All Posts from May 21, 2007

Market Watch

AMMONIA

U.S. Gulf/Tampa: As many folks hurried off to Turkey for the IFA conference, they left Tampa import prices at the $340/mt DEL mark for May. Come June it may be another story, say sources, citing a weaker Black Sea market. In the meantime, across the Gulf at NOLA, folks are calling the most recent business around the $295/st FOB mark.

March anhydrous ammonia imports were up 23 percent, according to the U.S. Department of Commerce, to 721,027 st from the year-ago 585,521 st. They are still down for the year by 7 percent. The current July-March imports were 5.96 million st versus the year-ago 6.4 million st.

Eastern Cornbelt: Sources reported more sidedress activity underway on corn last week, with growers moving directly from planting to sidedressing in some areas where rain delays prevented adequate preplant applications. One source said sidedress volumes for ammonia and UAN would be up at least 25 percent from normal in his trade area because of earlier wet weather delays.

The ammonia cash market remained at $440-$445/st FOB in Illinois on the low end. Forward contract ammonia was available for June from one supplier at $455-$460/st FOB regional terminals.

Western Cornbelt: Spot ammonia pricing continued to show some weakness. The regional market was quoted at $420-$435/st FOB terminals for cash market tons, with the low reported in Nebraska. One source said he expects spring ammonia volumes to be up 16 percent from last year in his trade area.

Southern Plains: Anhydrous ammonia pricing was down from last report. Sources tagged the low end of the market at $370/st FOB production points in Oklahoma and Texas, with delivered ammonia at $390-$400/st in those two states. Pricing out of pipeline terminals in Kansas was quoted in the low-$400s/st FOB after discounts.

South Central: The ammonia market was tagged at $410-$417/st to the dealer FOB Memphis, Tenn., and roughly $420-$425/st FOB Blytheville, Ark.

Black Sea: The market remains soft. Buyers from the United States are staying away, causing reduced demand. At the same time, Indian buyers have not returned to the market as expected.

Sources in Asia figure the Indian buyers will be busy at the IFA meeting in Turkey this week, looking to satisfy the needs of the DAP producers. Business was done at $245/mt FOB. Producers are said to be still pushing for $250/mt FOB but getting nowhere. For now, sources peg the market at $240-$245/mt FOB.

Observers figure the price will continue to slide for the next six to eight weeks. The conventional wisdom is that by mid-July the price will hit a nadir of $220-$230/mt FOB before climbing out of the price valley in time for the fall application season.

Middle East: With business reported into India at $316/mt CFR and another deal out of Iran at $270/mt FOB, sources say the price is firmly in the $280s/mt FOB. The material to India came from Sabic and does not reflect the purchases expected now that the phos acid contracts are done in India.

Sources say the buyers will most likely be spending most of their time at the IFA conference nailing down their contracts for this year.

Sources say Iran often offers its material at a discount for a couple of reasons. Shipping from Iran is slightly more than from other area ports, so the producers offer a discount of a couple of dollars right up front. Secondly, said one Asian trader, the Iranian plants are not always reliable. Sometimes promised material is not fully ready at the port at the promised time. All in all, said one source, a discount of $10/mt, while a bit high, is not out of the question.

UREA

U.S. Gulf: Prices continued to move down last week and were reported within the $310-$320/st FOB range. However, some sellers said they feel the bottom is near, if not achieved. They say that the low numbers are enough to effectively keep out imports, and rice demand should shore up the markets. Some said that the price dive was just too much, but others said it may simply have been a move by some to get business before domestic forward pricing programs came into effect.

Prills were hard to gauge. Sources said there is just too much extra tonnage on the market to keep those prices up. Most were saying product could be had below the $300/st FOB mark, if you could find a buyer willing to pull the trigger. Others said there was a big difference in prill quality perceptions as well.

Speaking of increased imports, March was a big month. Urea imports were up 69 percent, to 900,025 st from the year ago 532,580 st. However, July-March imports are still off 22 percent, at 4.48 million st from the year-ago 5.7 million st.

Eastern Cornbelt: Although urea barge prices have softened in recent weeks, positioned tons on the upper river system remained fairly firm this late in the season. One Ohio source reported tapped-out inventories at his location last week, and speculated the dealer pricing would be in the $390-$400/st FOB range if cash tons were available. The low end of the regional range was pegged at $375-$380/st FOB upper Mississippi River locations

Western Cornbelt: Granular urea pricing continued to slip, with the regional spot market quoted at $375-$385/st FOB last week. One supplier was reportedly offering forward contract urea for June as low as $368/st FOB Pine Bend, Minn.

