East Dubuque, Ill.-Rentech Development Corp. and Peabody Electricity LLC, a wholly-owned entity of Peabody Energy, have entered into a joint development agreement for the co-development of two Coal-to-Liquids (CTL) projects, which will be located on Peabody reserves. The projects will convert coal into ultra-clean transportation fuels using Rentech’s proprietary Fischer-Tropsch CTL process. The agreement represents Peabody Energy’s initial activities to develop CTL projects in the U.S. The companies intend to make use of Peabody’s reserves in Montana and the Midwest, and will evaluate a mine-mouth project model to maximize cost and transportation advantages. One project is targeted for production of 10,000 barrels per day of transportation fuels, while the other is projected to produce up to 30,000 barrels per day.
U.S. Gulf/Tampa: All was quiet at Tampa and NOLA last week, with nothing new to test $275-$280/mt DEL Tampa and $242-$245/st FOB NOLA. Citing lower international ammonia prices, buyers were hopeful that the next round of Tampa business would see lower numbers.
Eastern Cornbelt: Spot fertilizer pricing changed little from last report, and sources reported few new sales to test the markets. Anhydrous ammonia remained at $330-$340/st FOB regional terminals, with forward contract offers from one supplier ranging from $340-$350/st FOB for August through November.
Western Cornbelt: Sources reported only minimal changes in spot fertilizer prices, with few new sales to test the markets. Anhydrous ammonia was quoted at $315-$330/st FOB regional terminals, with the low in Nebraska. Forward contract offers from one supplier were in the $335-$345/st FOB range in the region for August through November.
Southern Plains: Anhydrous ammonia was quoted at $285/st FOB Verdigris, Okla., or Coffeyville, Kan., on the low end, with delivered tons in central Oklahoma pegged at the $305-$310/st range.
South Central: Sources continued to speculate that anhydrous ammonia pricing was in the mid-$300s/st FOB regional terminals for the last done business, but lack of new sales made for little market specificity.
Black Sea:Producers are reportedly still standing by their phones waiting for August orders. Asian sources report that once calls are made, bids just above $200/mt FOB will be seriously considered. With U.S. prices reportedly hitting around $275/mt CFR, the low-$200s/mt FOB is not unlikely. Adding to the grief of the producers are reports that demand for their product will lessen as more Western Hemisphere plants either continue to operate or come back on line. While sub-$200/mt FOB has not been done, sources say it could be a possibility.
Middle East: As expected when the Black Sea makes a continued slide, the Middle East price eventually catches up with the trend. After comfortably holding off major price decreases, producers are now said to be looking at a much tighter price range than in previous weeks.
Producers had run multi-tiered pricing plans, but now, say sources, the range in prices has narrowed significantly, with the low end even coming down a bit. Whereas the spread was once as much as $30/mt, sources now say the spread has narrowed to a more manageable $10/mt, with much of the higher priced material gone.
Even though India continues to demand material, the lack of demand from other regular buyers has caused the Middle East price to drop to $230-$240/mt FOB, say Asian observers.
Sources report SAFCO tried to run its #4 plant, but the commissioning was marred by errors in the start-up process and they had to take it back down.
Indonesia: KPA will be going down for a routine 3-4 week turnaround beginning the first week of September.
United Kingdom: Terra’s plant that went down June 1 due to an explosion has been slow to return to production. The company continues to make upgraded products with sourced ammonia.
UREA
U.S. Gulf: The granular market was hard to peg last week, with some saying it started out as low as $215/st FOB early in the week and others saying it was $225/st FOB by Friday. Most folks were in the middle.
As in the previous week, sources said higher numbers were for folks needing to get material up the Arkansas River to meet wheat demand. That said, others said much of the Southern Plains is dry and that demand may wind up being “iffy.” In the meantime, Koch was reported to have raised its inland prices in Oklahoma, and there were unconfirmed reports that its Enid plant would be back up from a turnaround July 24.
Others foresaw more heightened demand in the next month or so, as folks seek to buy for wheat demand and to beat the river closing in October. Most are awaiting September vessels, as only one is due in in August, say sources. In the meantime, sources say low gas prices should keep domestic producers pumping out material, but most were saying that CF had sold out into, if not past, October.
