities. TOYO will take charge of the design and construction of the urea unit based on its own technology to be licensed for the project. An ammonia production technology will be licensed by Kellogg Brown & Root. The project site is adjacent to the existing Moron Petrochemical Complex of PEQUIVEN in Moron, Carabobo State, Central Region of Venezuela, which is approximately 150 km west of Caracas. Toyo said this is its third project with MFS, following an ongoing fertilizer project in Trinidad & Tobago and methanol in Oman.
U.S. Gulf: A few large players have concluded July business at Tampa at $303/mt DEL. In the meantime, across the Gulf, recent business was put in the $305-$315/mt DEL range. CF is believed to have bought a large quantity of product for near-term delivery.
Nothing new was reported on the NOLA barge market, which stands at $280/st FOB.
Natural Gas: Domestic producers got a nice surprise June 27 with the July NYMEX gas price settling at $6.929/mmBtu. On that day, August remained above $7.00/mmBtu, but by close of business June 28, it was also sub-$7.00/mmBtu at $6.655/mmBtu.
The continued downward trend was attributed to the EIA reporting a 99 Bcf storage injection for the week ending June 22, which was up from industry estimates of 82-87 Bcf. As a result, some wondered if 2007 inventories may exceed those of last year. U.S. imports of LNG have helped boost inventories this year. Observers caution that hurricane season can quickly change any gas storage assessments.
Eastern Cornbelt: Sources in Ohio reported some sidedress movement of ammonia and UAN still taking place at mid-month on corn. Interest in locking up tons for fall also remained high in the region. One supplier was reportedly offering fall ammonia prepay orders at $460-$470/st FOB regional terminals last week, up from previous levels, but others had stopped taking prepay orders and were already sold out. One source said fill orders for ammonia could still be placed in Illinois at the $455/st FOB level last week, with reference levels as high as $470/st FOB in Indiana and Ohio.
Western Cornbelt: Ammonia prices were reportedly edging up as suppliers changed fall prepay offers or took prepay programs off the table after a heavy booking period. With spot demand all but over in the region, sources tagged the regional ammonia market last week at $430-$450/st FOB, depending on terms, supplier, and terminal location. Reference prices for forward sales were even higher, with some locations at the $460/st FOB level.
Southern Plains: The regional ammonia market was quoted in the $370-$390/st FOB range for fill or fall prepay last week, with the low out of production points in Oklahoma and the upper end out of pipeline terminals.
South Central: The anhydrous ammonia market was described as flat at $410-$415/st FOB Memphis, Tenn., and roughly $10/st higher at Blytheville, Ark. The dealer market FOB Henderson, Ky., was tagged in the $430-$435/st FOB range.
California: Delivered ammonia pricing in California moved on June 18 to $435/st truck-DEL and $450/st rail-DEL.
Black Sea: Recent business into the U.S. between Yara and Mosaic puts the market at $240-$243/mt FOB. Sources report Transammonia also picked up tons at $240/mt FOB for July loading. For players in Asia, these two deals were enough to peg the market in the low $240s/mt FOB and ready to rise.
The anticipated uptick in the market should come, sources say, because of ongoing business, the Yara and Transammonia deals, and upcoming turnarounds. The combination of good sales and reduced output can only mean higher prices, said one trader.
Middle East: Sources say phos acid imports by India have not started as planned, resulting in few ammonia tons being picked up. Reports of one, or possibly two, spot cargoes being offered were passed off by Asian traders as efforts to push the price up.
Still, Sabic reports it is sold out for July, as do other area producers.
Asian buyers such as Taiwan Fertilizer, Namhae, and SFC are taking their contracted tons and are said to be looking for a few more. The strong – but not excessively so – demand is helping hold on to a price level buyers would like to see soften.
Once the phos acid starts moving into India, a steady flow of ammonia vessels from the Arab Gulf to Indian buyers should provide a solid floor to the market.
While some buyers were claiming in early June that the mid-$260s/mt FOB was done, others in Asia say they are hard pressed to see significant deals at those levels. Asian observers are calling the market stable at $270-$275/mt FOB.
India: Buying has not picked up the way industry observers expected once the phos acid contract talks were concluded. Asian sources say until the acid starts serious movement into India, ammonia purchases will remain steady but not strong. One Asian trader estimated July should see the start of major acid deliveries. At the same time, however, he points out that the price of ammonia might only move up marginally. The expected purchases of ammonia by Indian buyers have already been taken into account by the market. The only thing that could upset the pricing ideas is an unexpected jump in demand.
UREA
U.S. Gulf: Granular urea barges were pegged between $320-$324/st FOB last week. Most players called the market quiet. Battle lines were being drawn, with sellers seeing more room for price increases and buyers saying they are again ready for sub-$320/st FOB numbers. Buyers argue that international prices are now weak enough to attract imports into NOLA. This in itself, they say, should get major sellers to reconsider any higher quotes – or else risk seeing more imports headed to the U.S.
