All Posts from September 24, 2012

Potash

Eastern Cornbelt, India, Indonesia, Market Watch, Potash Muriate, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: Most continued to put recent business within the $460-$465/st FOB price range for barges, although some speculated that barges could still be had at sub-$460/st FOB levels.

BPC was reported to be re-exporting some product to Latin America, which some said is the norm when there is more demand south than north.

Eastern Cornbelt: The potash market at regional warehouses remained at $500-$510/st FOB in the Eastern Cornbelt.

Western Cornbelt: Potash was unchanged at $500-$510/st FOB most warehouses in the Western Cornbelt.

Southern Plains: Potash was pegged at $505-$510/st FOB Carlsbad, N.M. Out of regional warehouses, the potash market remained at $500-$510/st FOB.

South Central: Potash pricing remained flat at $495-$500/st FOB most South Central warehouses.

Southeast: Potash was quoted at $510-$517/st FOB in the Southeast, with rail-delivered tons pegged at $530/st in the region, give or take.

India: The country’s “potash holiday” may have done the trick, at least to some extent.

Uralkali CEO Vladislav Baumgertner told Bloomberg last week that the company would do its best to protect current prices, saying he sees a stable price environment in key markets this year.

India’s big cut in potash imports – due to several factors, including subsidies, weak monsoons, and weak currency – appears to have helped keep higher prices at bay. Now it will have a few more months to see if it can work down the $490/mt CFR prices agreed to last year.

Indonesia: As part of a trade mission to Asia, Saskatchewan Premier Brad Wall took part in a meeting that concluded on Sept. 18 with the signing of four five-year potash agreements between Canpotex Ltd. and an Indonesian consortium of potash buyers.

The Memorandums of Understanding (MOUs) will provide Indonesia with the potash supplies it will require in the future to meet its fast growing demand.

“The people of our province are in the enviable position of owning 45 percent of the world’s potash reserves,” Wall said. “As such, it is incumbent on us to get to know our potash customers, understand their needs and interests, and build the bridges that help our industry grow in key international markets.”

“Indonesia is one of the most exciting, rapidly growing potash markets in the world, and Canpotex is the largest supplier of potash to this important market,” Canpotex President and CEO Steven Dechka said. “It’s very helpful, therefore, to have Premier Wall visit Indonesia and build on our relationships in this country, which are so important to Saskatchewan’s economic future.”

In addition to potash, Indonesia imports other goods from Saskatchewan such as semi-chemical wood pulp, non-durum wheat, and peas. Close to 50 percent of the recorded exports to Indonesia from Canada come from Saskatchewan.

Uralkali settles antitrust case

Breaking Industry News

Uralkali reports that it has signed settlement agreements to exit the U.S. potash antitrust case. The agreements were signed with direct and indirect plaintiffs for US$10 million and $2.75 million respectively and shall come into effect after final approval of the U.S. District Court for the Northern District of Illinois.

In September 2008 potash consumers brought civil antitrust complaints in the federal court against Uralkali and BPC, as well as certain other potash producers, including Belaruskali, Potash Corp. of Saskatchewan Inc., The Mosaic Co., Agrium Inc. and Silvinit. The complaints alleged price fixing violations of the U.S. Sherman Act since July 1, 2003.

Under the settlement agreements, Uralkali said it would be released from any liability in connection with the plaintiffs’ claims. BPC as a defendant would be also released as well as other Uralkali and Silvinit traders – IPC and Uralkali Trading SA. Uralkali did not admit any liability in the settlement agreements. It said it believes these settlements are in the best interest of the Company to avoid the burdens, costs and distraction of protracted litigation.