Some saw this run-up in prices as simply trader maneuvering in time for the Southwestern Conference, though others insisted there was some bonafide demand from end-users thrown into the mix. Others said some of the larger buyers are yet to come into the market and much more activity will be seen between now and late September. Another said after this bullish period is ended, the bears will take over once the river closing and higher barges storage fees take hold.
Eastern Cornbelt: Granular urea was up slightly to $245-$255/st FOB in the region, with the low reported out of spot river locations in Illinois. Effective July 17, Agrium’s postings for granular urea moved to $265/st FOB Garrett, Ind., and $270/st FOB Saginaw, Mich. Rail-delivered postings from the company moved to $270/st in Illinois, Indiana, and Ohio, and $275/st in Michigan.
Western Cornbelt: Granular urea was quoted at $245-$250/st FOB, up slightly from last report, with delivered tons in Nebraska pegged at the $265/st mark from Oklahoma shipping points. Agrium’s urea postings in the Northern Plains region moved on July 17 to $250/st FOB Shakopee, Minn., and North Dakota terminals at Alton, Carrington, Colfax, Marion, and Scranton. Rail-delivered postings from the company moved on that date to $255/st in Minnesota, the Dakotas, and Wisconsin.
Southern Plains: Urea pricing was up significantly from last report in the wake of stronger barge pricing. Granular urea was quoted at $245-$250/st FOB Inola and Enid, Okla., last week. Postings from Koch were said to have firmed to $250/st FOB Inola and $255/st FOB Enid.
South Central: Sources pegged the granular urea market out of regional terminals at $230-$250/st FOB, with the low in Arkansas and the high reflecting dealer reference pricing FOB Vicksburg, Miss. A Kentucky source pegged the dealer market at a firm $245/st FOB Ohio River locations last week.
Southeast: Granular urea pricing was up from last report, with most sources quoting the market at the $270/st mark FOB port terminals. One North Carolina source reported truckDEL urea at $290/st last week, with railed tons roughly $10/st less. Urea supplies were reportedly tapped out at Brunswick, Ga., and Wilmington, N.C., although two companies were reported to have tons coming into the Wilmington market during the first week of August.
Black Sea: Apparently a number of shorts were covered last week, but that did not stem the slide in prices. Reportedly, $203/mt FOB was done, but Asian sources point out that buyers are seriously eyeing $195/mt FOB. Observers add that producers who usually end a conversation when buyers start bidding more than $5/mt below the last done deal are now said to be willing to keep the conversation going. Best bet by many is that prices will continue to slide and then pick up come late August or early September.
With no major buyers looming on the horizon for the next 45 days, there appears to be little to encourage higher prices.
Come the end of August, tenders are expected from Pakistan and India. Asian sources say that should at least put brakes on the slide in prices. Some are not too sure, however, that it will halt and seriously reverse the current trend. By the time the tenders are called, people will not only have the Black Sea product to offer, but what is expected to be lots of Chinese urea come Oct. 1.
Middle East: Prilled urea is taking a hit, and sources say granular is not far behind. While prilled urea had held its own for quite a while, sources now say that it has dropped at least $10/mt and should be coming down even more. Granular continues to be soft, with some sales coming in lower than the $215/mt FOB the producers publicly claim is the low point.
Argentina reportedly picked up 40,000 mt from PIC at $243/mt CFR. Once freight and other costs are backed off, Asian sources say the netback comes in at $207/mt FOB for granular. Sources add, however, that the Middle East producers regularly have multi-tier prices, depending on the markets. Even though the Latin American price netback comes in at $207/mt FOB, they say the market is closer to $215/mt FOB.
At the same time, IPL/India picked up another prilled cargo. Fertil is claiming the price was $228/mt FOB. While IPL did not deny the price, they also did not confirm it. Sources in the region say this is the normal way the two companies operate. Few really accept that price, and claim prills are closer to $220-$225/mt FOB.