Southern Plains: Granular urea pricing continued to slide in the region. Koch reportedly dropped its reference prices on May 15 to $340/st FOB Enid, Okla., and $350/st FOB Inola, Okla. Other suppliers continued to report Arkansas River terminal sales at the $360-$365/st FOB level through mid-week.

South Central: Sources said urea movement on rice was accelerating last week. Granular urea pricing covered a wide range in the region, although many were still tapping prepay tons for the early rice demand. Most sources pegged the dealer cash market at $370-$380/st FOB regional terminals, but there were reports of reference levels at the $385/st FOB mark or higher at some locations. On the other end of the pricing spectrum, dealer pricing at Vicksburg, Miss., had reportedly dropped to the $345/st FOB level last week.

Southeast: Granular urea was quoted at $385-$395/st FOB port terminals to the dealer, with the low at Wilmington, N.C., and the high reflecting reference levels at Norfolk, Va. The dealer price FOB Brunswick, Ga., was pegged at the $390/st mark last week.

India: The results of the MMTC tender had just more than 1 million mt being offered. Prior to the tally of offers, industry observers were more concerned with how many tons would be offered rather than at what price level. One Asian trader noted that the prices were about what was expected – in the mid-$320s/mt FOB from the Arab Gulf and $278-$300/mt FOB from Yuzhnyy. The real issue, he said, was how many tons will be offered.

Industry observers noted that MMTC would be looking for about 1 million tons. If much more than that was offered, sources agree, the buyer would have a strong case to argue for lower prices.

As it turned out, the 1 million mt number was hit at prices most in the industry expected. Results follow:

PIC/Kuwait did not offer tons. Reportedly, the PIC operations will be operating at a reduced level for the next month or so. By press time, MMTC had not issued any awards. Sources speculate the MMTC representatives will be working throughout the IFA conference to nail down a final price. There are also reports that MMTC had worked out “acceptable” prices before the tender with suppliers in the Middle East and Black Sea. At least one source familiar with the Middle East offers said he was not aware of any special deals achieved before the tender, but would not rule out a series of “gentlemen’s agreements” as to pricing.

The large number of open offers could mean any number of sources, said one observer. There is a possibility that at least 20,000 mt could come from Indonesia now that PIM has called a selling tender. Other tons could easily come from China as well as the Black Sea. One source commented that non-panamax orders would make more sense coming from China rather than the Black Sea just based on shipping costs. However, he added, if the price is right out of Yuzhnyy, then Chinese tons might be trumped.

MMTC had made noises that it would only accept prices similar to what IPL achieved earlier this year. Traders on three continents raised doubts that such a deal would materialize.

Middle East: The offers made in the MMTC/India tender show producers’ interest in moving the price back up.

After concluding business with IPL/India just a month ago close to $300/mt FOB and then additional cargoes at $310-$315/mt FOB, the producers jumped into the $320s/mt with both feet.

While the offering price does represent a healthy increase, some industry observers were surprised the producers did not push for more.

Prior to the release of the results, a few traders had speculated the range might be closer to $325-$330/mt FOB. One trader noted, “The producers have never been shy about asking for as much as possible for their product.”

The conservative offers refueled speculation that pre-tender deals were done between MMTC and the producers.

Both sides of the tender deny any pre-tender deals were made.

PIC/Kuwait is cutting back on production. One source said the cutback could be as long as three months.

The reason for the reduction in output is not clear. One source suggested the shutdown was for a major maintenance overhaul. Another thought there were some feedstock issues that needed to be resolved. And another combined the first two but added that the cutback was also designed to reduce stock overhang.

Based on the MMTC tender, sources now peg the market at $310-$323/t FOB for prills. Granular, because of the Egyptian material, shows a greater spread from the factory. Once the delivered price is calculated, however, the result is the same.

Black Sea: Prices received a slight bump once the math was done on the delivered prices offered in the MMTC/India tender. With offers in the $330s/mt CFR, sources estimate the netback to Yuzhnyy to be $280-$300/mt FOB. The problem with calculating the netback, however, is that most of the tons not offered by the Middle East suppliers were offered on an open sourced basis.

Depending on where the best deal showed itself, traders winning a contract could take material from the CIS, China, Bangladesh, or Indonesia.

