Brisbane, Queensland—Australian junior phosphate mining firm Fertoz Ltd. told shareholders Sept. 19 that recent evaluations have led it to consider that its Dry Ridge Phosphate Project in the Caribou/Targhee National Forest in southeastern Idaho does not meet its selection criteria, in that the ore is not ideal for organic farming and permitting has proven to be more difficult than expected. As a result, the company is working with the leaseholder on other partnership approaches. Fertoz had an option to explore the property through the end of August 2016, with the option of buying either a majority or minority stake in the property thereafter (GM Dec. 23, 2013). Fertoz listed its mining criteria as high quality phosphate, shallow resources, available infrastructure, and close proximity to known organic markets, with a relatively quick pathway to permitting. Fertoz also has junior phosphate projects in British Columbia (Fernie, Wapiti, Crow’s Nest, and Barnes Lake), which it continues to develop and permit. Fertoz said it remains focused on commencing sales in 2016-2017. It said this fall it will be testing a broad range of blends and various soil types with products synergistic to rock phosphate, including sulfur and humates, which have been demonstrated to improve the available phosphate and uptake in plants.
Tampa: Sources reported a slow domestic sulfur market heading into next week’s TFI World Fertilizer Conference in San Diego.
Few surprises were expected in the lead-up to fourth-quarter Tampa negotiations. Most market players expected a rollover or small increase from the current $65/lt DEL contract, but differed on which factors might carry the most weight in the upcoming talks. The domestic market’s overall supply landscape, Mosaic’s solid sulfur melter, the U.S. Gulf export price, and the strength of the Chinese and Middle Eastern markets were all touted as potentially important in determining Tampa values.
The second- and third-quarter 2016 negotiations prioritized the U.S. Gulf price over international market strength, some argued, while other recent quarters often looked toward the Eastern markets for guidance.
The changing domestic supply landscape remained a hot topic of conversation as well, with Canadian producers now said to be offering more tons offshore via Vancouver than to U.S. buyers tied to the Tampa index.
Other sources, however, minimized the effect of supply on negotiations. “Not sure why supply/demand would affect pricing (now),” said one trader. “It hasn’t for some time.”
“The Tampa price is now more influenced by the U.S. Gulf price and the price Mosaic can import cargoes to Tampa for their melter,” added another supplier.
Others looked to the world’s largest sulfur buyer for direction. “China will ripple to all the markets,” commented one observer.
The third-quarter contract price of molten sulfur delivered to Tampa was $65/lt.
U.S. refinery utilization fell for a second consecutive week, according to data from the Energy Information Administration (EIA). Refiners operated at 92.0 percent capacity for the week ending Sept. 16, a 0.9 percent decline from the prior week’s 92.9 percent, but ahead of both the year-ago 90.9 percent and the 90.8 percent five-year average.
Daily crude inputs also fell, EIA data revealed. Average daily crude inputs were calculated at 16.587 million barrels/d, a 143,000 barrel/d drop from the last reported 16.730 million barrels/d.
U.S. Gulf: Valero Energy Corp. ratcheted up unit shutdowns as part of a planned turnaround at its 335,000 barrel/d Port Arthur, Texas, refinery last week, sources said.
The plant’s 268,000 barrel/d crude distillation unit was shuttered for four weeks starting Sept. 19, and a 100,000 barrel/d coking unit powered down on the same day and is slated to remain offline throughout October.
Sulfur sold from the U.S. Gulf was quoted at $60/mt FOB in recent trading, unmoved from the prior week.
Vancouver: Vancouver market traders continued to call offshore spot business at $65-$70/mt FOB based on sales to Mexico and Australia. Short-term contract rates kept pace with spot at $65-$70/mt FOB.
The Chinese market was steady at $81-$82/mt CFR despite rumored firming, sources said. Recent port inventories were calculated at 1.8-1.9 million mt.
Alberta producers saw netbacks of (-)$55-$20/mt FOB.