Vietnam: The Phu My plant is expected to be back in operation this week. The plant shut down for a routine maintenance turnaround last month and failed to come back online as scheduled. The operators of the plant purchased a cargo of Black Sea material to cover the losses from the expected shutdown time. Now, they are reportedly looking for another cargo from the Black Sea.
Bangladesh: There are still no awards from the BCIC tender that closed the beginning of the month, and a second tender is coming due next week. Asian sources say the decision makers are apparently waiting for confirmation that Chinese product will be readily available. The last tender was dominated by offers based on Chinese urea. The next tender is also expected to be dominated by Chinese product.
China: Reduction of the export tax from 30 percent to 15 percent is still expected to take place Oct. 1. With the Chinese domestic market softening, Asian observers had speculated that the reduction might be moved up a month to ensure huge stockpiles would not occur. That now appears to be less of an issue than a month ago.
Reportedly, Chinese producers are asking $250/mt FOB bagged, but some of the BCIC offers came in at $240/mt FOB bagged.
Sri Lanka: The latest tender for 48,000 mt may not be fully funded. Sources say awards for four cargoes were issued, but now the Sri Lankan government is having difficulty lining up the necessary cash to pay for the product. Some material is expected, but sources say it might be only half of what was awarded.
NITROGEN SOLUTIONS
U.S. Gulf: While price ideas for UAN barges have been up for some time, it wasn’t until this week that players actually reported some done deals. Most were putting new business within the $144-$146/st FOB ($4.50-$4.55/unit) range.
Eastern Cornbelt: UAN was pegged at $5.40-$5.78/unit FOB regional terminals for spot tons, with the upper end reported in Ohio. Forward contract offers from one supplier were in the $5.96-$6.11/unit FOB range in the region for August through November.
Western Cornbelt: UAN remained at $5.25-$5.70/unit FOB regional terminals for spot tons to dealers.
Southern Plains: UAN-28 was quoted at $126-$138/st ($4.50-$4.93/unit) FOB regional terminals, with the low reported out of production points in Oklahoma. One source quoted delivered UAN-28 at the $150/st ($5.36/unit) mark last week.
South Central: UAN-32 remained at $175-$185/st ($5.47-$5.78/unit) FOB regional terminals, with the lower numbers in Arkansas and Mississippi and the high in Kentucky. Dealer reference pricing was pegged at the $180/st mark ($5.63/unit) FOB Vicksburg. One supplier was offering forward contract UAN tons FOB Louisville, Ky., for August through November at the $192.40/st ($6.01/unit) mark.
Southeast: UAN-30 was tagged at $173-$174/st ($5.77-$5.80/unit) FOB Wilmington and Norfolk, Va. Sources said vessel tons were being quoted at the $180/mt C&F mark for the next round of business.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate remained at $255-$260/st FOB.
Southern Plains: Ammonium nitrate was $250-$255/st FOB the port of Catoosa, Okla.
South Central: Ammonium nitrate was unchanged at $240-$245/st FOB in the region.
Southeast: Ammonium nitrate was steady at $285-$290/st DEL in the region, with little new business reported to test the market.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was $150-$155/st FOB.
Western Cornbelt: Granular ammonium sulfate was steady at $150-$155/st FOB and $155/st DEL in the region.
Southern Plains: Ammonium sulfate pricing was down from last report. The granular sulfate market was quoted at $150/st FOB Freeport, Texas, and $180/st FOB Plainview, Texas. Other sulfate postings FOB Plainview included coarse at $175/st and standard at $170/st.
SouthCentral: Granular ammonium sulfate was steady at $168-$170/st FOB Memphis and most Arkansas terminals, with the upper end quoted at $175/st FOB in the region.
Southeast: Granular ammonium sulfate remained at $137/st FOB Hopewell, Va., and $142/st FOB Augusta, Ga., although sources said an increase from Honeywell was on the books for Aug. 1. One source said the increase at Hopewell would be $5/st, while another said the price there would move in August to $145/st FOB. Delivered granular sulfate remained last week at $157-$180/st in the region, depending on location.