Chances are about 360,000 mt will come from the CIS. Six offers of 50-60,000 mt were made specifying the port of Mundra, which is the only place panamax vessels can be handled.

For the producers, seizing more of the Indian business would go a long way to helping shore up prices.

Latin American buyers had been holding off to watch as prices moved up and then slipped once again.

While the buyers in Mexico, Brazil, Colombia, and their neighbors cannot move the market or – by themselves – provide a floor for market prices, their entry at the time of an Indian tender can offer enough price support to prevent further slippage.

Bangladesh: The latest BCIC tender closed last week. A number of sources have begun to look at the BCIC tenders as just something to note but not take seriously. The latest round shows offers from non-traditional companies far below the market level. In the past, BCIC has accepted the low offers. When the winning companies could not perform, BCIC took the performance bond money and called another tender.

The tender called for 25,000 mt each of prills and granular. Results follow.

Indonesia: Once MMTC/India called its tender, PIM announced it would call a tender this week. The material picked up in this tender could be used to cover a small amount of the Indian business, but many in the industry figure the cargoes will go to other Southeast Asia buyers such as the Philippines. Most likely only 20,000 mt is being offered. In the past PIM sold the tender in lots of 5,000 mt each to local traders. International buyers then go around to each trader to reconstitute the 20,000 mt.

NITROGEN SOLUTIONS

U.S. Gulf: Availability was called tight. Prices continued to be strong overall, though some were divided over price direction. While some called the market as high as $265/st FOB, others claim product could be had as low as $255/st FOB. Some players blamed the forward summer market for the price slippage, saying that near-term, barges are and should remain high as inventories are so short. However, psychologically buyers are put off by current prompt prices when June is being offered for $230/st and July-August at $204-$214/st FOB.

UAN imports were up 80 percent in March, to 328,642 st from the year-ago 183,051 st. However, for the year-to-date, July-March, they were still off 20 percent, to 1.93 million st from the year-ago 2.4 million st.

Eastern Cornbelt: UAN supplies remained tight in the region as sidedress demand picked up, and several sources talked of outages at several regional terminals last week. Spot pricing covered a wide range last week. The low end of the market was quoted by an Indiana source at $245/st ($8.75/unit) for UAN-28, reportedly available from two separate suppliers at two different locations. Elsewhere in the region, the UAN-32 market was generally quoted at $290-$300/st ($9.06-$9.38/unit) FOB regional terminals, with the upper end reported in Ohio to the dealer.

Western Cornbelt: UAN was moving well in parts of Iowa and Nebraska, and inventories remained tight. The UAN-32 market continued to be quoted at $288-$300/st ($9.00-$9.38/unit) FOB regional terminals, with the upper end reflecting dealer list pricing at some locations. The dealer market FOB Bigelow, Mo., was quoted at the $295/st ($9.22/unit) mark last week.

Southern Plains: UAN-32 pricing continued to firm, with tight inventories reported in the region. The market was tagged at $285-$295/st ($8.91-$9.22/unit) FOB terminals, with most dealer quotes at the upper end of that range last week.

South Central: UAN-32 was up from last report and in tight supply, with several locations reporting sold-out inventories. Sources tagged the terminal market at $280-$295/st ($8.75-$9.22/unit) FOB, with the upper levels at more northerly locations in the region. The market FOB Caruthersville, Mo., was pegged firmly at the $285/st ($8.91/unit).

Southeast:UAN-30 pricing remained at $235-$240/st ($7.83-$8.00/unit) FOB, with the low at Norfolk and the upper end to dealers FOB Wilmington. Several sources said the UAN vessel market had backed off to $160/mt C&F for the next round of business.

AMMONIUM NITRATE

U.S. Gulf: The last done barges were reported to have traded within the $270-$272/st FOB range, with quotes for new business heard at $275-$280/st FOB. Sources said that those actually needing product would have to pay up for it, as barge quantity product is in very short supply.

AN imports were up 24 percent in March, to 160,470 st from the year-ago 129,671 st. July-March imports were off 23 percent, at 825,070 st versus the year-ago 1.07 million st.

Western Cornbelt: Ammonium nitrate was unchanged at $315-$25/st FOB in the region, with delivered nitrate pegged at the $335/st mark in Nebraska from Oklahoma shipping points.

Southern Plains: Ammonium nitrate was pegged at $310-$315/st FOB Catoosa, Okla., up slightly from last report.