West Coast: A wide-ranging Southern California power outage shut down the PBF Energy Inc. refinery at Torrance, Calif., on Sept. 19, according to local reports.
The outage triggered early-morning flaring followed by an unplanned production stoppage, and a full restart of the 155,000 barrel/d facility is expected to require “multiple days,” sources said. A February 2015 explosion at the refinery forced production down to approximately 20 percent capacity for the following year.
The West Coast prill market was called flat at $60-$65/mt FOB. Sources noted third-quarter molten contracts in the $50-$75/lt FOB range.
ADNOC: ADNOC formed sulfur was quoted at $77/mt FOB Ruwais for the month of September, $7/mt above the $70/mt FOB August price.
Aramco: Saudi Aramco cargoes for September loading were quoted at $74/mt FOB Jubail. The August price was $66/mt FOB, $8/mt below current levels.
Tasweeq: The September official selling price from Qatar’s state-owned Tasweeq was $74/mt FOB Ras Laffan, a $9/mt increase from $65/mt FOB in August.
Agrium Inc. and Potash Corp. of Saskatchewan Inc. executives were on the road last week trying to convince shareholders and analysts to go along with their planned merger (GM Sept. 16, p. 1). PotashCorp President and CEO Jochen Tilk and Agrium President and CEO Chuck Magro jointly spoke before the Scotiabank Fertilizer and Chemicals Conference Sept. 20 to make their case.
The CEOs made the case that shareholders of both companies would benefit from the deal. Some analysts have suggested that Agrium shareholders will see any synergy gains go to increased dividends for PotashCorp shareholders, and that they will also see a dilution in the successful retail business while the company puts more eggs in the more volatile commodity basket. “Agrium shareholders are going to participate in the $500 million of annual operating synergies,” said Magro, noting that those will result in a 20 percent increase in the market cap with no help from the markets.
“We have to create value,” said Tilk. “I mean, sitting back and waiting, waiting for the markets to change around you is not about creating value. It’s essentially just being somewhat passive.” Both CEOs said the companies are better together than apart.
Magro said the transaction would mean “financial horsepower to accelerate retail growth. So looking forward, the goal of growing retail by, say, another $400 million of EBITDA over the next several years, that would take Agrium somewhere around $3 billion of investments to deliver that sort of growth.” He said it would be much more accretive to do in the new company than Agrium as a stand-alone. And he noted that while the retail business is the largest in the U.S., that it still has under 20 percent market share and plenty of room to grow. He noted that because of a combination of things so far in 2016, including the current commodity cycle, Agrium has been able to increase retail sales by $500 million, with 65 new locations.
Both CEOs shed a little light on a merged phosphate business. “We saw an opportunity from the beginning that we can put our phosphate assets together and leverage some synergies, but also turn it into a meaningful business and then explore the future of that business together,” said Tilk.
And while Agrium needs PotashCorp’s phosphate rock, Magro said the plan is to turn that rock into phosphoric acid at one of PotashCorp’s plants and ship it to Agrium’s plant at Redwater, Alba. He said it is very realistic that the new company will save $80 million per year by doing this, adding “We’ve run the numbers, and this is quite a value capture.” Agrium currently imports its rock for Redwater from Morocco’s OCP.
The two also talked a little more about potash synergies. Magro said adding Vanscoy to the mix will allow the companies to reduce cost by sharing resources, better managing turnarounds, and improving production planning. He said there is a lot of availability to share resources between the companies’ Saskatchewan potash mines, including the cut in overtime hours at Vanscoy. However, the CEOs reiterated that overall cuts to their estimated 20,000 workforce would be relatively small .
The two indicated that Saskatoon will likely be the “potash” headquarters for the company, while Alberta would be nitrogen, though they said those issues still have to be worked through. Saskatoon is to be the official company headquarters, though the company has said that Calgary will have a corporate office.