Sellers argued that any perceived weakness in the world market is short-lived, as other countries, including Brazil and even Argentina, will be needing product.
For now, prills continue to be reported in the $290-$292/st FOB range. Prills fell off during the season due to a flush of new imports, according to sources, who now say that product and prices are gone. As a result, the market may be ready for another round of imports – ConAgra is expected to bring in prills that it won in the GrodnoAzot reverse auction.
Clarification: The Green Markets NOLA granular urea price last week was $318-$322/st FOB as appeared on P. 1 and 4. The price erroneously appeared as $218-$222/st FOB on P. 2.
Eastern Cornbelt: Granular urea was quoted at $355-$365/st FOB regional terminals for the last sales, with little new business to test the market.
Western Cornbelt: Granular urea remained at $350-$365/st FOB in the region, with few new sales to test the market.
Southern Plains: Sources reported some urea movement to fill, and also for post-harvest applications on winter wheat ground in the Texas panhandle. Sources also talked of topdress urea movement in blends with ammonium sulfate on cotton in the region last week. The urea market was quoted at $345-$350/st FOB Inola and Enid, Okla.
South Central: Urea was still moving well for the second topdress application on rice. Granular urea was generally quoted at $345-$350/st FOB regional terminals last week to the dealer, with some locations offering tons at the $340/st FOB mark to national accounts.
Southeast: Granular urea pricing was generally quoted at $350-$355/st FOB port terminals, with the low at Norfolk and Savannah, Ga. Sources reported some movement in the region for forestry applications.
India: The global urea market had its share of excitement last week, as MMTC closed its tender for an unspecified amount. Then things went quiet.
Prior to calling the tender, which closed June 28, MMTC nailed down a price for Yuzhnyy panamax vessels at $322/mt CFR. All other offers would have to come in on an equivalent or lower basis to ensure making a deal with MMTC.
Sources say about 100,000 mt were secured in handshake deals, with the tender blessing the arrangements.
If all options are taken, about 1.1 million mt were offered in the deal. Sources say it is likely MMTC will take at least 800,000 mt. Some observers note that MMTC would like to take everything, but only if the price is right.
Sources are betting MMTC will negotiate with the Middle East suppliers to get a better price. One trader noted that to make the Arab Gulf material compatible with the Yuzhnyy tons, the FOB price will have to come down about $5/mt.
The tender confirms the softening that has been taking place in the market since the May IFA gathering. When MMTC closed its last tender, just before the IFA meeting, it paid about $340/mt CFR.
Tender results follow:
Supplier
Quantity (MT)
Origin
Shipment
US$/mt FOB
US$/mt CFR
Helm
35-50,000
Open
7-13 July
324.00
15-23 July
324.00
25 July – 3 August
324.00
4-10 August
324.00
SABIC
2 x 25,000
Saudi Arabia
July
305.00
25,000 (optional)
August
305.00
FERTIL
20,000
UAE
August
305.00
15-20,000 (optional)
305.00
QAFCO
25,000
Qatar
July
305.00
25,000 (optional)
305.00
MTPL
50,000
Russia/Open
322.00
Toepfer
22,500 – 80,000
Lots
CIS – Bangladesh – Egypt – Open
10 July – 15 August
330.0
60-70,000
305.00
332.00
in lots of 15-30,000
(Chittagong)
325.00
330.00
40-50,000
335.00
in lots of
337.00
15-30,000
330.00
335.00
Ameropa
50-60,000
Open
322.00
Or
Up to 15 August
322.00
2 x 20-40,000
July/August
323.95
ConAgra
50-60,000
Open
322.00
50-60,000
10 July – 15 August
322.00
2 or 3 x 20-30,000
324.00
Transammonia
2 x 40-60,000
Open
10 July – 15 August
321.90
2 x 40-60,000
322.50
2 x 20-35,000
324.00
2 x 20-35,000
(option)
324.50
2 x 20-35,000
325.50
EFC
25,000
Egypt
15 July – 15 August
319.00
Petronas
18-20,000
280.00
324.50
18-20,000 (option)
Mediterranean – Black Sea – China
7 July – 15 August
325.50
326.50
328.25
Keytrade
50-60,000
50-60,000 (option)
CIS – Open
10 July – 15 August
322
Eurochem
35-45,000
CIS
July-August
324.00
Industry observers say the next shoe to drop – IPL calling a tender – will probably not happen until late August or September.
If MMTC takes all or most of the tons offered in this tender, sources say the country will be in good shape for the upcoming application season.