PHOSPHATE
Central Florida: If the Central Florida DAP market got any slower than it did last week, it would be going in reverse. While some contracts were being filled, no new sales were reported last week. Some were saying – or hoping – that some business might be done at the Southwestern Conference this week, but were not optimistic. Most believe it will be about a month before DAP and other phosphates begin to move again. One advantage DAP might have for the fall is the shortage of urea, because of its nitrogen content. However, no one was rushing in to make buys for that – or any other – reason last week.
Meanwhile, TFI reported that phosphate production fell 7 percent during the latest fiscal year as production of all phosphate materials declined. TFI said phosphate inventories rose 17 percent from a year earlier, reflecting higher stocks of phosphoric acid and DAP.
CSX Transportation’s freight rate increase of about $2/st will begin on Sept. 1, so buyers should plan accordingly.
The Central Florida DAP price range remained changed last week at $223-$227/st FOB. Mosaic’s posted price remained at $235/st FOB, and CF’s posted price was $227/st FOB. Prices do not include discounts; however, some large buyers can obtain a lower price without a discount from some producers. CF was said to be selling DAP as low as $223/st FOB. Mosaic discounts MAP $4/st from the price of DAP, while CF has no price difference. PotashCorp’s Central Florida reference price remained at $245/st FOB. In Texas, Agrifos’ prices were unchanged at $255/st FOB for DAP and $261/st FOB for MAP.
U.S. Gulf: The NOLA DAP barge river system was stagnant last week, even more so than in previous, really slow weeks. Some potential buyers and sellers hoped something would happen at the Southwest Conference this week, but had doubts. While no new sales could be found last week, several sources said they had been offered barges below the previous week’s range, as low as $226/st FOB. However, none of those offers were accepted, so the price range will not be affected – at least not until a sale actually occurs. The low offers were said to have come from traders who purchased them some time ago and were having to pay storage, which was becoming costly. As one source said, “The way the sharks are circling, I wouldn’t be surprised to see them going lower than that.”
Activity will likely begin first along the Arkansas River, which could be in just a few weeks, but for most, the fall season will not begin for at least another month. Before dealers begin to reorder, they want to see product moving out the door.
Based on a lack of new spot sales last week, the NOLA DAP barge price range remained unchanged at $228-$233/st FOB.
Eastern Cornbelt: DAP was $263-$275/st FOB and MAP
was quoted at $260-$272/st FOB regional warehouses, with
the low on the river system and the upper numbers inland.
TSP remained at $233-$240/st FOB, and 10-34-0 was $265-
$275/st FOB in the region.
Western Cornbelt: DAP and MAP remained at $265-$275/st FOB the warehouse, with TSP at $235-$240/st FOB. One Nebraska source pegged the MAP market to $268/st FOB on the river last week. 10-34-0 pricing was steady at $265-$275/st FOB.
Southern Plains: DAP and MAP were pegged at $260-$265/st FOB Catoosa. 10-34-0 was quoted at $245-$250/st FOB in the region.
South Central: DAP was pegged at $255-$260/st FOB regional warehouses, with the low reported in Arkansas and Houston, and the upper end reflecting dealer pricing in Kentucky and FOB Vicksburg. MAP was quoted in roughly the same range, with the upper end at $261/st FOB Houston. TSP remained at $215-$220/st FOB regional warehouses.
U.S. Export: The export DAP/MAP market was the bright spot for the industry last week, as well as for the year. PhosChem reported sales of 180,000 mt for prices between the narrow range of $260-$261/mt FOB. 120,000 mt were sent to India, while the remaining 60,000 mt were sold in Central and South America. India was said to have at least two tenders coming due soon, and the Russians, who were said to have sold that country five panamax vessel loads recently, were low on supply. That will help PhosChem in the competition. Also, Pakistan was said to be in the market. One source noted that freight rates in some areas were beginning to come down after a recent rise. Since most of the sales are based on a delivered price, FOB prices to producers will increase.
TFI’s June export report showed India continuing to be the biggest U.S. customer, purchasing 236,228 mt of DAP. China, which was leading at this time last year, bought only 54,760 mt, while Peru was the third largest buyer at 28,088 mt. The total DAP exported in June was 463,620 mt, which represented a 22.2 percent decrease from the previous year. For the calendar-year-to-date, TFI said India was tops with purchases of 783,415 mt, China was second at 572,911 mt, and Mexico was the third biggest buyer at 300,795 mt. Interestingly, India’s purchases increased 35 percent from last year, while China’s decreased by the same amount. So far this calendar year, export DAP sales were down 18.3 percent.