As for antitrust issues, the CEOs believe regulators will look at potash as a global market, not strictly U.S., noting that in just the past few years, there is a significant number of companies that can import into the U.S. if they choose to do so and they have done so, and the industry has seen the impact of that in terms of incremental product and prices. They also noted the coming up of new capacity globally as well in North America with the K+S Legacy Project in Saskatchewan. They noted that on the phosphate side of the business, regulators chose to look at a global market with respect to The Mosaic Co.’s acquisition of CF Industries Holdings Inc.’s phosphate assets a few years ago.
As for nitrogen and phosphates, the two reiterated that there simply is not a lot of overlap between the two companies.
The performance of both companies’ shares on the New York Stock Exchange continues to lag. Agrium shares closed at $92.61 Sept. 22, down from $95.21, the day before the merger was announced. In the meantime, shares dipped as low as $88.21. PotashCorp shares closed at $16.32 Sept. 22, still down from the pre-merger $16.97. Shares had dropped as low as $15.83.
CF executives also spoke at the conference and weighed in as to the merger’s impact on their company. CF Senior Vice President of Sale, Distribution, and Market Development Bert Frost said Agrium’s Crop Production Services is a large customer of CF for ammonia, UAN, and urea. “And we expect that to continue to be the case, because they buy economically. They buy what makes the most sense for each of the individual units that receives those products. And some of our locations are more logistically advantageous for them to purchase from, and they are a good customer for us to sell to.”
He said he thinks the relationship will continue, and noted that PotashCorp’s Lima, Ohio, and Augusta, Ga., nitrogen plants are more industrial-based. He noted that PotashCorp’s Geismar, La., is more ag-related and may supply the new company with UAN.
Plymouth, Minn.—The Mosaic Co. said last week that the sinkhole that has developed at its New Wales facility in Florida (GM Sept. 16, p. 13) is expected to cost the company some $20-$50 million. Mosaic Executive Vice President and CFO Richard Mack told attendees of the Scotiabank Fertilizer & Chemicals Conference Sept. 20 that the amount includes the cost to remediate the issue, pump out and process the water, and backfill the sinkhole. He said production at the facility has been “largely uninterrupted,” and that he does not expect it to have any material impact on New Wales production. In its latest update Sept. 21, Mosaic said that the water released from the phosphogypsum stake remains onsite and the company has been retrieving it by pumping it through its own well. The company has scheduled or collected some 106 free well-water tests from neighbors, and those results should be concluded soon. The testing is being done by Environmental Consulting & Technology Inc., and if requested, is free from the Florida Department of Environmental Protection. The company is also providing drinking water to those requesting it until they receive confirmation that their water is not impacted. So far, 15 have requested water. Mosaic Senior Vice President, Phosphates, Walt Precourt appeared before the Polk County Board of County Commissioners last week to update them on the situation. “I regret and apologize for not providing information sooner and am committed to providing regular updates to the public as we move forward,” said Precourt. “As new information is available, we will be posting it on our website and providing continued updates to regulators, the press, our local community, and most importantly, our neighbors.” Mosaic did notify relevant local authorities after gypstack water levels began dropping Aug. 27.
OCP SA reported a 35 percent drop in second-quarter 2016 EBITDA, to MAD3,023 million ($312 million) on revenues of MAD11,279 million ($1.2 billion), down from the year-ago’s MAD4,687 million ($479 million) and MAD12,983 million ($1.3 billion), respectively.
Second-quarter operating profits were MAD1,763 million ($183 million), down from the year-ago MAD3,722 million ($380 million). Second-quarter revenues fell 13 percent year-on-year, but recorded a 9 percent increase on the first quarter’s MAD10,337 million ($1.06 billion).
“As anticipated, we achieved a modest sequential improvement in second-quarter revenues, reflecting increased fertilizer sales to high-growth markets. Our profitability for the period benefited from competitive raw material sourcing and cost savings following the ramp-up of our slurry pipeline,” said Mostafa Terrab, OCP chairman and CEO.
First-half EBITDA was 31 percent lower year-on-year at MAD5,916 million ($606 million) on revenues of MAD21,656 million ($2.2 billion), down from the year-earlier’s MAD8,634 million ($890 million) and MAD23,895 million ($2.5 billion), respectively. Six-month operating profit was MAD4,212 million ($432 million), compared to MAD6,975 million ($719 million).
