All Posts from December 22, 2008

Market Watch

AMMONIA

U.S. Gulf/Tampa: The markets were quiet last week, with Tampa still being called $125/mt DEL and NOLA $120/st FOB. There was no word on which direction Tampa business might go for January. However, bets were not far in either direction.

Eastern Cornbelt: The anhydrous ammonia market was pegged at $450-$650/st FOB for prompt tons, with the low reported out of spot Illinois locations. No firm offers were reported for prepay ammonia, although one regional supplier was referencing forward contract ammonia for January through February as high as $905-$915/st FOB regional terminals last week.

Western Cornbelt: Anhydrous ammonia was pegged as low as $395/st DEL in Missouri from southern production points, while Nebraska sources quoted delivered ammonia at the $480/st level for prompt tons. Out of regional terminals, sources tagged the market at $450-$550/st FOB, with the upper end quoted by an Iowa source for spring prepay offers. Effective Dec. 12, Agrium’s ammonia postings in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota dropped to $520/st FOB and $540/st DEL.

Southern Plains: The ammonia market was quoted at $265-$290/st FOB production points on the low end. There were reports of spring prepay being offered in the $340-$350/st FOB range, with 25 percent down and the balance due Feb. 1. Spot market ammonia out of regional pipeline points was reported in the $300-$325/st FOB range last week, with spring prepay offers ranging from the $340s/st FOB on the low end to the $500s/st FOB on top.

Several dealers said they expect some year-end buying for spring prepay tons at the retail level, but many said growers remain hesitant to commit in a down market. Continued market softness at the wholesale level made for wide price ranges for numerous products last week. “It’s the squirreliest I’ve ever seen it,” said one Kansas source.

South Central: The ammonia market was tagged at $320-$360/st FOB terminals to the dealer, with the Memphis, Tenn., market pegged at $320-$340/st FOB for prompt tons. There were reports of spring prepay offered at the upper end of the range earlier in the month at Memphis, but it was not certain if that program was still on the table last week.

Pacific Northwest: Agrium’s Dec. 12 anhydrous ammonia postings included $565/st rail-DEL in Washington, Oregon, Idaho, and Utah; $585/st truck-DEL in northern Idaho, and in Washington and Oregon east of the Cascades; and $590/st truck-DEL in Montana and northern Wyoming. Agrium’s aqua ammonia postings moved on that date to $146/st FOB Central Ferry and Finley, Wash.

UREA

U.S. Gulf: The granular urea market saw some action last week. Sources said it began the week at $190-$195/st FOB, but soon moved up to $205-210/st FOB by Thursday. Most said the uptick was spurred by traders looking for a large quantity of product for re-export. This reportedly required a large chunk of product. Sources said this incident brought home the reality that the U.S. is really the low-priced market, which emphasizes the prospect that less urea will be hitting the shores in coming months, not more. Why ship to the U.S. when you can send it elsewhere for more money?

Some sources were also citing positive numbers from the corn and wheat futures markets that might give farmers a little more optimism down the road. Others said that wheat top dress season isn’t much more than one month or so away. Still, for now most agreed that the real demand last week was mainly prodded by potential export interest, not domestic. Most were wondering if this was just a temporary uptick in the market or whether a true floor had been found. The answer to that question will have to await the New Year.

Eastern Cornbelt: The granular urea market to the dealer was quoted at $285-$320/st FOB in the region for prompt tons.

Western Cornbelt: Granular urea pricing was tagged in a broad range at $270-$330/st FOB regional terminals, with the low in Missouri and the upper numbers in Iowa to the dealer. One Nebraska source pegged the dealer market last week at $275-$285/st FOB. There was a report of spring prepay urea being offered at the $350/st FOB level as well.

Southern Plains:Granular urea was pegged at $240-$260/st FOB Oklahoma shipping points last week, with the low FOB Enid, Okla. Several sources said suppliers were trying to move to the upper end of that range as NOLA barge values crept up last week.

South Central: Granular urea was pegged at $260-$270/st FOB regional terminals for spot tons to the dealer, with one source reporting spring prepay being offered in the $285-$295/st FOB range.

