All Posts from November 22, 2010

Market Watch

AMMONIA

U.S. Gulf/Tampa: No agreement had been reached late last week for Tampa for December. While suppliers were hoping for a rollover from the last round, buyers appeared to be somewhat reluctant and were looking for something in the neighborhood of a $25-$40/mt DEL retreat from November.

Eastern Cornbelt: The anhydrous ammonia market remained at $690-$705/st FOB, with continued reports of brisk movement and spot outages at terminal locations.

Western Cornbelt: Although dry conditions have made fall ammonia applications difficult in some locations, one Iowa contact said ammonia allocations at major terminals had brought the ammonia market “to a crawl” at mid-month, with some retailers saying they are out for the season.

Sources continued to quote the anhydrous ammonia market at $670-$700/st FOB for prompt tons, where available, with the low in Nebraska and the upper end in Iowa. There were reports of spot loads in western Iowa being quoted as high as $750/st DEL from southern production points.

Northern Plains: Ammonia continued to move to the field as weather conditions permitted. The market was tagged at $670-$700/st FOB. The low end reflected producer postings, but Minnesota sources were more inclined to quote the upper end of the range for new sales at mid-month. Delivered ammonia in North Dakota was pegged at the $655/st level for cash market tons out of Leal.

Effective Nov. 2, Agrium’s anhydrous ammonia postings firmed to $670/st FOB Mankato, Minn. In the Leal/Beulah sales area in North Dakota, Agrium’s ammonia postings moved to $670/st FOB and $690/st DEL.

Black Sea: The industry is looking for a weakening of prices from the area next month. After a steady rise in prices, sources now say that the market has seen the price slip below $400/mt FOB. Just how far down, said one source, will largely depend on what the U.S. does.

For now, the price is centered on $400/mt FOB, with sources calling the market $390-$410/mt FOB.

UREA

U.S. Gulf: NOLA urea barges were under pressure last week with sources calling new granular business within the $380-$383/st FOB range. Sources said farmers were more concerned with applying potash and phosphate and will probably wait a little longer before using much more urea.

Eastern Cornbelt: Granular urea was reported at $420-$440/st FOB regional terminals, up slightly from last report.

Western Cornbelt: Granular urea was firm at $420-$440/st FOB regional terminals to the dealer.

Northern Plains: Sources tagged the granular urea market at a firm $440/st FOB Minnesota terminals, up significantly from last report. Effective Nov. 2, Agrium’s granular urea postings firmed to $445/st FOB North Dakota terminals at Alton, Carrington, Colfax, Scranton, and Grand Forks, with rail-delivered urea postings moving on that date to $450/st in Minnesota and the Dakotas. Those levels reflected a $20/st increase from Oct. 14 postings.

Northeast: Granular urea pricing was pegged at $400-$415/st FOB Philadelphia and Baltimore, up from last report. Sources tagged the E. Liverpool urea market at the $420/st FOB level last week.

Eastern Canada: Granular urea was quoted at $530-$540/mt FOB in Ontario, up some $65-$80/mt from last report.

India: Possibly the last tender of the Indian buying season closes Nov. 22. IPL called the tender late last week without specifying how many tons it will take.

After STC booked about 900,000 mt earlier this month, India is still short by 300-600,000 mt. Chances are, say sources, IPL will most likely take that amount if the price is right.

And getting the price right for a buyer will prove difficult.

Sources of urea are getting fewer as the year closes. With reports that China will raise its export duty effective Dec. 1 and Indonesia holding onto more of its tons for domestic use, the only possible suppliers come from the Black Sea or Arab Gulf.

The delivered price into India has been steadily moving up with each of the past tenders.

The Indian government’s target price of $310/mt FOB was nicked in the August IPL tender when the buyer accepted west coast deliveries at $311/mt CFR.

The shattering of the $310/mt CFR barrier seriously came in September when MMTC accepted prices in the $347/mt CFR range.

Earlier this month, STC accepted offers in its October tender in the $360s/mt CFR range.

Industry sources speculate that at least another $20 will be added to the prices offered on Monday. Some bulls are saying even $400/mt CFR will be offered in all seriousness.

If IPL takes the quantity sources expect it to, India might be ready to sit out the first quarter of the year. New purchases won’t take place until after the new fiscal year starts and the accountants get together with the agronomists in the second quarter.

Black Sea: Prices keep moving up. Sources say a firm deal at $379/mt FOB was concluded, and there are reports that $381/mt FOB was also done.

Part of the exuberant pricing comes from reports that China will not be in the international market after Dec. 1, and India still needs to buy about half a million tons.