The big issue for MMTC and its inland customers is making sure there is no port congestion this time around. One source pointed out the tender terms call for delivery by mid-August. That should give the port handlers enough time to unload the urea vessels and get them back to sea before the large influx of grain shipments arrives.
Last year, panamax vessels with grain and urea arrived at the same time. The government ordered the grain ships should get priority, leaving the urea vessels at anchor. The delays in unloading the urea ships caused grief for the end users, the government, the ship owners, and the traders handling the deal. Sources say MMTC has worked hard this year to avoid the political and economic consequences of delaying offloading the urea.
Local media report various government ministries met last week to ensure the urea is promptly unloaded and moved inland. Representatives of the fertilizer, railway, port, and agriculture ministries called on importing companies, handling agents, and railway planners to prepare now for the influx of tons for July and August.
The committee also said that tons purchased in the previous tenders should be delivered by the end of June and moved inland, leaving the port facilities empty to receive the new orders.
Reportedly, the government authorized the importation of 1 million mt of wheat to take place between August and November. Sources told the newspapers that urea imports should slack off just before the wheat shipments arrive, if everything arrives on time.
Black Sea: Once the top price of $322/mt FOB for a panamax to India is calculated back to Yuzhnyy, sources say the price comes in at a comfortable $275/mt FOB. In the run-up to the tender, sources report some deals done just below that level. One trader reported that a cargo or two may have been bought by a major trading house at $268-$269/mt FOB, but could not confirm the deal. Another trader dismissed that business as top-off tons at best – or someone trying to push down the price in anticipation of the Indian tender.
Once MMTC settles its deals through August, sources say the only major place for selling will be Latin America, and the Baltic ports are offering serious competition. At the same time, the buyers are comfortable enough that they can hold off for lower prices.
One trader noted that there may be a brief bump in prices that could hit as high as $280/mt FOB, but by the beginning of August the price will most likely settle back into the $270s/mt FOB.
The Yuzhnyy producers once only had to compete with the Middle East suppliers when it came to business into India and Pakistan. Now, however, China has become a major force for exports with its 6 million mt production capacity.
Deals to the Western Hemisphere are facing the Baltic suppliers as well as Chinese tons that can service the western side of Latin America.
The Europeans can draw from increased Mediterranean production as well as the Baltic and Black Sea suppliers. All in all, the Yuzhnyy producers don’t have a lot of room to maneuver in pricing.
For now, the market out of Yuzhnyy is pegged at $273-$277/mt FOB.
Middle East: Even though the producers claim through the MMTC/India tender that the new market level is $305/mt FOB for prills and granular, sources say by the beginning of this week MMTC will have talked the producers down to at least $300/mt FOB.
Industry observers say the Middle East price would have to drop to $300/mt FOB to put it at parity with the Yuzhnyy price and to meet India’s desire to remain in the $322/mt CFR neighborhood.
At the same time that producers are claiming the market is $305/mt FOB and up, sources say deals to the U.S. are hovering closer to $300/mt FOB.
One Asian trader noted that calculating the netback is difficult, because special deals are arranged for different clients. Still, say sources, until the India tender results are final, the top end is $305/mt FOB. Observers call the market at $300-$305/mt FOB for both prills and granular.
Once the Indian business is concluded – assuming MMTC takes the whole 165,000 mt being offered – the price is not expected to fluctuate much.
Area producers face the same issue as the Yuzhnyy suppliers: China.
The strength of the Middle East suppliers has always been their ability to send different sized vessels to various ports around India. With favorable freight rates, sources say Chinese exports can meet the same criteria.
At the same time, increased granular production in the area and the rest of the world is limiting the options for the producers. India now being a “price” buyer rather than just a prill or granular buyer means MMTC and IPL can pit the prill and granular producers against each other for the best deal.
China: A number of the traders offering tons into the MMTC/India tender included either “open” or “China” origins for their tons.
This latest tender confirms China’s entry into the year‘round urea export market.
Even with a 30 percent export duty, which was designed to encourage fewer exports, the Chinese material is competitive for international trades. One trader noted that the duty was imposed at a time when the global market was weaker. Now with a strong market, he said, the duty is only a slight inconvenience.
Industry observers wonder what will happen to the global market when the duty is removed Oct. 1. For now, however, sources say the current price in the $280s/mt FOB will have to come down to match the delivered price into India from the Black Sea.
Pakistan: It now looks as if Pakistan will not take any of the urea promised under a deal between the government of Pakistan and Saudi Arabia. The Saudi government offered an aid package to Pakistan that included credit for fertilizer purchases.
Chances are, say sources, the credit will be used to buy phosphates or NPKs instead of urea. Sources report stockpiles are more than adequate for the upcoming application season. Even with that stockpile, sources say the government is banning any efforts to export urea.