CPS plans scuttled by neighbor protests

News, News Briefs

Davenport, Iowa — Scott County officials were about to take the first step toward allowing an agriculture retail facility, including a 30,000 gallon anhydrous ammonia tank, in an area zoned for agriculture, but opposition from neighbors apparently was the reason Agrium’s Crop Production Services (CPS) withdrew its application just before a hearing was scheduled. “The current zoning is agricultural preservation district and the application was to rezone to ag floating to allow retail businesses in rural parts of the county to serve agriculture purposes,” explained Brian McDonough, Scott County planning and development specialist. “But they (CPS) withdrew that afternoon. So there wasn’t a public hearing.” McDonough said CPS would also have to have approval by the Scott County board of supervisors. “There was no reason stated, but we can assume that the reason was because there were surrounding residents, including six people – two of which owned homes – that were expected to be among a dozen to 30 at the meeting to speak in opposition.” The land, according to the zoning staff report, is not prime farmland. The application requested that the site contain, in addition to the 30,000-gallon above-ground storage tank, one fill station, one above-ground scale, and one attendant station/utility station. The facility was to be open 120 days per year in both the spring and fall months. Some concerns also were raised about the ammonia being available to methamphetamine thieves. But Scott County Sheriff Dennis Conard told the local press that this is no longer the case. Those who make the illegal substance use a “one-pot” method that doesn’t require ammonia. “We don’t have the thievery issues at those places anymore,” Conard stressed. Scott County is the same county where the local zoning board recently voted 6-1 against Orascom Construction Industries’ (OCI) plan to locate its nitrogen plant on a piece of prime farmland. OCI eventually pulled its request and found a site in Wever, in Lee County.

PotashCorp might exit ICL stake

News, News Briefs

Saskatoon — Potash Corp. of Saskatchewan Inc. Executive Vice President and Chief Financial Officer Wayne Brownlee said last week that if the company cannot increase upon its 14 percent stake in Israel Chemicals Ltd. (ICL), that it would probably exit that stock in due course. PotashCorp has sought to increase its stake, and Brownlee said there is a question of whether or not it will be able to get further influence so as to generate value for its shareholders. He said the company did not get into ICL to be a passive shareholder. “We got in there because we actually had a bigger deal in mind, and it has just taken a while to pull together still.” While PotashCorp does hold larger minority stakes in other companies – Arab Potash Corp. (APC) (28 percent) and SQM (32 percent) – it also holds three board seats on each of those and appoints four top managers at APC. It holds a minority stake in China’s Sinofert, but sees this as a window into China, as well as an opportunity should the Chinese government opt to reduce its stake. He was speaking before the Scotiabank Global Banking and Markets Agriculture, Fertilizers and Chemical Conference Sept. 18.

Public comment period announced for Canpotex project

News, News Briefs

Ottawa — The Canadian Environment Assessment Agency has completed its study of the proposed Canpotex Potash Terminal Project in Prince Rupert, B.C. The report is available at www.ceaa-acee.gc.ca. Public comments received by Oct. 5 will be considered. Canpotex could export some 11.5 million mt/y of product from the terminal and would have a 180,000 mt storage building. Plans are for construction to begin as early as this fall, with completion in spring 2016.

Good year seen for nitrogen in 2013; jury still out on P&K

Featured, News

The conventional wisdom gleaned from major fertilizer executives for 2013 is that it should be another good year for nitrogen, but that the jury is still out for phosphate and potash. This comes from various analysts conferences in the past few weeks, where executives have given presentations.

While P&K producers were generally hopeful their products would see good movement in 2013, the outcome for those products may ultimately be decided by soil testing, as was indicated by Nicholas Conrad, treasurer, vice president, and head of investor relations with The Andersons Inc., Maumee, Ohio, speaking at the Scotiabank Global Banking and Markets, Agriculture, Fertilizers and Chemicals Conference on Sept. 18. “Our sense aligns with the market that the application of nitrogen should be strong next year, and we feel good about that. We’re a little agnostic on P&K as to whether there will be some carryover or not. I think the agronomists have to figure that out.”