South Central: Ammonium nitrate was generally quoted at $305-$315/st FOB terminals to the dealer, with the low reported at $296/st FOB Greenville, Miss.

Southeast: Ammonium nitrate was tagged at $305/st FOB Wilmington, with delivered bulk nitrate quoted as high as $355/st in North Carolina from one regional supplier.

AMMONIUM SULFATE

U.S. Gulf: Ammonium sulfate imports were off 36 percent in March, to 50,953 st from the year-ago 80,230 st. However, AS imports were up for the July-March period by 11 percent, at 268,937 st from the year-ago 241,850 st.

Eastern Cornbelt: Granular ammonium sulfate pricing remained at a nominal $240-$250/st FOB for the last done business, but supplies were very tight. One supplier was reportedly expecting to have mid-grade sulfate available on the spot market in the near-term, but granular product would remain strictly allocated until June.

Western Cornbelt: Granular ammonium sulfate was steady at $240-$250/st FOB for the last sales, but product remained very tight.

Southern Plains: Granular ammonium sulfate was in extremely tight supply. Sources quoted the market at $200/st FOB Freeport, Texas, but supplies were reportedly tapped out at that location for new sales last week. Sulfate pricing FOB Plainview, Texas, remained firm at $230/st for granular, $220/st for coarse, and $205/st for standard, with heavy movement reported.

South Central: Granular ammonium sulfate was another “scarce commodity” in the region, as one source put it, and demand remained high. “If you’ve got it, they’re going to buy it,” said one, noting that terminal inventories were either extremely limited or tapped out last week. Pricing ranged from $215-$235/st FOB, with the low at Caruthersville and the upper end FOB Memphis to the dealer. The dealer market FOB Vicksburg was pegged at the $225/st FOB mark.

Southeast: Dry weather in the region has reportedly hurt ammonium sulfate demand in some areas, but sources continued to talk of extremely tight inventories and strict allocations. The granular ammonium sulfate market remained at $205/st FOB Hopewell, Va., and $210/st FOB Augusta, Ga., with dealer postings from DSM Chemicals for delivered sulfate in Florida referenced at the $235/st level.

PHOSPHATE

Central Florida: Prices for phosphates continued to soften slightly in Central Florida last week, as fill program prices tended to take effect. However, although some spot sales – albeit small – did happen, most loadings were under contract. Beginning June 1, railcars will be loaded under pricing set by Mosaic under its fill program and CF’s future price program for June and August. Mosaic’s fill program was for the period of June through August. Most of those orders were taken when prices for both Mosaic and CF were at $365/st FOB, and the market was moving to meet those lower figures last week. Sales were made in the $365-$370/st FOB range.

A large number of sources said last week that a big sale was made to a customer for delivery into Iowa. The amount was believed to about 10,000 st, which would be a full unit train. The identity of the buyer was not established and the exact price was not confirmed. However, one source who bid on the deal and lost said he understood it was done by a trader and thought the price was in the range of $355-$357/st FOB, which would be considerably below the current range. Although it could not be confirmed, it was possible, because large buyers are often able to negotiate more favorable pricing. Because the price could not be confirmed, it was not included in the range.

Last week, activity was strongest in the northern Midwest, Ohio, and the Northeast. In the Southeast, planting was already complete for the most part. In Florida, sales were said to have stalled as a result of extremely dry conditions and forest fires – more than 240 were reported and more than 200,000 acres had been charred. The biggest of those fires was the Bugaboo blaze, which straddles the Florida/Georgia state line.

Based on actual sales last week, the Central Florida DAP price range was $365-$370/st FOB, compared to a flat $370/st FOB the previous week. Mosaic’s list price for DAP was $370/st FOB, with MAP $4/st FOB lower. CF’s list price was said to have fallen to $362/st FOB for both DAP and MAP. PotashCorp lowered its Central Florida reference price for DAP to $370/st FOB from $380/st FOB. In Texas, Agrifos lowered its price to $415/st FOB for both truck and rail from the previous listing of $425-$430/st FOB.

U.S. Gulf: Improved weather, drier and warmer, helped push terminal sales along the Gulf’s river system last week, but barge activity was anemic. With slower sales, prices sailed south. As was normal for May, demand for phosphate barges was way down, as most dealers and terminal operators had filled their bins for the spring season. Warehouses in the upper Midwest were said to be the most active buyers, and inventories there were on the low side.