The price in the region took a major pounding in 2008 when it dropped from $800/mt FOB to $215/mt FOB in just 13 weeks. Since then the price only visited $300/mt FOB in February of this year – and then dropped again.

In June 2010, however, the price began its steady rise as global demand strengthened and supply stagnated.

Most of the sales from Yuzhnyy went to Turkey and Europe. The usual suspect for major buying – India – stayed away from the Black Sea because of the abundance of material from Iran and China.

With China out of the picture and global prices coming into line with each other, Yuzhnyy as a source for India has once again opened up.

As traders prepared their paperwork for the IPL tender, sources put the Black Sea market at $379-$385/mt FOB.

Pakistan: The government is expected to get about $400 million from Saudi Arabia, which was announced by the latter at the Pakistan Development Forum (PDF) early last week. Of the $400 million, $300 million will be in the shape of soft loans. Saudi Arabia has offered this assistance to mitigate flood effects in Pakistan. Market sources observed that soft loans would be utilized for the import of urea from Sabic during the Rabi season if the product is needed. Pakistan’s National Fertilizer Development Centre (NFDC) has warned that local production may decrease due to curtailment of gas and the late commissioning of the new Engro plant.

Middle East: Producers are grinning in anticipation of the IPL tender.

The buying options for India will drop to Yuzhnyy and the Arab Gulf if reports of a December increase in Chinese export duties are accurate.

The problem for the Arab producers is that Iranian producers are willing to offer tons at rates just a notch below the Arab pricing ideas.

Indian buyers have not been shy about taking Iranian urea.

In the tender that settled earlier this month, STC took about 400,000 mt from Iran. Previous tenders have taken similar quantities.

The Arab producers have been offering material in Indian tenders at rates they knew the Indians would reject. But they only offered token tons – 25,000-40,000 mt – in each tender. Sources say the producers were just making a point about where they think the market should be.

By last week, the producers were getting their wish as sources reported $390/mt FOB was done in a private sale.

The price had been languishing in the $360s/mt FOB because contract sales from the Arab producers and the tender sales to India from Iran kept the price stagnant.

Now sources say the latest deal will push up the price the Arabs and Iranians offer into India this week.

There is talk that some deals were done above $400/mt FOB, but sources could not confirm these sales.

For now, prills and granular are pegged at $390-$400/mt FOB.

China: Sources say it is a 99.99 percent certainty that Beijing will change the export duty beginning Dec. 1.

The government has become concerned that too much urea is being shipped offshore and helping drive up the price of urea. By imposing the higher duty sooner, the central planners in Beijing hope to increase the nation’s domestic reserves and get prices down for local farmers.

The move will push up the date for a higher export duty by one month.

Even during the summer, sources speculated that China would not extend the current lower rate into January as it had in the past two years. By the end of summer, rumors of imposing a higher rate before the end of the year started to float.

By the time of the regional IFA meeting in Hanoi a couple of weeks ago the rumor was being taken as gospel, and buyers
of Chinese urea stepped up their search for vessels to pick up contracted tons.

Sources say the Chinese government will most likely allow buyers with urea already in bonded warehouses and contracts and vessels in hand by the end of this month to ship their product after the Dec. 1 deadline. One source said the grace period may most likely extend only until Dec. 15.

Reportedly, the traders who got contracts from STC/India in the last tender have been moving rapidly to secure their tons and vessels. Sources say there is no clause in the STC contract that allows the seller to declare a force majeure because the source country changes its export duty.

Speculation is that China will move the duty up to 110 percent in December. One trader, however, suggested Beijing may take a middling position for December and then move up to 110 percent in January.

Also circulating are reports that the export planners may do away with the smaller windows of export opportunity that occurred in the past two years.

Next year may only see June, July, and possibly October as months with lower export duties.

Indonesia: Sources report state-owned producers have about 250,000 mt to unload by the end of the year.

Reportedly, one producer was ready to issue a selling tender for 40,000 mt but quickly withdrew the offer.

A number of private deals have taken place since the last tender earlier this month.

Sources say the producers are anxious to make sure they do not get caught selling to only one or two countries.

One trader noted that if the producers relied only on the tenders for their sales, the end users would most likely end up being the U.S. or India. Dependence on these two buyers could, the trader noted, bring pressure to lower prices.

By making smaller sales to a number of regional buyers, the producers hope to keep the balance of power in negotiations on their side of the table.

Sources say the rising price of rice in the region, along with stronger demand for urea, could help the producers develop trades that involve importing cheaper rice in exchange for reasonably priced urea. One trader even suggested that barter deals with major rice producers, such as Vietnam, might be worked out.

