All Posts from January 21, 2014

Uralkali reaches agreement on first-half K shipments to China

Uralkali announced on Jan. 20 that its wholly-owned subsidiary, Uralkali Trading, has reached an agreement for first-half 2014 potash deliveries to China with a buying consortium headed by CNAMPGC, one of the major Chinese agrochemical corporations. The contract is for 700,000 mt at $305/mt, and the contract period runs through June 30, 2014.

That level reflects a $95/mt drop from the first-half 2013 contract price of $400/mt reached between China and major potash producers in January 2013 (GM Jan. 7, Jan. 21, 2013).

“The contracts between Uralkali and the Chinese companies clearly testify to growing demand and the beginning of market recovery,” said Oleg Petrov, Uralkali director for sales and marketing. “The terms of the agreement with our Chinese partners are mutually beneficial and serve the interests of our consumers, agricultural producers of the PRC.”

U.S. and allies lift some sanctions on Iran

Sanctions against some Iranian exports – including ammonia and urea – are being eased under an agreement between the P5+1 and the Iranian government. The deal took effect Jan. 20 as Iran began opening its nuclear facilities for inspection and promises that it would not seek or develop nuclear weapons. The P5+1 — the United States, United Kingdom, Germany, France, Russia, and China, coordinated by EU High Representative Catherine Ashton — reached a deal with Iran Jan. 12 to take effect Jan. 20. The Western countries agreed to a six-month easing of sanctions on a variety of goods and services, including Iranian petrochemicals. According to the U.S. Treasury Department guidelines, petrochemical products from Iran include aromatic, olefin, and synthesis gas along with their derivatives, including ammonia and urea. All deals must be signed and concluded before the end of the temporary relief of sanctions program, July 20, 2014. U.S. companies and individuals will continue to be banned from directly engaging in the trade or purchase of the newly released items. The only exception is related to humanitarian goods.

Along with the temporary lifting of the sanctions, the Treasury Department released the names of the Iranian companies that are no longer subject to sanctions. The following 14 companies are the only ones that may participate in exports of Iranian petrochemical products:

   
• Bandar Imam Petrochemical Company   
• Bou Ali Sina Petrochemical Company
• Ghaed Bassir Petrochemical Products Company
• Iran Petrochemical Commercial Company
• Jam Petrochemical Company
• Marjan Petrochemical Company
• Mobin Petrochemical Company
• National Petrochemical Company
• Nouri Petrochemical Company
• Pars Petrochemical Company
• Sadaf Petrochemical Assaluyeh Company
• Shahid Tondgooyan Petrochemical Company
• Shazand Petrochemical Company
• Tabriz Petrochemical Company

Restrictions on financing have also been eased.

The temporary lifting of sanctions also allows Iranian depository institutions to handle financing for the exports. Under the Treasury Department guidelines, that means “any entity (including foreign branches), wherever located, organized under the laws of Iran or any jurisdiction within Iran, or owned or controlled by the Government of Iran, or in Iran, or owned or controlled by any of the foregoing, that is engaged primarily in the business of banking (for example, banks, savings banks, savings associations, credit unions, trust companies, and bank holding companies)” may be used for the deals.

The full resource page on the sanctions against Iran and how those sanctions have changed can be found at http://www.treasury.gov/resource-center/sanctions/Programs/pages/iran.aspx.

A page with the most common questions about the changes in the sanctions is available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/jpoa_faqs.pdf

Agrium gives earnings guidance

Agrium Inc. has announced that it expects its fourth quarter 2013 earnings from continuing operations to be at the bottom of the previously released guidance range of $0.80-$1.25 per diluted share. The update to guidance is primarily due to lower than expected sales prices across all Wholesale nutrients in the quarter and lower than expected UAN and domestic potash sales volumes, partly due to challenges with domestic rail shipments. Agrium’s Retail operations are expected to achieve record results for the fourth quarter and for the 2013 year. Retail was able to offset industry headwinds of lower nutrient prices and a compressed fall season in the U.S. by achieving higher margins for nutrients, seed and services and other product lines.

Corporate inter-segment eliminations, largely related to Wholesale nutrient volumes that have been purchased by Retail but have not yet been sold to end customers, were higher than anticipated. These eliminations postpone the recognition of these sales and impacted earnings by approximately $18-million in the fourth quarter of 2013. Earnings from these sales will be recognized once Retail completes the sale to end-customers this spring.

Agrium also expects to report a number of one-time adjustments in the fourth quarter of 2013 that are excluded from the fourth quarter guidance. This includes a purchase gain of approximately $250-million related to the acquisition of the Viterra Agri-business on Oct. 1, 2013. Pertaining to the AWB Ltd. / Landmark acquisition, it will reflect the receipt of approximately $70-million for an insurance recovery relating to a long-standing litigation case on soybean shipments and a goodwill impairment of approximately $220-million in Landmark due to lower than expected business performance and delays in synergy realization.