The 9 percent decrease in first-half revenues from a year earlier reflected weaker prices across all three of the company’s product sectors. The impact of lower prices more than offset the benefits of reduced raw materials costs, the company said. The continued ramp-up of the slurry pipeline resulted in a 26 percent year-on-year increase in cost savings of MAD436 million in the first half of 2016, compared with the year earlier MAD346 million. Some 4.3 million mt of rock was transported by the pipeline in first-half 2016, 58 percent more than the 2.8 million mt transported a year-earlier.
Six-month phosphates sales fell 25 percent, down to MAD4,602 million from the year-ago MAD6,148 million, reflecting lower phosphate rock selling prices. Sales volumes also fell by 9 percent, particularly on account of lower sales to the Brazilian and Indian markets.
Sales of fertilizers rose 4 percent, to MAD10,549 million from MAD10,162 million. OCP attributed this increase mainly to positive volume effect due to the “strengthening of the company’s strategy in Africa,” accompanied by the return of Argentinean market demand.
First-half phosphoric acid sales fell 16 percent to MAD4,604 million from MAD5,492 million, with the fall primarily reflecting weaker international prices. Volumes increased by a modest 3 percent.
While acknowledging the industry environment remains challenging, OCP’s CEO believes the phosphate market is close to or at the bottom of the cycle and heading to a gradual recovery in 2017.
“Consumption should benefit from higher crop yields in key regions, and strengthening demand is also expected in response to lower Brazilian inventories,” said Terrab.
On the supply side, however, he worries that high inventory levels in China could lead to expanded exports. However, he said the factors that “could surprise on the upside” include stronger-than-expected Indian and Brazilian demand, together with limited exports from China.
Terrab remains confident that growing global demand will absorb expanded [phosphates] capacity, but said the company has “the flexibility to adjust capital spending” and “modulate production” to maximize value.
Oslo—Yara International ASA on Sept. 21 praised a recent peace agreement between the government of Colombia and FARC (the Revolutionary Armed Forces of Colombia), a guerrilla movement active in the country for 52 years. Yara said agriculture and rural development are at the center of the peace agreement, and that the company is ready to actively support the government and other stakeholders contributing to its success. “We are investing more than US$100 million in Colombia, contributing to growing productivity and prosperity in the Colombian countryside,” said Yara President and CEO Svein Tore Holsether. Yara is a long-term investor in Colombia, and said it is the largest foreign investor in the country as of 2014 (US$425 million). The company said a third of its current investment is earmarked in the Valle del Cauca region, one of the areas most heavily affected by the conflict and with a great potential for sustainable agricultural growth.
Verdesian Life Sciences, Cary N.C., reports that its board of directors named Kenneth Avery as CEO, effective Sept. 19. He succeeds J.J. Grow, who will move into a new role as board chairman. Avery will report directly to Grow.
Avery was with Monsanto for nearly 10 years, most recently as vice president and head of global vegetables. He also served as vice president and CFO at Delta & Pine Land Co, and was a partner with Arthur Andersen LLP. Avery earned his bachelor’s and master’s degrees in accounting from Mississippi State University, and is a CPA.
U.S. Gulf: Port Allen Lock continued to see reduced availability for the week, with five-hour waits reported and an 11.8-foot water differential between the lock’s river and canal gauges. Additionally, dredge operations closed navigation between 8:30 a.m. and 1:00 p.m. on Sept. 21.
Transit at the Charenton, East Calumet, and West Calumet Floodgates was unavailable due to high water. Wait times were called four hours at Bayou Sorrel Lock.
Industrial Lock dewatering operations scheduled through Nov. 27 will allow for “extensive” repairs and machinery maintenance, shippers said. Dredging at Baptiste Collette Bayou, which is part of the official detour route connecting the Mississippi River to the West Canal, has restricted the channel to 75 feet of navigable width, requiring vessels to contact the dredge to confirm compliance prior to passing. Delays were anticipated, with doublewide tows expected to experience the longest waits.
