Western Potash Corp., a unit of Western Resources Corp., Vancouver, announced June 20 that it has received environmental assessment approval from the Saskatchewan Ministry of Environment for the Milestone Phase I Project.
Western Potash said it continues to advance detailed engineering on the pilot project in advancement of construction. The pilot project will utilize selective solution mining techniques, which result in lower CAPEX and OPEX costs compared to conventional solution mining. The company is actively working to close the gap of the project financing. Once these are completed, the company said plant construction is anticipated to start in early 2018, with first potash production in 2020. As the Phase l Project proves to be successful, the company plans more feasibility studies, leading to annual production of 1.4 million mt/y.
Verde AgriTech reports that it has signed a marketing and distribution agreement with a leading North American distributor that specializes in the markets for organic agriculture and cannabis. The unnamed distributor will have exclusive rights over the Pacific Northwest region of the United States and non-exclusive distribution rights for the rest of the country. The distributor has agreed to minimum volumes for the next four years, and has already placed multiple orders with Verde for Super Greensand® product.
In addition to cannabis and organics, the distributor will work on market development for salinity-sensitive, high-value crops. The main target is almonds in California. Verde estimates American almond production is worth about $6.4 billion dollars annually, and over 80 percent of the crop is grown in one of the most salinity-damaged areas of the U.S.
Verde said it has been granted a fertilizing materials license by the state of California and should soon receive the registration of Super Greensand® as an organic input material. It said the product is already approved by the Organic Materials Review Institute (OMRI) to be used in organic production in all other states.
“We are proud to be partners with a leading American distributor that has a longstanding history supplying the organic agriculture market,” said Cristiano Veloso, Verde president and CEO. “This will allow Verde to join two sectors of rapid growth in North America: organics and cannabis. The seven containers of Super Greensand sold in the U.S. are only the start of a wholesome expansion.”
Verde produces its greensand product in Brazil, and is looking at expanding capacity (GM May 26, p. 26).
In other news last week, Verde announced a non-brokered private placement to raise up to C$1 million through the issuance of up to 952,380 units of securities at a price of $1.05 per unit.
Granular prompt barge trades moved down last week, with many sources citing wet weather across rice country that was impacting movement. Barges were called $160-$165/st FOB, according to most sources, versus the week-ago $166-$172/st FOB.
While some were still calling prills quiet, others said new Libyan product was garnering stiffer numbers, with sources now calling the market $180-$188/st FOB.
Eastern Cornbelt:
Granular urea pricing had reportedly slipped to $195-$197/st FOB Ottawa, Ill., and $195-$200/st FOB Cincinnati, Ohio, at the low end of the range. Out of inland terminals, sources quoted the upper end of the regional urea market at the $215/st FOB level at mid-month.
Western Cornbelt:
Missouri sources said the first pass of topdress urea on rice was winding down in the state, with the second pass likely to start soon. Urea remained at $195-$210/st FOB in the Western Cornbelt, with the lower end of the range reported in the St. Louis, Mo., market and the upper end in Iowa on a spot basis.
Northern Plains:
Minnesota sources quoted the granular urea market at $195-$205st FOB for the week, with the lower end confirmed in the Twin Cities market. Truck-DEL urea into North Dakota was pegged at $210-$230/st in late June, depending on location, while reference pricing at Carrington remained in the $245-$250/st FOB range.
Great Lakes:
The granular urea market was quoted at $200-$240/st FOB in the Great Lakes region, down some $15-$30/st from last report, with the low confirmed by Wisconsin sources on a spot basis and the upper end out of Michigan terminals.
Northeast:
Granular urea was quoted at $220-$235/st FOB in the Northeast, up slightly from last report, with the low confirmed at East Liverpool, Ohio, and the upper end FOB Baltimore, Md.
Ukraine:
Cherkasy Azot, part of the Ostchem Group, which in turn is owned by Group DF, has resumed production of urea, ammonium nitrate, and UAN after a more than three-month forced stoppage, Interfax reported, citing Group DF’s press service. According to the press service, Cherkasy Azot planned to bring the three units up to full capacity by June 20.
Work to restart operations at Ostchem’s Rivneazot (Ukraine’s sole CAN producer) and Severodonetsk Azot Assoc. is also underway. Group DF said output from the restarted plants would be aimed primarily at satisfying the demand of the country’s farmers.
The restart is timely as Ukraine’s Interdepartmental Commission on International Trade (ICIT) last month introduced antidumping measures on imports of urea and UAN from the Russian Federation (GM May 26, p. 1). Russia hitherto has been a major supplier of both urea and UAN to the country. Ukraine already applies antidumping measures on imports of Russian ammonium nitrate.