TFI reported Australia was the biggest customer for U.S. MAP in June, with purchases of 39,926 mt, and Colombia was the second biggest buyer at 14,776 mt. The total MAP exports for June were 103,738 mt, a decrease of over 61 percent from the previous year. For the calendar-year-to-date, Canada was this country’s biggest buyer at 280,037 mt, Australia was second with 220,858 mt, and Argentina, which buys about the same amount of MAP as DAP from the U.S., purchased 131,563 mt. The total MAP sales of 1,017,176 mt was a decrease of 39.6 percent from last year at that time.
The higher freight rates continued to reduce FOB prices for U.S. producers. The previous week’s DAP price range was $260-$263/mt FOB, but slipped slightly to $260-$261/mt FOB, as a result of the higher delivery charges.
Bangladesh: BCIC has issued a tender to import 50,000 mt of phos acid under a 150 day deferment plan. Offers are to be received by Aug. 28.
POTASH
Eastern Cornbelt: Potash was quoted at $195-$205/st FOB regional warehouses, depending on grade and location, with the low out of spot Illinois River locations.
Western Cornbelt: Granular potash was pegged at $193-$205/st FOB in the region, with the low at St. Louis and the higher numbers reported by Iowa sources out of warehouse locations.
Southern Plains: Potash was unchanged at $192-$198/st FOB Carlsbad, N.M., depending on grade, with delivered potash pegged at $203-$210/st in the region, depending on location. One Kansas source pegged the warehouse market for red granular potash at the $205/st FOB mark last week.
South Central: Potash remained at $195-$198/st FOB most regional warehouses.
Southeast: Potash pricing was steady at $215-$228/st DEL in the region for coarse or granular tons, while soluble potash continued to be pegged at higher numbers.
SULFUR
Tampa: Third quarter negotiations between sulfur producers and the phosphate industry continued to drag on last week, as major phosphate producers were seeking a rollback in prices.
West Coast: Contract negotiations for priller operations on the West Coast were expected to close at the end of last week, but had not at press time. Prices there were expected to decline significantly, possibly by between $8 and $10/lt.
Vancouver: In Canada, sulfur producers were expecting a new contract with China and more sales and a possible boosting of prices for the fourth quarter. Problems in the Middle East could also benefit them.
MARKET NOTES
Western U.S.: Effective July 17, Agrium’s postings for granular urea moved to $270/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; and $275/st FOB West Woodburn, Ore., and Alberta plant locations at Red Water and Carseland. Delivered postings from the company moved on that date to $247-$252/st in Montana and Wyoming, depending on location; $277/st in northern Utah; $280/st in Central Utah; and $285/st in southern Utah.
Effective July 13, Agrium reposted granular ammonium sulfate at $175/st FOB and $180/st DEL in the Pacific Northwest region. Agrium also announced a summer fill program for MAP and APS (16-20-0), effective July 12. MAP is offered at $310/st FOB warehouses in Washington, northern Idaho, and Oregon (except for Malheur County), while 16-20-0 is $240/st. The two are delivered into that area at $315/st and $245/st, respectively. In other areas of the region, MAP is offered at $305-$310/st DEL and 16-20-0 at $240/st DEL.
Saudi Arabia: The Saudi Arabian Mining Co. (Maaden) and Litwin Europe Middle East BV of the Netherlands signed a contract July 19 for the construction of three phosphoric acid plants, with a total cost of approximately $320 million. The complex will produce 4,380 mt/d of phosphate, making it the largest facility of its kind in the world. The acid plants will be designed to enable them to increase to 4,800 mt/d of phosphate. First production is scheduled in the first quarter of 2010.