Southeast: The granular urea market was quoted at $270-$290/st FOB regional terminals to the dealer, with the Norfolk, Va., market tagged at the $280/st FOB level.

India: It looks as if IPL will be taking close to 500,000 mt of urea in its recent tender, with Mideast producers getting the bulk of the business.

The deals were apparent a couple of weeks ago when IPL cut deals with the producers and Transammonia for cargoes at $249/mt CFR.

As previously reported, the Fertil business was inked prior to the tender. Rumors circulated just as the tender was called that Sabic was also in talks. Sources pointed out at the time that these types of talks are typical for IPL and MMTC. In recent years the two companies have secured low-cost tons prior to a tender. The tender would then confirm the price to satisfy the Indian government’s requirements to hold public tenders for urea purchases.

In the end, sources report just more than 500,000 mt were booked by IPL, with only slight variations to the tender offering prices. Awards made public as Green Markets went to press follow.

Sources say future buyers such as MMTC, or TCP in Pakistan, which closes its tender Dec. 27, will be hard pressed to push the Mideast price any lower than what IPL paid. Even with this tender, industry observers note that the country went into this tender almost 1.5 million mt short for this season.

Middle East: With about 280,000 mt booked to go to India by the middle of January and other deals in hand, sources say producers in the area are now sold out through January.

When the initial pre-tender deals were discussed, sources put the effective netback at $225-$235/mt FOB. The offers presented in the tender show a stronger pricing idea. And because the offers from Qafco and Sabic were for either prills or granular at the sellers’ option, sources say the local market is effectively at parity.

Observers note, however, that the weaker U.S. market may push the bottom end of the granular price lower. Sources report some swap deals closer to $200/mt FOB for granular. Without any public business, however, at least one Asian trader is leery of calling the granular market softer than prills.

Pakistan: In what one observer called a bit of bad timing, TCP called a tender to close Dec. 27 for 250,000 mt. Tons are to be shipped within 15 days of receipt of a letter of credit. TCP had hoped to take advantage of growing producer stockpiles in the Middle East. Now, however, with the Middle East producers sold out through January thanks to the IPL/India tender, sources say TCP will have to depend on Black Sea tons. And the price from Yuzhnyy is reported on the way up as well.

In related news, farmers in the Punjab and Sindh provinces have complained of urea shortages. They staged demonstrations and demanded that the government ensure adequate supplies.

Black Sea: With the possibility of 150,000 mt going to India and Pakistan almost guaranteed to take 250,000 mt all within the next 45 days, sources say the price in the area is moving up. Sources report one deal for about $230/mt FOB last week.

The earlier pre-tender price worked out with IPL of $249/mt CFR had an estimated netback to Yuzhnyy of $215-$220/mt FOB. Now with growing demand, sources say that price is moving up.

The next big indicator will be the TCP/Pakistan tender. Until then, sources peg the market at $220-$230/mt FOB.

Bangladesh: BCIC has reissued two tenders for the import of 75,000 mt of prilled/granular urea in bags. The breakdown showed that BCIC is looking to import 37,500 mt each of prilled and granular urea, respectively, through two separate tenders. Bids are due in Dec. 30 and are to be valid up to Jan. 30.

NITROGEN SOLUTIONS

Eastern Cornbelt: The UAN-32 market was pegged at $285-$320/st ($8.91-$10.00/unit) regional terminals for spot tons, although new sales were few.

Western Cornbelt: UAN-32 pricing continued to slide. Sources tagged the regional market last week in a broad range at $275-$320/st ($8.59-$10.00/unit) FOB to the dealer, with the low reported in Iowa and the upper end in Missouri. One Nebraska source reported a $280/st ($8.75/unit) DEL level for prompt UAN tons.

Southern Plains: UAN-32 was generally quoted at $230-$250/st ($7.19-$7.81/unit) FOB terminals for cash tons. Several sources talked of spot offers as low as $210-$220/st ($6.56-$6.88/unit) FOB production for tons that had to move fast, but sales at those lower numbers were not confirmed. One source also talked of spring prepay being offered in the $240-$250/st ($7.50-$7.81/unit) FOB range out of regional production points.