Vietnam: The Vietnamese government announced last week that it would ban the export of all fertilizers until the end of the year, especially urea.

Area traders say the imposition of a ban is common place this time of year. And just as common are efforts by importers and traders to get around the ban.

One way importers get around government edicts such as the most recent one is to not report the full amount of any imports.

If a local buyer then comes asking for urea, the holder can either get a higher price by “discovering” some excess tons, or he can re-export the material to an off shore buyer for a nice profit.

Whatever happens, however, sources say it is clear Vietnam needs urea.

The Vietnam Fertilizer Association told state-run media that demand for the next six months will be about 500,000 mt. He added that domestic producers will only be able to satisfy about 60 percent of the need.

Sri Lanka: The government closed a tender for 60,000 mt of urea Nov. 12.

Only three companies offered material in the tender. Sources say the offers were submitted before the Black Sea and Middle East prices began their dramatic increases.

Results of the tender follow.

NITROGEN SOLUTIONS

Eastern Cornbelt: UAN continued to be quoted at $10.50-$10.89/unit FOB terminals, depending on location and time of delivery. An Illinois source last week tagged the UAN-32 market solidly at the $340/st ($10.63/unit) FOB level to the dealer.

Western Cornbelt: UAN-32 remained at $325-$340/st ($10.16-$10.63/unit) FOB regional terminals for cash tons, with spring prepay reported in the $340-$350/st ($10.63-$10.94/unit) FOB range.

Northern Plains: Minnesota sources tagged the UAN market at $10.71-$10.94/unit FOB, depending on location and time of delivery, with the upper end quoted for spring prepay. Delivered UAN-28 was pegged at $320-$330/st ($11.43-$11.79/unit) in North Dakota, with the low for prompt tons and the upper end for spring prepay.

Northeast: Sources quoted the UAN-30 market at $295.50/st ($9.85/unit) FOB Baltimore for prepay tons pulled before March 2011, with monthly increases scheduled for shipments after that. Another contact quoted UAN-30 prepay in the $305-$310/st ($10.17-$10.33/unit) range for tons pulled by June 2011 and ordered by Dec. 15, 2010. Out of the E. Liverpool, Ohio, market, spring prepay UAN-28 was quoted at the $10.55/unit FOB mark.

Prompt UAN-32 tons out of terminals in upstate New York had reportedly firmed to the $11.00/unit FOB mark.

Eastern Canada: The UAN-28 market had firmed significantly, to $350-$355/mt ($12.50-$12.68/unit) FOB Ontario terminals. One source pegged the dealer market for UAN-32 at the $397/mt ($12.41/unit) mark last week.

AMMONIUM NITRATE

U.S.Gulf: Although prices remained unchanged last week at $300-$302/st FOB, it appeared the price may rise after the Thanksgiving Holiday or early December. Product has been offered for $320/st FOB for December.

Western Cornbelt: Ammonium nitrate was steady at $355-$365/st FOB in the region for any available tons, with the upper end quoted in the Iowa market.

Eastern Canada: Ammonium nitrate was pegged at $447-$470/mt FOB in Eastern Canada, depending on location. An Ontario source quoted the CAN-27 market last week at $440/st FOB in his trade area.

AMMONIUM SULFATE

Eastern Cornbelt: The granular ammonium sulfate market was steady at $250-$260/st FOB, with mid-grade sulfate referenced at $240/st FOB and $250/st rail-DEL.

Western Cornbelt: Granular ammoniums sulfate was unchanged at $250-$260/st FOB in the region.

Northern Plains: Granular ammonium sulfate had firmed to $250-$260/st FOB in the region. Effective Nov. 8, Honeywell’s granular ammonium sulfate postings moved up to $250/st FOB Roseport, Minn., with mid-grade moving to $240/st FOB Roseport. On a rail-delivered basis in Minnesota, Honeywell’s postings moved to $260/st for granular and $250/st for mid-grade ammonium sulfate.

Northeast: Granular ammonium sulfate pricing had reportedly moved up to $210-$220/st FOB and $230-$240/st DEL in the region.

Eastern Canada: Dealer reference prices for granular ammonium sulfate remained at a solid $320/mt FOB in Ontario.

PHOSPHATES

Central Florida: With winter just around the corner, prompt sales of phosphate from both producers and traders slid to a halt last week and some in the industry were already taking advantage of the Thanksgiving holiday, which will not start for another week.

Still, the Florida market was at least $10/st FOB higher than the export market, but producer inventories remained low, even as phosphate-processing plants were running full steam ahead. Much of what will be produced in the near future will still be needed to meet PhosChem’s contractual obligations with India.