NITROGEN SOLUTIONS
U.S. Gulf: Barge price ideas were all over the board last week, as sources said demand for the product has seen a sharp increase. The week started with several sources saying business was in the $240-$245/st FOB ($7.50-7.66/unit) range; however, by the end of the week, that had shot up to $250-$255/st FOB ($7.81-$7.97).
Eastern Cornbelt: Sources said bookings for fall UAN have been brisk in the region, and demand remained strong last week although supplies were very tight. Fill UAN continued to be quoted in the $8.59-$8.75/unit FOB range out of river terminals on the low end, with the upper end quoted at $285-$288/st ($8.91-$9.00/unit) FOB, depending on location and supplier.
Western Cornbelt: UAN-32 was quoted at $270/st ($8.44/unit) FOB spot river locations for limited blocks of fill material last week, with the upper end of the fill market pegged at $280-$285/st ($8.75-$8.91/unit) FOB. There were reports of rail-delivered UAN fill being offered for as low as $263/st ($8.22/unit) in Nebraska, but sales at that level could not be confirmed.
Southern Plains: UAN-32 spot market tons were tagged at $270-$285/st ($8.44-$8.91/unit) FOB Oklahoma terminals, with dealers continuing to quote a $295/st ($9.22/unit) FOB cash market price in Kansas for the upper end of the range. UAN remained tight, with reports of some suppliers booked out through November.
South Central: The UAN-32 market out of regional terminals was generally quoted at the $275/st ($8.59/unit) FOB mark for fill tons, give or take.
Southeast: Tight supplies and higher replacement costs reportedly pushed the UAN-30 market up to $240-$242/st ($8.00-$8.06/unit) FOB Norfolk, Va., and Wilmington, N.C. Vessel tons were reportedly booked for late July load dates and August delivery in the mid- to high-$260s/mt C&F at mid-month. Sources last week, however, said vessel numbers were now being tossed around in the $270-$275/mt range for forward sales, with no reports of actual business being concluded yet at those levels.
AMMONIUM NITRATE
Southern Plains: Ammonium nitrate was also in tight supply, and pricing remained at a solid $310/st FOB Catoosa, Okla., to the dealer.
South Central: Ammonium nitrate was starting to move again on pastures in areas where recent rains had fallen. The nitrate market was quoted at $310-$320/st FOB terminals in the region.
Southeast: Delivered ammonium nitrate remained at $330-$340/st in the region, depending on location and supplier.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $230/st FOB for the last sales. Summer fill postings were reportedly as low as $205/st FOB or rail-DEL in the region, but sources were unsure whether tons were actually available at those levels.
Western Cornbelt: Ammonium sulfate continued to be quoted at the $230/st FOB mark or higher for the last spot business, although sources said summer fill offers were available at the $205/st FOB or DEL level last week – at least on paper.
Southern Plains: Granular ammonium sulfate was steady at $200-$230/st FOB in Texas, with the low FOB Freeport and the upper end at Plainview. Inventories were described as tight and allocated. July 1 granular ammonium sulfate postings from American Plant Food Corp. include $200/st FOB Freeport, $210/st FOB Galena Park, Texas, $220/st FOB Mermentau, La., and $230/st FOB Littlefield, Texas. Coarse potash postings from the company for that date include $185/st FOB Freeport, $195/st FOB Galena Park, and $215/st FOB Littlefield, while standard will move to $175/st FOB Freeport and $205/st FOB Littlefield.
South Central: Granular ammonium sulfate remained in tight supply, but sources reported little new movement to test the market. Most continued to peg the dealer market at a firm $235-$240/st FOB regional terminals.
Southeast: Granular ammonium sulfate remained at $205-$210/st FOB, with the upper end FOB Augusta, Ga. On a delivered basis, granular sulfate was pegged at $215-$235/st in the region, depending on location and supplier, with the upper numbers reported in Florida.
PHOSPHATES
Central Florida: Phosphate producers were busy loading railcars last week, but prompt sales were a thing of the past. Mosaic and PotashCorp were said to have little or nothing available for a month or more, but CF may still have some supplies that could be sold on a prompt basis. However, most of the territory served from Central Florida had already either received what they need for the fall or had already ordered. In addition, drought conditions in about half of the country were not helping.
Although the Central Florida DAP index range has not changed because of a lack of prompt sales, the actual asking prices were higher than the index by $3-$5/st FOB.
While prompt sales were absent, producers were making deals last week for deliveries in the fall at $385/st FOB.
The Central Florida DAP price range last week was unchanged at $370-$372/st FOB, which was the range of the most recent transactions a few weeks ago. Mosaic’s asking price was $385/st FOB for DAP and $381/st FOB for MAP. CF was listing a price of $375/st FOB for prompt, $378/st FOB for September, and $382/st FOB for October. PotashCorp’s Central Florida reference price remained at $385/st FOB. In Texas, Agrifos was asking $410-$415/st FOB for truck sales and $410/st FOB for railcars. Agrifos was sold out into late September.