Conrad said the market expectation is that 96 million acres of corn will be planted in 2013, as it was in 2012. While the optimism is guided by high corn prices, and a large crop could eventually depress prices, he does not see a reversion to $2.50 per bushel corn. Conrad posed the current situation as the best of times and the worst of times – the best being a long-term demand curve for protein consumption and the need for major grains, with the worst of times being the current drought. Unlike previous droughts, Conrad said this time there is not an abundance of grain in storage. Instead, grain stocks are at historic low levels, requiring good acreage in 2013.

Conrad said the bulk of the drought has impacted Missouri, southern Illinois, southern Indiana, and Ohio. He said the company is benefiting from grain diversification into Nebraska. While the state has had drought conditions, it is heavily irrigated.

He said the company is very close to the farm gate, and in addition to providing inputs it has sold farmers the crop insurance that so many of them will use this year to manage their risk. On the fertilizer side of its business, he noted that in the past few years the company has expanded from its Eastern Cornbelt base to Wisconsin, Minnesota, and Florida, and has acquired Ohio-based micronutrient company New Eezy Grow Inc. and a pelletized lime operation.

CF Industries Holding Inc. Chairman, President, and CEO Stephen Wilson told the Scotiabank group that while the Cornbelts could use some more rain this fall for better fertilizer application, that he is not too worried if it doesn’t come. “…we will make up for it with ammonia or other nitrogen products in the spring and over the intermediate longer term, it’s just a blip.” He touted the company’s flexibility as the largest supplier of the three major nitrogens – ammonia, urea, and UAN.

And as for all the recent news about nitrogen greenfields in North America, Wilson said CF’s brownfield plans are more economical. He hopes to make another brownfield announcement by the end of the year, and said the company’s $2 billion expansion plans could add some 1 million mt/y of ammonia production and 3.5 million mt/y of UAN and/or urea. Most of this investment would occur from 2014-2016. He noted the company’s past permitting and brownfield experience.

On the logistics front, which has been somewhat stressed by low Mississippi River water levels, Wilson said he feels CF is ready for the fall and spring seasons. He noted that the company has recently invested in Palmyra, Mo., to allow that ammonia terminal to be used as a staging area for taking ammonia north.

Agrium Inc. President and CEO Michael Wilson told Scotiabank attendees that farmers are financially strong, and that when they are making this kind of money on corn, wheat, and soybeans, they will maximize yields.

OCI expects final permitting in October; Iowa plant to give $100-plus per ton advantage

Featured, News

Orascom Construction Industries (OCI) recently told analysts that it expects to have final permitting complete for its new Wever, Iowa, nitrogen plant in October. The permitting process has been in the works for the past year. “The regulatory approval is huge,” said Nassef Sawiris, OCI chairman and CEO. “The engineering challenges are very high and it is a five-year process. We’re trying to do it in four. A year has passed and three to go.” OCI believes that its past experience in building nitrogen plants gives it an edge in fast tracking the project.

Sawiris is not worried about potential carbon taxes or environmental concerns from U.S. regulators. “This plant will be years ahead of any existing other plants in the U.S. in terms of emissions, in terms of technology, state-of-the-art and environmental implications. So everything is best in kind. When you look at the most recently constructed similar plant, that dates back more than 30 years from now, so we are coming in with technology that does not even compare to what exists today in the U.S. So any implications will actually mean that this new modern plant will have a significant advantage over the existing peers.”

Finding a site in Iowa, in the heart of the Cornbelt, was pivotal to OCI, and it says logistically the move should save it about $100-plus of logistical cost per ton. “We estimate a significant saving for being in the middle of the market rather than transporting urea from North Africa or the Arab Gulf across the ocean through New Orleans and onto barges and through the Mississippi River and unloading it again at distribution points in the U.S.,” said Sawiris.

On the natural gas front, OCI said the Wever site will connect with a major pipeline and it is evaluating all options for gas supply, which are in advanced discussions. No final hedging or long-term agreement has been signed. OCI said at its Beaumont, Texas, plant it is operating on spot gas, but for the Iowa plant, due to the financing, there will be some component that will have a cap on pricing for that project.