Daytime dredging and debris removal continued to block West Canal navigation at the Galveston Causeway Railroad Bridge (Miles 357-358), closing the site from 7:00 a.m. to 7:00 p.m. daily. The work is being conducted on a 12-days on, two-days off cycle, shippers said, allowing for unimpeded passage during non-work hours.
Shippers estimated delays in the 4-8 hour range last week at Brazos Lock. Eleven vessels were queued to lock on Sept. 21.
Lower Mississippi River: A five-month dike project set to begin Sept. 26 in the Lake Providence area is expected to trigger navigation delays. The current late-January 2017 estimated end date could be extended should high water-related work stoppages prove necessary, shippers said.
Upper Mississippi River: High flows on the Mississippi River triggered restrictions on southbound transit out of St. Louis, shippers reported, limiting tows to 20 barges or less. High flows and missing buoys cut navigation to daylight hours only between Cairo, Ill., and Cape Girardeau, Mo.
Rock removal at Thebes, Ill., will commence when levels recede to the 15-foot mark at Cape Girardeau, and daytime navigation slowdowns are anticipated daily once work begins. The Cape Girardeau gauge read 27.62 feet on Sept. 22.
Navigation at Locks 14 and 15 returned to normal on Sept. 13 after the Coast Guard freed an anhydrous ammonia barge aground at Mile 491, near Campbell’s Island.
Illinois River: Levels on the Illinois Waterway fell below minor flood stage last week. The Havana gauge remained above the 13-foot action stage at 13.26 feet, however, while Beardstown matched its action stage with a 13.0-foot reading on Sept. 22. National Weather Service forecasts predicted up to five inches of rainfall along the river in the coming days.
The Corps noted Starved Rock Lock delays of up to three hours. Dams were down at the Peoria and LaGrange Locks, allowing vessels to run the pass.
Ohio River: Sources continued to report navigation interruptions and equipment malfunctions at Lock 52 last week. A number of non-functioning wickets at the site have handicapped main chamber operations and closed the auxiliary unit, pushing delays to five hours or more. The Corps had not offered an estimated time of completion for the repairs as of Sept. 20.
Lock 52 main chamber cell banding maintenance originally scheduled for Sept. 5-16 and Sept. 19-30 was delayed indefinitely, one contact said. Locking was suspended at Lock 53, allowing vessels to pass freely. Congestion nevertheless stretched transit times to three hours.
The Corps continued to enforce locking through the riverside chamber at Olmsted Lock. Tows were capped at 15 barges, with no hip barges permitted in the chamber.
Maintenance delayed navigation at Montgomery Lock by 2-10 hours. Work at the site will restrict main chamber transit to overnight hours only through Nov. 17, with access permitted 12:00 a.m. to 8:00 a.m., subject to an 80-foot width restriction.
The Montgomery auxiliary chamber was available during daylight hours, although lockings were limited to a single barge per turn. The main chamber is scheduled to reopen temporarily on Oct. 1-2, Oct. 15-16, and Oct. 29-30, and was available for transit on Sept. 17-18.
Willow Island Lock repairs and maintenance scheduled for Sept. 6 through Oct. 1 caused intermittent service interruptions, shippers said. Miter gate repair will close the R.C. Byrd Lock auxiliary chamber Oct. 3 through Dec. 9.
On the Tennessee River, Kentucky Lock upstream guide wall repairs will force sporadic shutdowns Oct. 4-9, followed by a complete closure on Oct. 9-13. Additional maintenance scheduled for Oct. 19 through Nov. 19 will also result in intermittent closures, sources said. Shippers are able to use Barkley Canal as an alternate route.
The Allegheny River remained indefinitely closed to transit at Lock 6 due to a mechanical failure and hydraulic leak, shippers said.