U.S. Gulf: Although NOLA DAP barge sales were slower on the river system last week, which is normal for this time of year, it was far busier than in Central Florida. Those who purchased early in the week got the best deals, as prices began going up by midweek.
Mosaic, which has closed its summer-fill program, was making sales for late fall at $405/st FOB, and some traders reported sales for the same price during the same period. One said he was not surprised that price was achieved, but he was surprised that it happened so early in the season. Regardless, it appeared the new higher price will stick – at least into the fall.
Prices took a wide range last week, with as little as $390/st FOB paid early in the week, and $398/st FOB occurring later.
Most of the buys last week were going directly into warehouses, which have been stocking up for the fall season. Warehouse prices were as low as $415-$420/st FOB at Inola on the Arkansas River and about $425/st FOB for most points along the Mississippi and Ohio rivers.
Indications were that end users – i.e., farmers – were accepting the new, higher prices, apparently because the price of corn and other crops was still substantially higher than in the past. The only thing that could put the brakes to the market would be a collapse in grain prices, but there was no evidence that was lurking behind the silos.
In Oklahoma and Texas, heavy rain and flooding have taken a toll on the winter wheat crop, which was ready for harvest at the time the bad weather started. About half the crop was still in the fields last week, and deterioration was setting in. Normally, that area begins buying phosphates early for the fall season, but wheat farmers who suffer heavy damage may be forced to do without in the fall due to a lack of money. Those who do not incur heavy damage will do very well, because wheat prices will likely go up. What impact that might have on phosphate prices was unclear, but it was probably not positive.
The NOLA DAP barge price range last week widened from $390-$392/st FOB the previous week to $390-$398/st FOB. The wide range was an indication of volatility in the market. Most of the activity was in the $392-$395/st FOB range. Mosaic’s price last week was $405/st FOB for prompt sales, if supplies exist.
Eastern Cornbelt: The phosphate market remains strong, with several manufacturers now reportedly sold out through September after a heavy period of fill bookings. Supplies will likely remain short through fall, sources said, and a tightening world market could also add pressures to U.S. prices. Sources last week quoted the DAP and MAP markets at $425-$432/st FOB most river terminals for fill, which was up slightly from last report. 10-34-0 remained at $335-$350/st FOB in the region for the last sales.
Western Cornbelt: DAP and MAP remained at $420-$430/st FOB regional warehouses. 10-34-0 was quoted at $325-$350/st FOB in the region, with the upper end reflecting new acid and ammonia replacement costs.
Southern Plains: DAP and MAP pricing was up from last report, with the market for both quoted at $415-$420/st FOB Catoosa. Most sources quoted the upper end of that range as the common dealer price last week. 10-34-0 remained in a broad range at $285-$325/st FOB, with the low out of tanks in the Texas panhandle and the upper end FOB Kansas terminals to the dealer.
South Central: Dealers were positioning phosphate fill tons for autumn movement on winter wheat. DAP was pegged at $415-$420/st FOB most regional warehouses, with MAP in the same range. TSP remained at $380-$385/st FOB warehouses to the dealer, where available. One source said he had some TSP on order, but the material was un-priced until time of shipment.
Western U.S.: Agrium’s ammonium phosphate postings in California and Arizona moved on June 25 to $300/st railDEL or FOB warehouse for 16-20-0, and $450/st rail-DEL or FOB warehouse for MAP.
Also effective June 25, Agrium’s ammonium phosphate postings in the Pacific Northwest firmed to $300/st DEL for 16-20-0 and $435/st DEL for MAP in Montana and Wyoming; $300/st DEL for 16-20-0 and $440/st DEL for MAP in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $300/st DEL and $445/st DEL for MAP in Washington, northern Idaho, and Oregon excluding Malheur County. Agrium’s warehouse postings moved on that date to $295/st FOB for 16-20-0 and $440/st FOB for MAP in Washington, northern Idaho, and Oregon’s excluding Malheur County.
U.S. Export: Last Wednesday, Transammonia made a sale of 6,000 mt of DAP into Central America at $440/mt FOB. In addition, PhosChem also sold 4,000 mt into the same region at the same price.
Pakistan and India were said to both be in the market or preparing to issue tenders for additional phosphate supplies, but no new contracts had been signed as of last week.
In general, the export phosphate market has been on a steady upward climb for some time, but prices appeared to have leveled off last week. However, buyers should expect prices to continue to increase gradually, as inventories remain low.
The export DAP price range consolidated last week at $440/mt FOB from the previous week’s range of $437-$440/mt FOB.