With sulfur expected to be scarce during the next several months, Mosaic has bought and brought about 400,000 mt to Galveston for re-melting as insurance.

Phosphate from Central Florida was being used in the Eastern Cornbelt in preparation for spring planting. Even as corn prices slid back somewhat, the crop will still bring more than it has in the past couple of years, which was an inspiration to growers to maximize the use of their land.

Prices for phosphate from Central Florida fell back to a more normal relationship in comparison to the NOLA barge market. The difference last week was about $10/st FOB.

Mosaic made one or more prompt railcar sales of DAP at $550/st FOB, which came late in the week.

With no new prompt sales last week, the Central Florida DAP price range fell to $540-$550/st FOB from the previous week’s $560-$563/st FOB. Smaller lots from traders could cost $5-$10/st FOB more. CF hiked its price from $535/st FOB to $540/st FOB. Mosaic’s price was $550/st FOB. MAP was listed at a premium of $10/st FOB in comparison to DAP. PCS Sales was making sales at comparable prices to the market. Agrifos’ price for truck sales was $580/st FOB, and rail – if available – was $570/st FOB The company had no MAP available for sale. Agrifos was expected to have enough product to carry it through the first quarter of next year.

U.S. Gulf: The shades came down on the NOLA phosphate barge market last week after buyers went into hibernation until mid-December, when the prepay season was expected to begin.

Activity at terminals and warehouses in some areas was still brisk, as farmers were eager to put heavier applications on the ground to maximize their crop yields for next year. Terminal prices were in the $590-$630/st FOB range last week.

Corn prices dipped a bit last week on the futures board from $5.70/bushel for next month to $5.41/bushel and were $5.08/bushel for December 2011. Soybeans were also down from $12.80/bushel to $11.56/bushel. Wheat for July 2011 was $7.25/bushel late in the week. Although prices for grains were down from the previous week, they were still more than strong enough for farmers to make an investment in fertilizers.

The deafening quiet of the market last week came as no surprise. It was normal for this time of year. The north river markets were unable to receive barge shipments at this late date, because the river that far north was closed. Buyers in other areas had no real need to make a move. The next wave of buying will probably not begin until the middle of December, and those will be prepay for spring. Prompt sales will likely be few and far between for the next couple of months, said sources.

Traders said they had made offers to sell in the $550-$555/st FOB range last week, but found no takers at that price. The paper market posted a price of $545/st FOB, and a trader said he thought sales were possible in the $540s/st FOB range, but he declined to make offers at that price. A trader who was concerned about the falling market sold one NOLA DAP barge at $525/st FOB after finding no takers in the $550/st FOB range – or anything in the $540s/st FOB – and finally wound up taking a low-ball bid at $525/st FOB. That will be difficult to reproduce anytime soon.

Last week, the NOLA DAP barge price range was $550/st FOB based on offers to sell, down from the previous week’s range of $558-$560/st FOB. Prices will remain soft into midDecember. MAP, where available, was bringing a premium of about $10/st FOB for NOLA barges last week, but was $10-$20/st FOB higher at warehouses.

Eastern Cornbelt: DAP was unchanged at $615-$630/st FOB and in tight supply. MAP was pegged at $625-$645/st FOB, where available. 10-34-0 was quoted firmly in the $520-$525/st FOB range for very limited tons.

Western Cornbelt: The DAP market remained at $610-$620/st FOB most regional warehouses for available tons. MAP remained in extremely tight supply, with sources quoting the spot market at $640-$650/st FOB for fall tons, “if you can find them.”

The 10-34-0 market remained at a firm $520-$525/st FOB, if you could find any tons. “There are no sellers willing to price at this time,” according to one Iowa contact.

Northern Plains: DAP was quoted at $600-$620/st FOB in Minnesota, with MAP at the $624-$640/st FOB mark, where available. Out of North Dakota warehouses, the MAP market was pegged as high as $650-$660/st FOB last week.

Minnesota sources pegged the 10-34-0 market at $490-$520/st FOB, also up significantly from last report. A North Dakota source said the last delivered 10-34-0 price out of Brandon, Manitoba, was $535/st, but no tons were available from any shipping points there last week.

Northeast: MAP was pegged at $630-$650/st FOB regional warehouses, where available, with the low confirmed out of warehouses in western Pennsylvania. DAP was quoted at $615-$625/st FOB on a spot basis, with the low reported at E. Liverpool for January shipments.

10-34-0 pricing had firmed significantly, with sources quoting the market at $525/st FOB terminals in upstate New York. That price was up some $70/st from last report.