Barge restrictions continued at the Monongahela River’s Liberty Street Bridge. Tow lengths were capped at 800 feet, with widths restricted to 105 feet or less. Speed limits were also in place, shippers said. The Braddock Lock and Dam river chamber is offline until further notice due to equipment failure, forcing vessels through the land chamber instead.
U.S. Gulf: Price ideas for sulfuric acid imported to the Gulf of Mexico remained concentrated at $45-$50/mt CFR, sources said, unmoved from recent reports. Pricing was based on Brazil import levels quoted at $45-$55/mt CFR, as well as $10-$15/mt FOB offers from Northwest European smelters. Atlantic liquid freight was called $30-$35/mt.
Cargoes headed for Chile were expected to bring $55-$65/mt CFR.
In the domestic market, sources noted Gulf-delivered product in the $90-$95/mt DEL range, unchanged from the prior week, while Midwest tons continued to command $80-$90/mt DEL. Acid bound for the West Coast was quoted in a $110-$115/mt DEL range.
London Metal Exchange zinc prices rose for the week, with tons trading at $2,278.50/mt on Sept. 21, versus $2,232.00/mt a week earlier.
India: The Bharat Aluminum Co. (BALCO) returned to full production at its Chhattisgarh aluminum smelter in August after approximately two years of reduced outputs due to slumping worldwide metal markets, The Times of India reported.
Cheap imports from China also factored into the cuts, sources speculated, where producers have been accused of ignoring market conditions and allowing production levels to outpace demand.
The plant’s capacity currently sits at approximately 600,000 mt/y, according to company documents. In May, BALCO announced plans to scale up production to 1 million mt/y.
U.S. Gulf: Granular prompt barges were reported at $180-$186/st FOB for the week, down just one dollar on the high end of the range from the prior week.
After the higher-than-expected India urea tender results were announced, one observer said NOLA price ideas might move into the $190s/st FOB. Another called the market positive. However, nothing in that range was reported by press time.
Prills continued to be called in the $200-$205/st FOB range, but sellers were looking for up to $210/st FOB for the next round of business.
Eastern Cornbelt: The granular urea market remained at $215-$230/st FOB in the Eastern Cornbelt, with the low reported in the Cincinnati, Ohio, market and the upper end out of Illinois River terminals on a spot basis. Sources noted “very little buying interest” in urea, however.
Western Cornbelt: Granular urea pricing was unchanged at $215-$225/st FOB out of most terminals in the Western Cornbelt, with the upper end reported in the Iowa market and the low in Missouri on a spot basis.
Southern Plains: The granular urea market was quoted at $210-$220/st FOB Catoosa, Okla., down $5-$10/st from last report, with $215/st FOB cited as a “common number” for dealer sales.
South Central: Granular urea was pegged at $215-$220/st FOB out of most terminals in the South Central region.
Southeast: Granular urea pricing in the Southeast was quoted at $230-$240/st FOB port terminals, down $10/st from late-August levels, with the lower numbers reported for limited tons in the Savannah, Ga., market.
India: The MMTC tender ended up with just under 3 million tons in firm and optional offers. Prices were right around where industry sources predicted. The lowest West Coast price was $203.20/mt CFR, while the lowest East Coast price was $203.81/mt CFR.
Firm offers came in at 2.7 million mt. Counter bids based on specific ports are expected by the weekend.
TransAgri provided the lowest price to the West Coast, while Dreymoor led the way on the East Coast. Other offers included $203/mt CFR from Global and $206/mt CFR from Helm. All four companies have strong ties with Iranian producers and a record of offering Iranian tons into India. The highest offer came from Hyosung of South Korea at $216/mt CFR for 25,000 mt.
The tightness of the market was evident in the offers. Just a bit more than 1 million tons was offered within a 79 cent range.
The bulk of the tonnage is expected to come from the Arab Gulf, including Iran. Freight rates from the Gulf are pegged at $10/mt, which leaves enough room for traders with Arab product to clear a small profit. The netback to China of sub-$190/mt FOB pretty much ensures that limited Chinese product will be in the mix.