Pakistan: Fauji has issued a tender for import of 40,000-80,000 mt of DAP in two parcels at Karachi/Port Qasim on C&F basis for shipment in July/October 2007. Offers are to be submitted on July 3 and should be valid until July 6.
POTASH
Eastern Cornbelt: The potash market FOB regional warehouses remained firm at $230-$235/st FOB, depending on grade and location; product was tight and strictly allocated. Effective June 19, Agrium moved its posting for red premium 60 percent muriate of potash to $220/st FOB Vade, Sask., for minimum carloads of 97.5 tons or minimum truckloads of 25 tons.
Agrium’s rail-delivered red premium potash postings firmed on that date to $249/st in Illinois, Indiana, Ohio, and Michigan. Mosaic is raising its domestic potash prices $20/st, effective Oct. 1, and has stopped taking orders in the domestic market through September.
Western Cornbelt: Potash pricing was firm at $229-$235/st FOB regional warehouses, depending on grade and location. Agrium’s rail-DEL red premium potash postings, effective June 19, include $251/st in Iowa, Missouri, and Nebraska.
Southern Plains: Potash was $225-$235/st FOB the warehouse, depending on location, supplier, and time of delivery. One source quoted the market for granular potash firmly at the $206/st level FOB Carlsbad, N.M. Mine postings ranged from $208-$214/st FOB Carlsbad last week, depending on grade.
Intrepid Potash is planning a nine-day maintenance turnaround at its East Plant (white product) in September, and a nine-day maintenance turnaround at its West Plant (red product) in October.
South Central: Potash covered a wide range at $230-$245/st FOB in the region, up dramatically from last report. The variance in price, according to several sources, represented spot sales of leftover spring tons at the lower number, with the upper end reflecting new replacement costs going forward. Several sources said they booked a good portion of what they’ll need for fall.
Effective June 19, Agrium’s postings for rail-delivered red premium potash firmed to $257/st in Alabama, Kentucky, and Tennessee.
Southeast: Sources tagged the potash market at a firm $240-$245/st FOB regional warehouses, based on current replacement costs, with delivered potash now quoted at $245-$257/st in the region, depending on grade and location. Effective June 19, Agrium’s postings for rail-delivered red premium potash firmed to $257/st in Virginia, West Virginia, Florida, Georgia, and the Carolinas.
Vietnam: BPC has signed a spot contract to supply Vietnam with about 30,000 mt of potash at the new price, which is reportedly up $100/mt. BPC plans to ship a total of over 200,000 tons of potash fertilizers to Vietnam in 2007.
SULFUR
Tampa: Negotiations for new third-quarter sulfur contracts were underway last week, but don’t look for a quick settlement. “The sides are far apart,” a phosphate producer said. Another source said the initial pitch from one of the large sulfur producers was well into the double digits, which won’t sit well with the phosphate industry. However, a sulfur producer said phosphate companies relying on product from refineries on the Gulf Coast could be in danger of losing product to the world market through the priller operations in Texas and Louisiana. The most likely market for the prill would be Brazil, which was said to have critical shortages that could force some facilities to shut down operations unless additional supplies were found.
Canada has little or no reason to cut American phosphate producers a break. Second semester prices on the world market were expected to exceed $100/mt, and phosphate producers in the U. S. would find that hard to swallow.
After moving toward somewhat better balance in supply and demand on the Gulf, supplies tightened again last week, although refineries in general were operating about normal. Even Valero’s Houston refinery, which was in the process of cranking up its production of ultra-low-sulfur diesel fuel, was getting closer to the projected 150-160 lt/day, after some early start-up problems. Production there last week was running between 100-120 lt/day. Valero’s McKee plant in the Texas Panhandle, which had a fire several months ago, was slowly restarting refining, but sulfur output from the facility is small. The company’s Texas City refinery was getting ready to begin a turnaround that will last 35 days starting on July 5. By the time it is completely back on line on Aug. 10, 4,000 lt of production will have been lost, about 25 percent of its capacity during that period.
West Coast: Negotiations with priller producers on the West Coast were expected to begin around the first of August, and prices were expected to increase significantly.
Vancouver: Negotiations for the second semester contact pricing were underway last week and China was said to be close to closing a deal, which would bring prices to more than $100/mt FOB from Vancouver. Other contracts, such as those with North Africa, were projected to be completed in the same general range. Contract negotiations were expected to be completed within another week or so. Sharp price increases on world contracts would be an indication of what was to come on the U.S. market.
MARKET NOTES
Pakistan: Fauji Fertilizer Bin Qasim (FFBL) successfully concluded the revamp of its ammonia plant June 24. As a result, ammonia capacity will be boosted 24 percent, which should gradually increase the capacity utilization rates of its urea and DAP plants by 16 percent and 15 percent, respectively.