South Central: UAN-32 was quoted at $230-$250/st ($7.19-$7.81) FOB from prompt tons to the dealer, although new business was hard to come by. One source said spring prepay was being offered in the $300-$320/st ($9.28-$10.00/unit) FOB range out of some locations.

Southeast: UAN-30 was pegged at $260-$270/st ($8.67-$9.00/unit) FOB port terminals, with the low end FOB Norfolk as of midweek.

Pacific Northwest: Agrium’s Dec. 12 UAN-32 postings included $350/st ($10.94/unit) DEL in Washington, northern Idaho, and Oregon excluding Malheur County; $355/st ($11.09/unit) rail-DEL and $360/st ($11.25/unit) truck-DEL in southern Idaho and Oregon’s Malheur County; and $380/st ($11.88/unit) DEL in Montana and northern Wyoming. UAN-28 reference prices moved on that date to $333/st ($11.89/unit) DEL in Montana and northern Wyoming.

AMMONIUM NITRATE

Western Cornbelt: The ammonium nitrate market was pegged at $300-$330/st FOB in the region, with the upper end also quoted for delivered tons in Nebraska.

Southern Plains: Ammonium nitrate was pegged at $275-$300/st FOB the port of Catoosa, Okla., down significantly from last report.

South Central: The ammonium nitrate market had reportedly dropped to $315-$325/st FOB, with the low reflecting the new posted level FOB Yazoo City, Miss.

Southeast: Ammonium nitrate suppliers in the Tampa market still had tons on the floor priced in the $500s/st FOB, but sources said they anticipate new – and lower – pricing levels in January.

Pacific Northwest: Agrium’s CAN-17 postings moved on Dec. 12 to $255/st FOB Kennewick, Wash. The company’s ammonium nitrate solution (20-0-0) posting also moved on that date, to $210/st FOB Kennewick.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was steady at $200-$210/st FOB or DEL in the region.

Western Cornbelt: Granular ammonium sulfate remained at the $200-$210/st FOB mark from most locations, with the low for prompt tons and the upper end for spring prepay.

Southern Plains: The granular ammonium sulfate market remained at $250-$300/st FOB Texas shipping points, with the low FOB Freeport.

South Central: The ammonium sulfate market was pegged in a broad range at $200-$250/st FOB in the region, depending on location and supplier. An Arkansas source quoted the common dealer price at the $225/st FOB level last week.

Southeast: The granular ammonium sulfate market remained at $290-$300/st FOB, with delivered granular sulfate in the $335-$363/st range in the region. Standard grade was reported at $285-$310/st DEL, and $250/st FOB Augusta, Ga. Sources reported no prepay offers on the table last week.

Correction: The Philadelphia, Pa., granular ammonium sulfate market for the Dec. 15 issue of Green Markets should have read $227-$235/st FOB, not the $327-$335/st FOB range reported on p. 8.

PHOSPHATES

Central Florida: Last week, a trader sold a single railcar and ten truckloads of DAP out of Central Florida at new, low prices, which were the first confirmed trades in months. The prices were well below the previous Central Florida DAP price range, but in line with the NOLA DAP barge price range. Those small sales were made primarily because the trader simply had to get rid of the material, which was common for the time of year.

Although sales remained as slim as industry hopes for a Happy New Year, traders generally said they were receiving more calls for prices and more interest than they have had in months. That either means the market was about to get back to business or the end of the year was causing some to consider the tax implications. Early in the year, most in the business made money – and in most cases it was quite a lot – while the second half of the year was lean and mean, so it would help to take whatever losses were going to occur before the end of the calendar year. With the country in the deepest recession in decades, most do not think next year will put a hit on their profits, because profits will likely be far less anyway.

The Fertilizer Institute reported off-site inventories rose to 1,070,000 tons and were continuing to grow, even as phosphate companies continued sharp curtailments in production. Neither the domestic nor the export markets looked promising.