The $7/mt increase in the price from the August IPL tender allowed producers to breathe a sigh of relief. Some industry watchers were afraid that at least one or two offers in the MMTC tender would be far off the mainstream thinking. If that happened, said one trader, and if the offering companies qualified in all other aspects of the tender, MMTC would have to counterbid at a level no other company could match. That, in turn, could leave MMTC able to only import a few cargoes when the need is clearly for a much larger order.
Outlier offers also run the risk of not being backed by producers, which means the offering company would have to default on the deal – leaving MMTC with nothing.
MMTC Urea Tender – Closed September 22, 2016
Offering Company
Quantity (mt)
US$/mt CFR
Discharge Port
Transagri
45,000
203.20
Pipavav
45,000
204.20
Mundra
60,000
203.20
Rozy
45,000
205.20
Hazira
Global
60,000
203.60
Rozy
30,000
206.30
Kandla
45,000
204.50
New Mangalore
45,000
205.40
Pipavav
60,000
208.10
Vizag
Ameropa
50,000
203.76
Mundra
Dreymoor
65,000
203.81
Gangavaram
65,000
205.81
Krishnapatnam-Karaikal
65,000
206.69
Rozy
65,000
207.47
Mundra-Pipavav
Quantum
130,000
203.95
Gangavaram
204.95
Krishnapatnam-Kakinada
205.45
Vizag
205.45
Mundra-Tuna
205.95
Pipavav-New Mangalore
Amber
130,000
203.99
Gangavaram
204.99
Krishnapatnam-Karaikal
205.49
Vizag
205.49
Mundra-Tuna
205.99
Pipavav-New Mangalore
Fertisul
132,000
204.25
Gangavaram
204.75
Krishnapatnam-Karaikal
205.65
Mundra-Pipavav
Comzest
30,000
204.50
Mundra
204.50
Pipavav
Ferttrade
65,000
204.65
Mundra
Aries
189,000
204.69
Krishnapatnam
204.49
Gangavaram
205.79
Kakinada
Gavilon
62,850
205.15
Krishnapatnam
62,850
205.75
Mundra
Continental
100,000
205.25
Gangavaram-Krishnapatnam-Karaikal
206.25
Mundra-Pipavav
Swiss Singapore
60,000
205.40
Gangavaram
60,000
207.20
Vizag
60,000
207.20
Mundra
AgriComm
62,500
205.50
Krishnapatnam
206.50
Mundra
MTPL
63,000
205.79
Vizag
63,000
206.69
New Mangalore
Allied Harvest
65,000
206.00
Krishnapatnam-Karaikal
207.00
Pipavav-Mundra-Hazira
Helm
55,000
206.00
Kakinada
206.00
Mundra
MidGulf
120,000
206.15
Kakinada
205.80
Krishnapatnam
204.85
Gangavaram
205.80
Kakinada
210.00
Gopalpur
205.90
Vizag
206.35
New Mangalore
206.25
Adani
Koch
60,000
206.50
Krishnapatnam
40,000
205.50
Mundra
Transglobe
60,000
206.50
Karaikal
205.00
Pipavav
Dragon
60,000
206.51
Gangavaram
208.01
Mundra
207.51
Krishnapatnam
Keytrade
50,000
207.00
Mundra
CHS Europe
60,000
209.00
Mundra
50,000
209.00
Krishnapatnam-Gangavaram
MekaTrade
60,000
212.97
Krishnapatnam
213.27
New Mangalore
213.47
Vizag
Hyosung
25,000
216.00
Vizag
Middle East: The estimated netback to Arab producers from the MMTC/India tender put prices in the low-$190s/mt FOB. This number makes the producers happier than the netback of sales to Brazil, which is pegged at $188-$189/mt FOB.
Iran is expected to sell about 400,000 mt to India in the tender, and one trader said that number could be as high as 500,000 mt. Arab producers in the Gulf are then expected to supply at least an equal amount, if not more.