The National Fertilizer Development Centre (NFDC) maintains that the shutdown by Fauji was a major cause of low urea and DAP production, but high inventories of urea allowed the country to meet local requirements. NFDC said urea supply/demand during Kharif 2007 (April-September) would be comfortable, saying the country will consume about 2.46 million mt of urea against a production/inventory of 2.9 million mt.
India: RCF has indicated that that it would like to participate in the revival of the Durgapur fertilizer unit of the Hindustan Fertiliser Corp. Ltd. (HFC). RCF teams have visited units at Talcher, Durgapur, Barauni, and Ramagundam, and zeroed in on Durgapur. Apparently, RCF considered various factors, particularly the timeframe for availability of natural gas from sources like KG Basin and pipeline connectivity. Currently, a detailed due diligence is being carried out, and subsequently
a detailed feasibility report through a third party consultant would be submitted to the DOF. As far as the Fertiliser Corp. of India, RCF has shown interest in setting up a coal-based chemical unit at the Talcher site as a joint venture project.
Trinidad: The government has recently agreed to lease land to PCS Nitrogen, which plans to develop a model farm in the country. It will include a demonstration farm and greenhouse. Rising food costs have been a major concern, according to the local media, and the new state-of-the-art farm and resource center is expected to aid farmers in better producing crops.
Mark Palmquist, CHS Inc. executive vice president and chief operating officer, will lead the crop nutrients business for CHS as part of the company’s Ag Business division. Agriliance Executive Vice President Rod Schroeder will lead the crop protection business for Land O’Lakes, and Executive Vice President Jim Blome will lead the Agriliance retail business. This is in light of the recent announcement of Agriliance’s repositioning and George Thornton’s retirement as CEO (GM June 25, p. 1). CHS said further structure will be communicated as it is determined.
Bunge Ltd. has named Jacqualyn Fouse chief financial officer, replacing Drew Burke, who served as interim CFO since April after William Wells left the company. Fouse previously served as senior vice president and CFO of Alcon Inc. since 2002. Before that, she was the CFO of SAirGroup from 2001 to 2002. Burke will return to his full-time position as co-chief executive of Bunge’s global agribusiness unit.
Lansing, Mich.-The Michigan Dept. of Agriculture has decided Muskegon County hasn’t made a case for taking over authority for the sale of fertilizer in its jurisdiction, according to state officials. “They just didn’t provide sufficient evidence at this time for us to proceed with a public meeting (on the issue),” April Hunt, state fertilizer and bulk storage manager, told Green Markets. “We’re going to wait to see if they have more data (to support their case).” She said county officials had been notified by letter and that the state would welcome the resolution to be resubmitted with more information detailing how the state law impacts their communities. She said the county still has control over use of fertilizer and could still achieve the objective of protecting waterways in the areas. Muskegon’s petition was focused on getting a public hearing to convince officials that the state law conflicts with county interests.
Oklahoma City-LSB Industries Inc., the parent of El Dorado Chemical Co., reports that it has been added to the Russell 3000® and Russell 2000® Indexes. The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, and the Russell 2000® Index measures the performance of all but the largest 1,000 of those companies. “Our inclusion in these indexes represents a further milestone in our corporate development and gives LSB greater visibility among index investors and funds,” said Jack Golsen, LSB chairman and CEO. Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies. An industry-leading $4 trillion in assets are currently benchmarked to them. Investment managers who oversee these funds purchase shares of member stocks according to that company’s weighting in the particular index.
Tallahassee-The Florida Department of Environmental Protection (FDEP) has decided it will not reevaluate a request for a permit for Mosaic Co.’s Ona Mine, despite a request by a judge from the Florida Division of Administrative Hearings. FDEP originally recommended approval of the application, but the judge asked it to reevaluate that recommendation after a study on the cumulative impact on the Peace River indicated damage from previous mining activities. Opponents of the mine were continuing their appeal.
Helsinki-The Finnish Ministry of Trade and Industry has issued Kemira GrowHow a two-year time period to start mining operations in the Sokli area. The decision by the ministry did not grant Kemira GrowHow the five-year extension for mining rights that the company applied for. If the limited period of two years is not enough and Kemira GrowHow believes that it is possible to develop the deposit and pursue the opening of the mine, the company may again apply for mining rights. The Sokli mine area is located at Savukoski in Eastern Lapland, where it is possible to extract niobium and phosphorus.
Southeast Idaho Energy (SIE) LLC, American Falls, Idaho, announced June 27 that it is moving ahead with plans to construct a $2 billion nitrogen and energy facility in Power County, Idaho. Named the Power County Advanced Energy Center, it will produce nitrogen fertilizer and ultra-low-sulfur diesel fuel.