A month ago, DAP prices were in excess of $400/st FOB and traders were making a killing reselling barges ordered in December and January for more than $100/st FOB less than the index at the time of delivery. Many of those traders continued buying as the market rose, and last week some were willing to sell for less than they paid for the product. The fill program for June through August offered by Mosaic at $385/st FOB was rapidly becoming the benchmark, because those loadings will begin within the next two weeks. Why pay more? Most sales last week, which were few, were near that price. CF’s future price for June and July was lowered from $390/st FOB to $382/st FOB, and that, too, had an impact on the market. As a result of lower barge prices, warehouse prices were moving downward by $10-$15/st FOB last week.

One source pointed out that the $385/st FOB NOLA DAP barge price might slip $10-$15/st FOB in the near future, and customers would again begin placing orders. However, he said that a rush to buy would likely push the price back up in the range of $385/st FOB within a short period. If that occurs, buyers should move quickly. Although many warehouses were full last week, that situation was expected to change during the next two months, and buyers will have to refill before the fall season arrives.

Last week, NOLA DAP barge sales were made in the range of $382-$385/st FOB, which created the range for the Gulf market. Prices may continue to soften again this week, but probably not significantly.

Eastern Cornbelt: DAP was quoted in a broad range at $413-$434/st FOB regional warehouses last week, with the low out of spot river warehouses in Illinois and the upper numbers out of inland locations in Ohio. MAP was quoted in roughly the same range. No current prices were reported for TSP. 10-34-0 remained at $335-$350/st FOB for the last sales. Product remained very tight, but sources said demand for starters was tapering off.

Western Cornbelt: One source said MAP and DAP sales in his trade area were up 18 percent over last year. DAP pricing was quoted at $413-$425/st FOB regional warehouses last week, with the low at St. Louis. MAP pricing was the same as DAP; the MAP market FOB St. Joseph, Mo., was pegged at the $425/st mark last week. One source tagged delivered DAP at the $406/st mark to his location from Central Florida, noting that low inventories at the warehouse level were helping to buoy that market.

10-34-0 remained in tight supply at $335-$360/st FOB in the region, although demand was waning. Agrium’s phosphoric acid prices will firm on June 1 to $690/st for SPA and $680/st for MGA rail-DEL in Iowa, Missouri, Nebraska, Minnesota, the Dakotas, and Wyoming. A $5/st increase for both products is slated for August, and again in September.

Southern Plains: DAP and MAP were down slightly from last report, with the market tagged at $415-$420/st FOB Catoosa for both products. 10-34-0 pricing covered a very broad range in the region. The low remained at $285/st FOB in the Texas panhandle, while Kansas sources quoted dealer prices ranging from $305-$330/st FOB, depending on location and availability.

Effective June 1, phosphoric acid pricing from Agrium will firm to $690/st for SPA and $680/st for MGA rail-DEL in Colorado, Kansas, Oklahoma, New Mexico, and Texas. A $5/st increase for both products is slated for August, and again in September.

South Central: DAP was down slightly from last report at $415-$425/st FOB regional warehouses, with most locations at the lower end of that range. MAP was quoted in roughly the same range, and TSP was pegged at $380-$385/st FOB regional warehouses, where available.

U.S. Export: India made a purchase last week of 250,000 mt of DAP from Jordan at a delivered price of $474/mt CFR, which was considerably below the $499/mt CFR price offered by PhosChem. The biggest problem PhosChem has in making sales to India – or other customers in the region – is ocean freight rates, which have skyrocketed to about $63/mt for the summer on panamax-sized vessels. The price for handymax vessels was believed to be about $70/mt. Jordan will be moving the phosphate to India on handymax vessels at a rate of about $34/mt, which made it easy to out bid PhosChem. Jordan’s DAP price would have been $440/mt FOB after deducting freight costs, which was actually higher than PhosChem’s. A source said PhosChem was unlikely to have much success in that region until inventories run low or out in the Middle East and North Africa, which will probably occur around July. That may not be too bad, because the heaviest buying period for India begins around that time.

Tunisia made a sale into Turkey at a price believed to be $420/mt FOB. PhosChem made a sale of 8,000 mt of MAP into Brazil at $429/mt FOB last week.

Other prices being offered for export last week included Russia at $415/mt FOB and Morocco at $420-$425/mt FOB.

The export DAP price range last week was $429-$433/mt FOB, down from $433-$435/mt FOB the previous week. The lower prices reflected higher ocean freight costs.