The three Ostchem operations were forced to stop production after state-run Naftogaz cut off the supply of gas to the plants. They have a current combined production capacity of about 350,000 mt/m of nitrogen fertilizers, according to Group DF.
Pakistan:
Exports from Pakistan have picked up. Sources reported the lowest offers into a Sri Lanka tender that closed June 20 were from Pakistan. Valency offered 18,000 mt at $233.99/mt CFR bagged on a sight basis. Quantum offered $241.43/mt CFR bagged with 270 days credit. Sources said the netback to Pakistan was $210-$215/mt FOB. The bagged product will be loaded into containers for shipment to Sri Lanka.
During the first quarter, the government gave urea companies permission to export 300,000 mt by the end of April. The government then extended the export period until the end of October, and is allowing the export of about 1 million mt during that time frame.
Prices have steadily declined since exports were allowed. In the first quarter, prices were in the low-$240s/mt FOB. By May, industry watchers were calling the market in the mid-$180s/mt FOB, with producers saying the price was really $220/mt FOB. The current drop to the $210-$215/mt FOB range, said one trader, is just another sign of the softness in the global urea market.
China:
Prices remain stable, with prills still at a higher price than granular. Sources said the domestic market remains strong enough to maintain these prices. Granular is pegged at $210-$218/mt FOB, while prills are at $230/mt FOB.
A large part of the strength in the domestic market is reduction in supply, said one trader. Production of urea in the country is about at 60 percent of rated capacity.
Producers are looking more to the domestic market than exports, said one trader, mostly because the netback is better. Proof of the lack of interest in exports comes from reports that the amount of urea sitting at ports for export remains very low. Sources peg the current stockpiles at nearly 560,000 mt.
Reserves at the port-side warehouses have been dropping because producers are calling back the tons for the domestic market. One trader said the strength of the domestic market over the global market is clear when holders of the product are willing to pay for transportation costs first to the ports and then back inland.
The government reportedly is still on track to reduce all exports in the next three to five years. Efforts have stepped up to ensure older, less efficient plants that are already closed are not re-opened.
Sri Lanka:
The Sri Lanka ministry of agriculture closed a urea tender for 18,000 mt June 20. The material is slated for August delivery.
Valency came in with the lowest price – on a sight basis – at $233.99/mt CFR bagged. Quantum had the lowest price for offers offering 270 days’ credit at $241.43/mt CFR bagged. Both offers were backed by Pakistan material.
Sources said freight is about $18/mt. That, plus another $10/mt for the bags, puts the top edge of the Valency offer at $215/mt FOB in Pakistan. Sources reported that at this level, more Pakistani material is being offered to buyers in Thailand, putting Pakistan in direct competition with Arab Gulf producers.
The ministry of agriculture closed another tender June 20 for 18,000 mt of granular urea for August delivery.
Middle East:
Sales from the Arab Gulf remain limited to cargoes under contract. Sources report that the gap between what buyers are reporting and what producers are claiming remains large.
Thailand, for example, continues to argue it is paying about $215/mt CFR, while its main supplier – Saudi Arabia – claims its price is $220/mt FOB.
The only spot deal recently – between Oman and Keytrade – is now being questioned by some traders. The $206/mt FOB reportedly paid by Keytrade will not work in any buying market, said sources. Traders pointed to a lack of buying interest in Australia, which is usually buying extra spot material at this time. The other buyer that might be interested – Thailand – is asking for prices well below even the break-even point.
Sources said if a buyer came in with a firm bid just under $200/mt FOB, any producer in the area would most likely agree in a heartbeat. Traders are calling the market in the mid-$190s/mt FOB, but without a new spot deal to back up their claims, the industry is falling back on stories about the Oman-Keytrade deal.
Prices were lower than expected in the Egypt/MOPCO auction that closed June 22. The tender was originally for 25,000 mt of granular urea to be shipped during the first half of July, but ended up at 40,000 mt. The final negotiated price was $192/mt FOB.
The price is about $15/mt lower than the last public sale and $8-$10/mt lower than previously discussed prices. Sources reported many bids in the $180s/mt FOB. Sources said MOPCO was lucky to nail down the price it did. At the same time, the industry sees the low bids in the auction as a harbinger of lower prices.