Ramesh Raman, SIE president, said the company is ready to begin the process of obtaining permits for the facility. The Center will be located in the heavy industrial zone southwest of American Falls, south of the Lamb Weston plant and east of Idaho Power’s Borah substation. SIE has an option on more than 450 acres there.
Raman said the Center would be built in two phases. In Phase 1, estimated at $1 billion, SIE would install one gasifier to turn coal and petroleum coke into more than 4,000 st of nitrogen and 1,400 barrels (58,800 gallons) of diesel per day.
The nitrogen plant will produce 1,650 st of anhydrous ammonia, 500 st for sale and the rest for urea production, according to John Burk, SIE director of communications. Urea production will be 1,500 st/d, with 1,200 st/d granulated. The plant will also produce 1,400 st/d of UAN.
Burk said the company is talking with several potential customers for its products and is optimistic about reaching an agreement soon. It is also working to line up coal and petcoke supplies.
There will also be byproduct sulfur, with the quantity depending on the sulfur content of the fuel. SIE expects to produce at least 125 st/d and use it to produce sulfuric acid. It has also begun preliminary discussions with these buyers.
In Phase 2, estimated at another $1 billion, the company would add two gasifiers to boost diesel output to 8,400 barrels (350,000 gallons) per day.
Burk said WorleyParsons will do the engineering, Zachry will be the construction contractor, and Conoco Phillips will provide the gasifiers. He could not provide details on the investors in the project at the current time, but said he should be able to do so in the future.
SIE hopes to begin construction late next year, with startup of Phase 1 in 2011-12. Construction will require about 700-1,000 workers over a six-year period. Raman said that approximately 150 employees would be needed to operate Phase 1 facilities.
“We will be creating jobs that pay well,” he said, “and we are committed to hiring locally. As we approach operations, we plan to work with local institutions to create a workforce training program.” Besides stimulating the local economy, the project will contribute to local taxes. “We expect to make a substantial contribution to the tax base of Power County,” Raman said.
SIE is a subsidiary of Refined Energy Holdings (REH), which is headed by Raman and based in Mount Kisco, N.Y. and Denver, CO. Raman said REH has secured the equity funding necessary to advance the project. “Once we receive our permits, we will seek a lender to complete the financing of the Advanced Energy Center,” he said.
“This project is a small, important step toward energy independence,” said Raman. “Significant advances in technology now make it possible for our country to put its vast coal resources to clean use and reduce our dependence on imports. We will demonstrate to the Idaho Department of Environmental Quality that our Center will operate well within the most stringent air quality standards, which are set and enforced by federal and state government agencies to protect human health and the environment. Advanced clean coal and environmental technologies enable us to do so.”
SIE says it has secured water rights to meet Phase 1 and Phase 2 requirements. In Phase 1, the Center is expected to use up to two million gallons per day. SIE plans to design the facility for zero water discharge.
“The Power County Development Authority (PCDA) deserves a great deal of credit for the project,” Raman said. “Through the support and efforts of PCDA, we have defined a project that makes sense for us, for the county and for its residents. It also makes sense for Idaho. There is an excellent market for fertilizer and diesel products in the state, and in the region as well.”
Almost two years ago, Raman proposed an electric generating plant for the FMC site in eastern Power County. “As the project evolved, we became convinced that a facility to produce fertilizer and diesel not only made commercial sense, but also would have greater benefits for the region,” he said. Raman explained that as plans for the Center developed, “We found that the available property at the FMC site could not accommodate the Center.” He thanked FMC for its efforts to help him make use of the FMC site.
The Advanced Energy Center will produce electricity for internal use. Raman said SIE will keep Power County residents informed as the project progresses. “In addition, we are interested in any ideas and questions that residents might have. That’s an important part of our commitment to ensuring that our facility will be a positive addition to the county.”
Industry observers last week were awaiting more details about the project. One source said the pivotal issue is financing; the true news about SIE will not come until that is achieved. Another acknowledged that SIE has indeed been making the rounds with large industry players, but said it is still very early in the process. Buyers might welcome a new nitrogen producer in the region, what with the region mainly served by two local producers – Agrium Inc. and J.R. Simplot Co. – and importers.
While the number of proposed coal-gas projects continues to grow, sources noted that the U.S. Senate on June 19 failed to put coal-to-liquid incentive amendments in the Clean Energy Act of 2007. However, industry proponents say coal-gas incentives will rise again, as some form or fashion of incentive has bi-partisan support from at least 69 of the 100 senators. They say no fewer than 69 senators voted for at least one form of coal-gas amendment, and they are hoping they can come together on one they can all support. Another source observed that states getting the coal-gas facilities can be relied upon for some support. To date, Illinois, Mississippi, and Alaska have been supportive of such projects.
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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.