India: An Indian/Egyptian joint venture – Indo Egyptian Fertiliser Company Ltd, the joint venture between Indian Farmers’ Fertiliser Co-operative Ltd (IFFCO) and the Egyptian state-owned El Nasr Mining Co. (ENMC) – has won major concessions for its proposed $325 million phosphoric acid plant in Egypt, with an annual capacity of 500,000 mt. The company has already completed acquisition of 1,000 acres of land and has been granted major duty and tax concessions by the Egyptian government. The proposed plant has been given permission for duty free import of all capital goods, and the income of the company would be tax free for 10 years, according to a venture official. The International Finance Corporation (IFC), which has been appointed as the lead arranger to tie up the finances, is in the final stage of appraising the project. IFFCO holds 76 percent in the joint venture, while El Nasr holds the balance. According to the plans, El Nasr, which is Egypt’s largest rock phosphate mining company, would supply 2 million mt of rock phosphate to the joint venture company, and IFFCO would buy out the entire amount of phosphoric acid thus produced for producing DAP in India.
Effective July 17, the following changes were made to The Mosaic Co.’s North American sales organization:
With a focus to improve customer responsiveness and to streamline the organization, the U.S. Mosaic sales team will be divided into two regions, east and west of the Mississippi.
Gord McKenzie will manage the western region and report to Rick McLellan, vice president, sales, North America. The eastern region will report to Rick McLellan until the search has been completed for the role of eastern region sales manager.
Mark Nordwald and David Specketer were named key accounts leaders for the western and eastern regions, respectively. These roles will be responsible for co-coordinating sales with major accounts.
John Gladden was named account manager for Florida and Georgia.
Marc Wallis joined Rentech as the vice president of sales, operations, effective July 15. He will be responsible for all sales activities from Rentech’s East Dubuque, Ill., nitrogen plant, and will administer the distribution agreement of product from that plant to Agrium Inc. Rentech recently bought the former Royster-Clark plant from Agrium Inc. Wallis is formerly from Royster-Clark.
Agrium Inc.’s Kenai Nitrogen Operations recently announced the appointment of Chris Sonnichsen as plant manager. He has been the Kenai production manager for the past nine years. Sonnichsen announced Kenai’s leadership team, which consists of new members Bruce Jackman, technical services superintendent; Jeff Turkington, operations superintendent; Rick Main, maintenance superintendent; and John Averill, safety, security & emergency response supervisor; and continuing members Jim Senn, business support superintendent; and Don Zacharias, human resources superintendent.
Elroy Webster, 72, a retired director and chairman of CHS Inc., died July 18 in Mankato, Minn. A farmer, Webster had five decades of involvement in cooperatives. In 1998, he was instrumental in uniting the former Cenex Inc. and Harvest States Cooperatives to form today’s CHS Inc., the nation’s largest cooperative and a Fortune 200 company. Webster also helped lead the 1987 establishment of a landmark joint venture involving the agricultural supply businesses of Cenex and Land O’Lakes, Inc. Webster received numerous awards for his leadership.
Washington-The Fertilizer Institute’s Vice President, Kathy Mathers, said Thursday that the Senate Outer Continental Shelf bill was expected to be introduced into the U.S. Senate on Friday, July 21, with expectations a vote could be had as early as July 24-25. She said negotiations continue to take place as to the specific language of the bill. In the meantime, Mosaic President and CEO Fritz Corrigan participated in a high-level energy meeting at the U.S. Chamber of Commerce last week, in which he stressed the hardship current energy prices have created for the fertilizer industry. In addition, the Tampa Tribune recently published a joint letter from Corrigan and CF Industries Holdings Inc. CEO Steve Wilson, in which they argued in favor of OCS drilling.
Troy, Ill.-The 100 tons of ammonium nitrate spilled in a CSX freight train wreck June 27 in a nearby rural area have been completely cleaned up and trucked 150 miles from the site for safe disposal, according to rail company spokesman Gary Sease. “We were able to find a landfill in Peoria that could take the material,” Sease remarked. He said the contents of three hopper cars were spilled in the derailment, along with 100 gallons of hydrogen peroxide from another car that was overturned, but were contained right after the mishap. Cleanup took nearly two weeks, and several contractors had to be hired to haul the fertilizer to the landfill. Both the Illinois EPA and the railroad said there was never any risk to the environment or nearby residents.