Just before the tender closed, sources said the absence of a strong buyer in the market means there is little demand for product. India is not expected back into the market until mid-July, at the earliest. European buyers are said to be fully stocked, with no need for additional tons. The only remaining possible home for the Egyptian product appears to be Africa, but even there, buyers seem to be taking a hiatus.
India:
Sources reported that stockpiles are growing even as the last of the tons from the previous tender are being shipped. The ship-by date from the tender is July 10. Sources said no new tender calls are expected until after that date.
To add to the uncertainty, sources said demand for urea appears to be slowing. Industry watchers said one contributing factor is the spotty rainfall. Some areas are getting enough rain to move the season forward, while other areas are behind. Another factor causing reduced demand, said one source, is the neem coating on domestic urea. The coating causes the nutrients to enter the soil more slowly, thereby reducing the farmers’ need for more urea.
Mexico:
Offers in the GF Trading tender for 70,000 mt of granular for Mexico were higher than the company expected. They have asked offering companies to look over their prices and submit revised offers by the end of the day June 23.
The lowest offers were $225-$227/mt CFR, well above the GF target.
The tender called for offers in two lots, one of 30,000 mt to be shipped July 8-12. The second lot of 40,000 mt is to be shipped July 10-15. Both cargoes are to be unloaded in western Mexican ports.
Nepal:
Two tenders will close by this weekend. STC of Nepal closes a tender for 30,000 mt of granular product June 23. The second, by AICL, closes another 30,000 mt tender June 24.
Indonesia:
The producers have yet to seriously move away from the idea of a floor price tied to the market price for their export contracts. Sources said the Indonesians have begun to move, however. One trader noted the latest offer would put the floor at $220/mt FOB, down slightly from the $223/mt FOB offered earlier this month.
Roger Downey, CEO of Vale SA’s Fertilizer and Coal divisions, is leaving the company at the end of June. His departure follows the planned sale of the bulk of Vale’s fertilizer business to The Mosaic Co., as well as the addition of new Vale CEO Fabio Schvartsman, who joined the company in May (GM May 26, p. 23).
Tropical Storm Cindy made landfall south of Lake Charles, La., on June 22, with flooding and isolated tornadoes expected. The moisture was predicted to focus on Louisiana, Mississippi, Alabama, and western Tennessee, portending ill effects for water levels in the Gulf shipping region. Rainfall of 6-12 inches was expected, while localized totals were forecast to reach 15-20 inches in some areas. Storm surges of 1-3 feet were also predicted along the Gulf Coast. Most navigation was expected to pause for a minimum 24 hours following the landfall, sources said.
Industrial Lock delays were noted at an average 42-44 hours on June 21, with some vessels reporting waits of 75 hours or more. Algiers Lock waits stood at 8-9 hours, while Harvey Lock navigation peaked at 6 hours on June 22. Sources put Calcasieu Lock waits at 10 hours on June 20.
Bayou Sorrel Lock transit was interrupted by emergency guide wall repairs. Partial daytime shutdowns were predicted to block navigation between 7:00 a.m. and 5:00 p.m., Monday through Thursday, through Aug. 7.
Dredging operations continued in the West Canal, between Freeport Harbor and Upper Matagorda Bay (Miles 395-400). The dredge was scheduled to operate on a 24-hour, seven-day schedule, slowing movement in the area. Colorado Lock required 2-6 hours for passage on June 21.
Harvey Lock is projected to close for dewatering and maintenance operations, tentatively scheduled to begin on Aug. 1. The lock is expected to reopen to navigation on Sept. 30. Algiers Lock will stand as an alternate route while work is underway.
Mississippi River:
Water levels improved further on the Upper Mississippi last week, allowing for the return of normal operating conditions. Tow lengths likewise reverted to standard maximum barge counts between St. Paul and Cairo.
High-water conditions continued to be reported south of Cairo, however, though the effects were significantly reduced compared to the sharp restrictions of recent weeks. Nighttime navigation returned to the Vicksburg area thanks to falling water levels. Vicksburg receded below the 35-foot action stage on June 20, and was forecast to hold steady at 34 feet through the coming week.
Slow transits continued to be expected between Cairo and Baton Rouge, where some speculated Tropical Storm Cindy could swell already elevated waters. The Baton Rouge gauge remained at an action-stage 33.46 feet on June 21, prior to Cindy’s arrival, and a Flood Warning and Flash Flood Watch issued for the area on June 20 was due to expire on June 22.