Eastern Canada: Fall potash, phosphate, and lime volumes were up significantly. With brisk movement on what most sources described as a big winter wheat crop, several sources said inventories were low. “Fall consumption has been very strong,” said one contact. “There have been some supply logistics issues. We’ve been hand-to-mouth for the latter part of the season.” He added that “the industry has some catch-up to do to get recharged for spring.”

Sources pegged the MAP market at $755-$770/mt FOB in the region, up some $60-$70/mt from last report. An Ontario source quoted DAP at the $765/mt FOB level in his trade area.

U.S. Export: PhosChem made a sale of 5,000/mt of DAP, which was for an undisclosed destination. That was the same price – $600/mt – that PhosChem received for another sale the previous week.

Export sales could get a boost now that the Federal Reserve has moved to reduce the value of the U.S. dollar, but inventories were already extremely low and the North American market was paying a premium to the export business. Tampa export was still $10/st FOB below the Central Florida price.

While the export market was expected to continue restrained in the near future, exports could get a bounce if China imposes its 110 percent levy on its own phosphate exports. The Chinese government had not announced a decision late last week.

The export DAP price range last week moved from $580-$600/mt FOB the previous week to a flat $600/mt FOB based on the two most recent sales, although they were few and were for small volumes.

Sri Lanka: The government closed a TSP tender for 24,000 mt Nov. 12. Delivery is slated for March 2011. The tally for the tender follows.

POTASH

Eastern Cornbelt: Potash was tagged at $510-$515/st FOB regional warehouses for any available tons.

Western Cornbelt: One source said potash summer fill shipments were finally starting to arrive in mid-November. Potash was pegged at a firm $510-$515/st FOB for very limited warehouse tons in the region, with delivered tons pegged as high as $525/st in western Iowa.

Northern Plains: Effective Nov. 4, Agrium’s red premium potash postings firmed to $510/st FOB North Dakota terminals at Colfax and Grand Forks; $515/st FOB Shakopee, Minn.; and $525/st rail-DEL in Minnesota and the Dakotas. Agrium also raised its potash prices at the mine on Nov. 4, with standard moving to $475/st and premium to $480/st FOB Vade, Sask.

Northeast: Sources said potash was still available on a spot basis for as low as $470/st FOB from resellers in western Pennsylvania last week, but others said any available tons from producers had firmed to levels north of $500/st FOB. On a rail-delivered basis, sources quoted the market at $520/st.

Effective Nov. 4, Agrium’s red premium potash postings firmed to $530/st rail-DEL in Pennsylvania, West Virginia, Maryland, Delaware, New York, New Jersey, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, and Maine.

Eastern Canada: Potash pricing had reportedly firmed to $590-$600/mt FOB at regional warehouses, depending on grade and location, with the low quoted by Ontario sources for 60 percent red granular potash and the upper end for 62 percent white granular.

The K-Mag market was tagged at $385-$401/st FOB in Ontario. Sulfate of potash (SOP) was quoted by Ontario sources at $645-$660/mt FOB.

Sri Lanka: The government closed a 24,000 mt MOP tender Nov. 12. Product is to be delivered by March 2011. Tender results follow.

SULFUR

Tampa: Sulfur continued to be in strong demand from the phosphate industry, as well as metals and paint producers, tire manufacturers, and the chemical industry. All of that demand should also translate into a growing economy, which in turn will increase the demand for even more sulfur.

With demand high and supply low and likely to shrink during the winter months, suppliers were having a difficult time making arrangements for the coming year. Sources said Shell in Canada will have greater production next year and that oil-sands producer Syncrude will sell into the U.S., rather than blocking, both of which were positive developments for the customers in this country.

Mosaic has taken out insurance against the sulfur shortage and shipped about 400,000 mt to Galveston for re-melting and use at its phosphate plants.

Refinery rates bumped up a little last week – about 1.6 percent – to 84 percent from 82.4 percent of capacity in comparison to the previous week, according to the DOE. However, winter is the time of year when refineries perform turnarounds, and that will not help the situation.

Vancouver: Exporters in Vancouver were making more sales of prill sulfur for re-melting in the U.S. market, a source said. Any export tariff increase of 110 percent by China for phosphate was a serious concern for Canadian sulfur suppliers, while the opposite was true for the U. S. phosphate industry.

MARKET NOTES

Pakistan: The country’s largest province – Punjab, which is a large urea consumer – has urged the Federal Minister of Petroleum and Natural Resources, Syed Naveed Qamar, to expedite the government’s proposal for LNG imports to meet the energy demands of the industrial sector.

Bangladesh: The country’s urea industry, which has been hit due to short supply of natural gas to their plants, welcomed their government’s approval for setting up eight power plants, with a total capacity of 1,283 MW.