Beaufort, S.C.-The South Carolina Ports Authority is preparing Port Royal for conversion to a retail waterfront district with hotels, etc. Under legislation signed two years ago by Gov. Mark Sanford, the property will be sold to a private developer for redevelopment. Yara North America is one of three businesses the state has been working with for more than two years to end existing leases – the others are Royal Cement and Port Royal Drystack. A Yara spokesman said the company would prefer not to comment because of ongoing negotiations.
Oslo-Yara International ASA reported a net income after minority interest of $166 million ($.54 per share) on sales of $1.959 billion for the second quarter ending June 30, 2006, compared to the year-ago $133 million ($.42 per share) and $1.903 billion, respectively. The company noted that the strong results came despite higher energy costs. Total fertilizer sales were down 4 percent from last year (4.927 million mt v. 5.131 million mt), primarily reflecting a planned reduction of low-margin sales outside Europe. Yara’s European sales increased in all markets except Italy. Lower fertilizer sales outside Europe and the Mediterranean were partly offset by a 13 percent volume increase for industry products. Yara noted that the U.S. market was oversupplied for the 2005/06 season, likely topping IFA estimates of a 5 percent decline in nitrogen consumption. Yara cited a Blue-Johnson estimate of a 7 percent decline for the period, with a forecasted increase in the longer term due to biofuel development. Yara also cited a drop in global grain stocks as a continued reason to support global demand. Yara said it continues to increase its market share in Europe, in a time when Western Europe is seeing declines in consumption, an estimated 3 percent during the second quarter. Yara figures are also up for the first six months, with net income of NOK1,894 on revenues of NOK23,935 versus the year-ago NOK1,763 and NOK23,114, respectively.
Valero Energy Corp. has decided to exit the nitrogen fertilizer business by shutting down Nitromite Fertilizer and permanently closing the former Diamond Shamrock anhydrous ammonia plants that Nitromite operates in Dumas, Texas.
The two aging ammonia facilities, both with capacity of roughly 225 st/day, came under Valero’s control when the company merged with Ultramar Diamond Shamrock Corp. in December 2001. One of the plants has been idled for years, while the other was idled in December 2005 due to high natural gas costs. Both plants were built in the 1960s.
Earlier this year, sources reported that Valero was planning to convert the long-idled ammonia plant at Dumas to a hydrogen plant for use at the company’s nearby McKee refinery. It was not clear last week if those plans were still in the works, or what was in store for the second ammonia production facility there.
The McKee refinery has approximately 430 employees, and produces various gasoline products, jet fuels, low-sulfur diesel, and asphalts. It has a total throughput capacity of roughly 170,000 barrels/day, and its location in the Texas panhandle gives it access to crude oil from northern Texas, Oklahoma, southwestern Kansas, and eastern Colorado.
The decision to suspend operations at Nitromite Fertilizer means that Perry White, general manager and an employee of the company since 1990, will be retiring at the end of July. Tim Crown, Nitromite sales manager, will be moving to another job with Valero. Zell Cain, scheduling manager for Nitromite, will also be retiring, as will Jimmy Cleveland, sales and credit manager.
Valero had not returned calls by press time, but it can be reasoned that the ammonia plants at Dumas, given their age, output capacity, and idled status, were of limited significance to the Fortune 500 refinery company. Based in San Antonio, Valero has approximately 22,000 employees and annual revenue of about $80 billion. The company owns and operates 18 refineries throughout the U.S., Canada, and the Caribbean, with a combined throughput capacity of roughly 3.3 million barrels/day, making it the largest refiner in North America.
Valero is also one of the nation’s largest retail operators, with more than 5,000 retail and branded wholesale outlets in the U.S., Canada, and the Caribbean under various brand names, including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon.
Valero still has an ammonia connection through its general partner, Valero LP, which operates the 2,000-mile ammonia pipeline formerly owned by Koch Industries Inc. Valero LP acquired the pipeline, which stretches from Louisiana up into Arkansas, Missouri, Illinois, Indiana, Iowa, and Nebraska, when it purchased the Kaneb Companies on July 1, 2005.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