The Lock 15 auxiliary chamber is closed 7:00 a.m. through 12:00 p.m. until Aug. 3. Wait times at Lock 15 were described at 2-6 hours on June 20-21. The auxiliary chamber at Mel Price Lock is scheduled to close July 10 through Sept. 10, with minimal delays anticipated. Lock 14 reported average waits in the 4-5 hour range, while Lock 18 navigation required 3-4 hours for the week. Vessels towing 9-15 barges reported delays of up to four hours at Lock 22.
Illinois River:
Dams at both the Peoria and LaGrange Locks remained down last week, allowing vessels to pass without locking. The start of a planned June 15 LaGrange Lock closure was pushed back by 1-2 weeks, sources said. Once begun, navigation at LaGrange will be subject to a 70-foot width restriction, and limited to evening and overnight transits.
Ohio River:
Receding Ohio River levels failed to prompt raised dams at Lock 52 last week, as was previously expected. Wickets would be raised soon, however, sources reported – likely in the week ahead – with delays lasting a minimum 1-2 days while the process is underway. Lock 53 wickets will likely come up concurrently with those of Lock 52, sources speculated. J.T. Meyers Lock reported 22-hour delays on June 20-21.
The Meldahl Lock main chamber is closed to navigation through Oct. 2, forcing traffic to pass through the smaller auxiliary chamber instead. Delays of up to eight hours were reported for the week, with long waits expected for the duration of the project. The Greenup Lock main chamber is closed 7:00 a.m. to 5:00 p.m., Monday through Thursday, through July 21. Despite earlier delay predictions, lock operators reported minimal waiting for the week.
The primary chamber at Dashields Lock will see intermittent shutdowns June 19-28, with delays expected. The Cannelton Lock main chamber is due to close for lower miter gate repairs on June 26, pushing traffic through the auxiliary unit until work concludes on Sept. 18. Equipment offload will close the auxiliary chamber June 25-26 and Sept. 18-19, and delays are expected. Shippers predict extensive backups during the first week of the project.
The Smithland Lock auxiliary chamber will close for equipment loading on July 12 and Oct. 3. The Newburgh Lock auxiliary unit will be unavailable on July 14-16, and again between Sept. 27 and Oct. 1. Main chamber repairs will limit Belleville Lock access Oct. 2 through Dec. 7.
The Tennessee River’s Wilson Lock continued to face intermittent daytime delays last week. Repair efforts underway between 6:00 a.m. and 4:30 p.m. daily were scheduled to conclude June 29. Highway bridge work started on June 15 near Fort Loudon Lock will likely trigger sporadic service interruptions at that location, shippers said. The project is scheduled to run through July 15.
Lock 4, on the Monongahela River, reopened to navigation on June 20, ending a period of excessive delays stretching back to May 14. The Tombigbee Waterway’s Demopolis Lock is slated to close for repairs on July 6-11, closing the river.
The Allegheny River’s Lock 6 remains impassible due to a hydraulic leak, a shipper said. Lock 4 is scheduled to close Oct. 2 through Nov. 8, closing the river to commercial traffic. Cheatham Lock, on the Cumberland River, was scheduled to undergo a series of 10-hour closures over the June 19-23 period.
Arkansas River:
Arkansas River navigation continued to improve for the week, though a backlog at Rosedale contributed to slowed deliveries, sources said. Diver operations will shutter Dardanelle Lock to daylight-hour traffic on Sept. 5-14, closing the river.
Market players expected sulfuric acid imports to fall in a $50-$55/mt CFR range for the week, unmoved from the previous report. The Brazil market was similarly unchanged at $55-$60/mt CFR, with smelter tons from Northwest European producers heard to run $15-$20/mt FOB. Some market players speculated that recent cooling reported in the international sulfuric acid markets would soften pricing in the next round of business.
In the domestic market, sources described Gulf supply as tight for the near-term, tracing the conditions to turnarounds and maintenance issues rumored at PCI and Veolia. Firming was described as a result, with Gulf market tons generally heard at $95-$100/t DEL, up from $90-$100/t DEL at last check.
Midwest product was described at $80-$90/t DEL, unchanged from one week earlier, while material delivered to the West Coast was flat at $100-$110/t.
China:
Leading aluminum producer China Hongqiao Group announced smelter curtailments last week, Platts reported. The 250,000 mt/y reduction – considered relatively minor compared to both the company’s 7-8 million mt/y capacity and the Chinese market’s expected 44 million mt/y output for 2017 – was nevertheless expected to motivate other firms to follow suit.
The cuts were mandated by a Chinese central government eager to reform smelter industry production. Edicts handed down in February and April called on aluminum and steel producers in the Hebei, Shanxi, Shangdong, and Henan provinces to slash outputs during winter months in order to help reduce air pollution, as well as those found in violation of China’s evolving environmental guidelines. A Bloomberg report termed Hongqiao’s capacity cut as limited to “outdated” capacity.