Sources have pointed out in the past few weeks that urea reserves have been building in Arab warehouses. Producers have shied away from tenders or other public sales that would lock in lower netbacks out of fear of dramatically lowering the formula prices for the contract sales that continue unabated.
The last public sale of Arab product was several weeks ago and was in the mid-$190s/mt FOB. Since then, contract sales have been taking place just under $190/mt FOB. Rumors of the Brazilian business – outside of existing contracts – matching the formula-based price were being countered by the producers.
Producers pointed to stronger prices in Egypt and the way the Chinese producers are able to hold their prices steady as reasons for refusing to publicly drop their prices. The results of the Indian tender now give them a face-saving way to accept lower prices than their previous public statements and protect their contracts.
Egypt had enjoyed a bump in the price for its product in the past 30 days. Sources said the stronger levels were a result of traders covering shorts for Europe. At the $197/mt FOB price Egyptian producers enjoyed, their product was not able to compete in the Indian tender, leaving them with just their traditional European and African customers.
Sources reported this week that the price in Egypt has come off. A cargo of 80,000 mt was reportedly sold at $191/mt FOB. A further drop is expected when the results of tenders in Ethiopia and Kenya are released next week.
Black Sea: Traders are selling short into Turkey, with netbacks in the low-$180s/mt FOB. The new estimates take the price into areas that will pressure producers back to their reported break-even point.
The Turkish sales come as the government is moving ahead on its earlier announcement to ban the importation and use of ammonium nitrate. This past week the government announced legislation that would make owning AN unlawful. Sources said Turkey would eventually have to step up its urea purchases to cover the losses from the AN ban.
China: Sources said the estimated netback of around $188/mt FOB that would come from the MMTC/India tender prices is not to the liking of Chinese producers. The producers have held firm that they are not interested in deals under $190/mt FOB.
Some producers, however, may be in the process of changing their minds, according to some traders. The reserves are building in the export ports, and demand for the winter buying season may not be as strong as producers had anticipated. The combination may drive some suppliers to accept lower prices just to get some cash in hand right away.
Sources reported that the enforcement of new transportation rules may also hurt urea sales. The government is implementing new regulations that limit the weight trucks can carry. If fully enforced, sources said the logistics costs for the producers and buyers will go up because overweight trucks will no longer be allowed.
Nepal: The government will close a tender for 25,000 mt of granular urea on Sept. 26. The product is to be delivered to Nepalese warehouses in special bags. Sources said China will most likely be the supplier in this tender.
Pakistan: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to allow the export of surplus urea to facilitate local manufacturers, who are sitting on high inventories of urea.
FPCCI Regional Standing Committee Chairman Ahmad Jawad released a statement saying Pakistan’s urea plants are running at full capacity, producing 6 million mt/y, while consumption is estimated at 5.4 million mt/y, leaving a surplus of 0.6 million mt. “If we carry forward last year’s stock, the country could easily export 1.2 million mt, which means earning $220 million dollars,” he said.
Jawad said the government could establish a mechanism to allow exports of urea through the imposition of a regulatory duty, but keep the prices subsidized for local consumption. He noted that from 1983 to 1986, when a large urea surplus existed in the country, Fauji Fertilizer Co. (FFC) began exporting, which not only stabilized the domestic urea market, but also earned valuable foreign exchange.
Bangladesh: Bangladesh will import 100,000 mt of granular urea from Saudi Arabia on state-to-state deals in late 2016. BCIC has issued an international tender for 100,000 mt of bulk granular urea in four shipments from Al-Jubail/Dammam, Saudi Arabia, to Chittagong Port. Bids are due on Oct. 3, 2016.
Bangladesh’s total demand for urea hovers at 2.7 million mt/y, while urea factories under BCIC produced 1.06 million mt in the last 2015/16 fiscal year. That production level is up 0.13 million mt from the previous year, due to the start of production by Shahjalal Fertiliser Factory, continued production by Jamuna Fertiliser Company Ltd., and other factors including proper plant maintenance and intensive monitoring to help boost production.
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