POTASH

Eastern Cornbelt: Potash pricing continued to firm, with reports of tight inventories at some locations in the region. With manufacturers touting limited availability for shipments until the summer months, pricing quotes out of the regional warehouse system ranged from $225-$235/st FOB last week, depending on grade and location. That range was up from the prior week’s report.

Western Cornbelt: Potash was quoted at $218-$230/st FOB in the region, depending on location, grade, and supplier. The market continues to show strength, with new reference prices reportedly as high as $235-$240/st FOB at some locations. One source said potash volumes for his business were up 12 percent year-to-date compared with last year.

Southern Plains: Potash FOB Carlsbad, N.M., was tagged at $198/st for 62 percent standard, $201/st for 62 percent fine standard, $203/st for 60 percent granular, and $208/st for 62 percent granular. Intrepid Potash has another $6-$10/st increase slated for June 1, depending on grade. Out of the regional warehouse system, sources tagged the potash market at $215-$225/st FOB, depending on grade and location.

South Central: Potash pricing remained firm at $215-$225/st FOB regional warehouses. The granular market FOB Caruthersville was tagged at the $218/st mark last week.

Southeast: Potash pricing continued to firm. Sources tagged the market at $245/st FOB Wilmington, with delivered potash now quoted at $240-$250/st in the region, depending on grade and location. Some were still pulling product purchased earlier at lower numbers, but new sales were definitely at higher levels, sources said.

SULFUR

Tampa: With no new disasters the sulfur market was quiet last week, as many in the industry were in Turkey for the annual world sulfur conference and the upcoming IFA meeting there.

Along the Gulf Coast, supply and demand were said to be coming into balance last week after shortages during the past couple of months. That was primarily due to most refineries coming back online after turnarounds. Valero’s Houston refinery was an exception. The facility was expected to return to full production last week, but unexpected problems were discovered that will keep it off line just a bit longer. Normally, the plant produces about 45 tons per day of sulfur; the plan was for it to be switched to making a sweeter diesel fuel, which would increase sulfur output to around 100 tons/day. Production was expected to begin increasing sometime this week.

MARKET NOTES

India: Given the growing consumption of fertilizers in the country, the government has decided to revive all the weak fertilizer units besides reopening those closed, according to the Union Minister for Chemicals and Fertilizers and Steel, Mr. Ram Vilas Paswan. Paswan said that six units would be revived/reopened, involving a total investment of Rs 220bn. He said that the consumption of fertilizers in the country was at 25 million mt last fiscal year, compared to 23 million mt the year before. It is estimated to cross 30 million mt within five years. Whereas the indigenous production is at 20 million mt, 1.6 million mt is produced by a joint venture unit with Oman. The balance requirement is met by imports, he added. It is this situation that has compelled the government to make a decision to revive/reopen all the sick and closed units, he said.

The country is now facing an acute shortage of urea and the international prices are ruling high, said Paswan. He said all the fertilizer units that are not using the high cost naphtha as a feedstock are doing well, while those running on naphtha would also become profitable once LNG becomes available. Until such a situation emerges, the loss-making units need to adopt strategies for sustaining their operations. LNG is expected to be available in Kochi by 2010-11, and it is possible to revamp the Fertilizers and Chemicals Travancore Ltd (FACT) plants with this cheap feedstock. Given this scenario the revival of FACT has become important, hence the government is planning to implement the revival package, including setting up a brownfield project with total replacement of the existing ammonia plant, revamping the existing urea plant, and utilizing the infrastructure and utilities to the maximum extent possible with a significant cost advantage compared to a greenfield project. The urea needs of Kerala and adjoining states could be met with this measure, he said. The estimated cost of the project is Rs 15bn for 7.2 million mt output per annum.

The caprolactam plant would be expanded from the present 50,000 mt/y to 1.5 million mt/y, with technical assistance from the process licensors, DSM of Netherlands, at a total cost of Rs 4bn. Once LNG becomes available, this unit would also improve its profitability. It would be accompanied by a nylon project at a cost of Rs 3bn, which would utilize 25 percent of the expanded caprolactam capacity. Thus, a total investment of Rs 22bn would come to FACT for its revival and these proposals would be presented before the Cabinet soon for its approval, he said.

In addition, in coordination with the Kerala government, FACT is planning to utilize the land available with it for developing infrastructure projects in collaboration with the state government or companies promoted by the state government. These projects include developing a new IT park, a food park for agro-food industry, and a defense park. The proposed diversified operations would improve the profitability of FACT, besides generating more employment in the long run.