The Central Florida DAP price range changed last week from $375-$395/st FOB to $300-$305/st FOB. CF had the lowest asking price at $490/st FOB. PCS Sales was still holding at $1,070/st FOB. Mosaic had no posted price for Central Florida. The most recent price for Agrifos was $500/st FOB for trucks, but no price was available for rail shipments.

U.S. Gulf: Early last week, the price of a NOLA DAP barge appeared to be stabilizing around $300/st FOB – $25/st FOB up from the previous week’s low – and some believed the market had found its bottom. However, late Wednesday and Thursday, prices dropped to the previous week’s mark, which could actually be the new bottom. At least it was for last week.

In addition, some terminal operators said they were seeing an increase in business, but the levels were still far below what they would normally experience at this time of year. Still, it was a positive sign. Most said they were getting far more inquiries than they have for the past couple of months, which was another good sign. However, business at the end of the year was abysmal, and that was hardly encouraging. The number of loaded NOLA DAP barges on the river system last week was estimated by various sources at more than 700 and up to 900. Producer terminals were brimming, and there was no place else to put the product that has already been produced. Cutbacks at processing plants were continuing and could grow more intense.

The biggest problem continued to be a standoff between dealers who have been stuck with bins of high-priced phosphate, and farmers who have access to the Internet. The price of corn for next year was up to around $4.40/bushel last week, which was an improvement. In order for the market to begin moving again, farmers must buy phosphates, which would help them take advantage of the higher grain prices. However, this year wheat farmers used virtually no phosphate – and if corn growers follow suit, the phosphate industry will be crippled.

Dealers claim if they sell at current prices, they may have to go out of business. If they don’t start selling, they will still go out of business. Traders won’t buy, because dealers are full and won’t buy. Producers can’t sell, because no one is buying. One phosphate company leader said the only way out of the problem is for companies to live up to their agreements to buy what they said they would, which was pretty self-serving and unrealistic. That would help the producers, but everyone else would be in an even deeper hole.

For the first six months of 2008, everybody in fertilizer made a lot of money; virtually everyone lost money during the second half of the year. Ultimately, a true up will occur one way or another, but unless some sort of compromise is reached, the body count may be high.

Based on transactions last week, the NOLA DAP barge price changed to $275-$300/st FOB, and will not likely increase this week. The previous week’s range was $275-$330/st FOB. Mosaic had no posted prices last week, and CF’s last price offering was $500/st FOB.

Eastern Cornbelt: DAP and MAP pricing continued to drop as inventories built at the producer and river levels, and the standoff between gun-shy growers and dealers with high-priced inventory continued. Sources quoted the wholesale DAP market in a broad range at $400-$520/st FOB, with the low out of spot river warehouses and the upper numbers inland. MAP was pegged at a $20-$25/st premium to DAP. 10-34-0 was pegged in a broad range as well at $700-$800/st FOB for prompt tons, although no sales were reported to test those numbers.

Western Cornbelt: The phosphate market continued to slip, with DAP quoted at $400-$500/st FOB regional warehouses to the dealer. Suppliers at the upper end of that range said they would probably have to adjust downward again in the near term. One dealer pegged the DAP market FOB St. Joseph, Mo., at the $460/st mark and falling at midweek. Another source said he was even quoted a $380/st FOB offer for DAP tons, but no new business was confirmed at that level.

MAP was pegged at $425-$500/st FOB, with the upper end reported in Missouri to the dealer. The 10-34-0 market continued to slip, with sources quoting the dealer price at $600-$700/st FOB in the region. The low end was reported by Missouri and Nebraska sources, while Iowa sources pegged the market in the $650-$700/st FOB range.

Southern Plains: The DAP market was reported at $400-$450/st FOB the Tulsa market for prompt tons, with MAP either the same as DAP or at a $20-$25/st premium, depending on who you talk to. Those ranges reflected another sizable drop from last report. The 10-34-0 market was generally quoted at $750-$800/st FOB in the region last week.