Following Hongqiao’s announcement, Xinjiang producer East Hope Group announced plans to begin smelter reductions of its own, starting at the end of June.
Speculation regarding upcoming third-quarter negotiations for the contract price of molten sulfur delivered to Tampa remained muted last week, despite the start of Q3 looming less than two weeks away.
Recent firming in a number of international markets ought to portend an increase, some market watchers argued. Others hedged, however, arguing that the Tampa market has grown increasingly independent in recent quarters, and does not always follow traditional indicators.
Some pointed to the Gulf export market – where last-done pricing remains in the lower-mid $70s/mt FOB – as Tampa’s most likely guidepost, speculating that exports may need to show signs of firming before Tampa is pressured higher. Few sources predicted a decline for Q3, however.
Molten sulfur delivered to Tampa was contract-priced at $70/lt DEL in the second quarter, a decline from $75/lt in Q1.
Refinery utilization ticked lower last week, according to U.S. Energy Information Administration (EIA) data. Refiners operated at a near-historic 94.0 percent capacity for the week ending June 16, a 0.4 percentage point increase from the 94.4 percent week-ago rate. Current-week capacity ran ahead of both the year-ago 91.3 percent and 91.6 percent five-year average.
Daily crude inputs were also down, notching an average 17.152 million barrels/d, a reduction of 104,000 barrels/d from 17.256 million barrels/d reported previously.
U.S. Gulf:
Sources continued to express firming expectations for the next round of business, citing ongoing snug supply contrasted against more-or-less steady demand. Lacking in new transactions, the market remained at a last-done $70-$75/mt FOB.
Vancouver:
Traders called recent Vancouver spot business in the $77-$82/mt FOB range, unchanged from one week earlier. Transactions rumored in the mid-$80s/mt FOB could not be confirmed on June 22. Short-term contracts were said to run even with spot.
Netbacks to producers in Alberta continued in a wide range, sources said, a spread established by U.S. molten contract pricing at the low, and prills exported by way of Vancouver on the high end. Netbacks were reported at (-)$55-$15/mt FOB, unchanged from the prior report.
West Coast:
Regulators voted to delay a cap on refinery emissions in California’s San Francisco Bay Area on June 21, followings complaints that affected parties were not given adequate time to review late changes to the measure, the East Bay Times reported. The emissions cap – the first of its kind in the U.S. – is intended to prevent refiners from expanding operations to enable the processing of heavier crude slates, such as those produced in the Oil Sands region of Alberta. The regulators agreed to postpone adoption of the measure by at least two months.
West Coast solid sulfur prices were heard in a $77-$80/mt FOB range, unchanged from one week earlier. Second-quarter molten contracts were quoted at $55-$77/lt FOB.
China:
China is facing the prospect of large-scale refining curtailments in the third quarter, Reuters has reported. In addition to Sinopec considering output cuts for the July-September period (GM June 16, p. 15), a number of additional producers have announced plans to reduce capacity. The cuts could total roughly 10 percent of the country’s 15.1 barrels/d, and will include announced curtailments from a number of major refiners, as well as scheduled turnarounds totaling approximately 1.3 million barrels/d.
Sulfur imported to China was reported at $99-$102/mt CFR for the week, unchanged from the previous report.
Michigan sources continued to quote the sulfate of potash (SOP) market at $565/st FOB terminals in the state.
Iran:
Agricultural Support Services Co. (ASSC) closes its tender on June 28 for the purchase of two 35,000 mt lots of granular potassium sulfate. Offers are scheduled to be opened on July 1.
Junior producer Potash Ridge Corp., Toronto, has appointed Andrew Squires as director. The company said he brings over three decades of international resource development experience in the energy and natural resources industries. The company said that prior to starting Osum Oil Sands, Squires worked for his own consulting firm providing services for clients including Exxon, Aera, BP, Pemex, PetroCanada, PanCanadian, and Chevron. He had past work experience with Dominion Exploration, Paramount Resources, Pioneer Natural Resources, and Amoco.
Squires is currently an executive advisor for Osum; president of AXS Industries, a global energy investment advisory firm; and a board member of American Lithium Corp. and IBIS Resources Corp., and is actively engaged in a number of start-ups and financings in the energy storage, oilfield equipment, and aerospace fields. He holds a B.Sc. in Mechanical Engineering from the University of Alberta.
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