South Central: Phosphate pricing continued to fall. Sources pegged the regional warehouse market for DAP last week at $320-$375/st FOB to the dealer, depending on location. MAP was roughly $20-$25/st higher than DAP, while TSP was quoted at a $20/st discount to DAP, where available.

U.S. Export: India had either consummated phosphate buys from China and Russia, or was about to do so late last week, at prices said to be between $390/mt FOB and $420/mt FOB. Once a deal is confirmed, it will be reflected in the export DAP price range. PhosChem reported no sales and no real possible deals.

The Fertilizer Institute’s reported export phosphate deliveries for November continued to show India was still the most active in the market. As has been the norm this year, India accounted for the most DAP exported in November, with 65,616 mt of the total of 92,777 mt last month. It was followed by Japan, 16,757 mt, and Australia, 7,166 mt. The total was 75.4 percent less than in November 2007. For the calendar-year-to-date, India still accounted for most of North American phosphate world exports with 2,985,086 mt, trailed by the same two countries as for the month – Japan, 284,813 mt, and Australia, 175,402 mt. DAP exports for the year were actually up 6 percent over 2007.

MAP exports, which totaled only 46,665 mt in November, were down 63.5 percent. Australia was the biggest buyer at 20,978 mt, trailed by Canada at 16,413 mt, and Colombia at 4,848 mt. In addition, MAP was down for the calendar-year-to-date by 25.9 percent, to 1,441,168 mt. Canada continued to be the most active buyer at 454,995 mt, with Australia second at 303,660 mt, and Brazil third at 276,088 mt.

The export DAP price range remained at $390-$395/mt FOB.

POTASH

Eastern Cornbelt: Potash was quoted at $775-$820/st FOB in the region, depending on grade and warehouse location.

Western Cornbelt: Potash was generally quoted in the $750-$810/st FOB range, though there was minimal business to test the market. The upper end was reported for white granular tons in Missouri, while Nebraska sources confirmed dealer-to-dealer offers at the low end of the range.

Southern Plains: The potash market was pegged at $700-$750/st FOB regional warehouses, down considerably from last report, but sources reported minimal business to test the market. While some were skeptical of the low end of the range, all agreed that the $750/st FOB level was readily available from secondary suppliers. Reference prices FOB Carlsbad, N.M., remained at $794-$800/st, depending on grade.

South Central: Potash was pegged at $775-$825/st FOB regional warehouses to the dealer.

Southeast: Sources pegged the potash market at $810-$840/st DEL in the region, with the upper end quoted by a Carolina source for delivered granular tons.

SULFUR

Tampa: The sulfur market ended the year smelling as bad as sulfur itself. The bright spot was that, as one source quipped, “We’re one day closer to the day everything gets back to normal.”

Inventories at Beaumont fell last week as Martin loaded a vessel, which a source said was destined for China with 50,000 mt, and gave it a storage capacity of about 90,000 mt. The company was pushing to complete another storage facility to bring its capacity to 150,000 mt. With the ability to process 2,000 mt a day and another sister priller getting ready to roll in late January, it would have the ability to store 37.5 days of processed prill by the end of February.

Meanwhile, Galveston still had some capacity for storage of blocked sulfur, but only for those under contract. One vessel with 50,000 mt was already being used for storage, and that method could become preferred as inventories grow and freight rates remained low.

ExxonMobil was in the news last week after it announced it was spending $1 billion to increase diesel production, and again for being fined $6.1 million for not meeting air pollution standards at its refinery at Bayport, Texas. The problem – high levels of sulfur in its emissions.

Sometime after the first of the year sulfur negotiations for new quarter one prices will begin, and that should be interesting. Phosphate companies may push for a price of zero per lt or less, but that may backfire if the Canadians decide to simply block instead of losing money with each ton, which would cause a sharp turnaround in prices for quarter two. A final price may simply be enough to pay for the cost of transportation, $25-$50/lt.

Vancouver: Mid-semester renegotiations of contracts with Brazil were said to be underway and could result in a rollback of the current $200/mt price.