In other news, OCI announced that its Beaumont plant is now producing at capacity, having produced 63,000 mt in the second quarter ending June 30, 2012. Capacity is 250,000 mt/y. The Beaumont methanol plant has also begun production. OCI’s new Sorfert, Algeria, Line I urea plant has produced 48,000 mt and expects to begin exporting this month. Line II will begin testing in October. OCI expects both to be at full production by the end of the year.

Despite the positive news, OCI second-quarter net income was down, pressured by several factors, including high taxes in Europe, startup costs at Beaumont and in Algeria, and Gavilon income being reflected as investment held for sale. OCI-wide net income was off 27.7 percent, to $119.4 million on revenues of $1.35 billion from the year-ago $165.2 million and $1.47 billion, respectively. Six-month net income decreased 42.6 percent to $213.3 million on revenues of $2.63 billion, down from $371.3 million and $2.73 billion, respectively.

Ammonia

Ammonia, Eastern Cornbelt, Market Watch, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: Nothing new was reported last week, with Tampa numbers still to be decided for October. Sellers will continue to cite Trinidad cutbacks.

Eastern Cornbelt: The anhydrous ammonia market was quoted at $785-$800/st FOB regional terminals for prompt tons, with most sources touting the upper end of the range as the week advanced.

Drought conditions continued to improve in the region due to September rains. Most of Indiana was in moderate drought as of Sept. 18, with severe drought reported on the state’s southern edge and only abnormally dry conditions in the northwestern counties.

Most of Ohio also ranged from abnormally dry to moderate drought last week, with some areas of the state now classified as drought-free. Illinois remained the driest of the three states at mid-month, with drought conditions ranging from moderate to extreme. The driest areas were reported in northwestern Illinois.

Western Cornbelt: The prompt ammonia market was tagged at $750-$780/st FOB in the Western Cornbelt region, up again from last report, with the upper end of the range reported out of Missouri terminals. Delivered ammonia in the central Missouri market was quoted at $775-$780/st from southern production points.

Sources reported little in the way of fall fertilizer work last week. “Not a lot is hitting the ground, but some are filling in preparation,” said a Missouri contact. “Most dealers have product in the building that they’ll use first,” said another Iowa contact.

A Nebraska source said he anticipates fall volumes to be about 80 percent of normal, but a lot depends on rainfall. “If we’d get a good inch-and-a-half soaker, that would really free up fall ammonia,” he said. Without that moisture, fall ammonia movement remains uncertain in the region due to parched soil conditions.

Southern Plains: The anhydrous ammonia market was quoted at $700-$750/st FOB in the Southern Plains region, with the low reported out of regional production points on a spot basis and the upper end FOB Clay Center, Kan. One source said dealer reference pricing FOB Clay Center had firmed from $345/st to $355/st FOB on Sept. 19.

Parts of the region benefitted from heavy rains in recent weeks. One eastern Kansas source said his location has received 6-9 inches of precipitation since the remnants of Hurricane Isaac dumped on the area in early September. Some Colorado and Texas sources also talked of beneficial rains in their trade areas.

South Central: Ammonia pricing covered a wide range in the South Central region in mid-September.

The anhydrous ammonia market FOB Henderson, Ky., was quoted at $775/st for prompt tons and $805/st FOB for spring prepay. In the Memphis market, where volumes were limited because of the low river levels, sources quoted the prompt ammonia market as high as $820/st FOB last week.

Urea

Bangladesh, Black Sea, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pakistan, Southeast, Southern Plains, U.S. Gulf, Urea, Vietnam, Western Cornbelt

U.S. Gulf: Prompt granular barges, which generally include pre-river close barges right now, were reported at a premium last week. Sources said they were trading within the $433-$441/st FOB range, and were predicting late in the week that the next trades will be in the $440-$445/st FOB range.

Barges that would load after Oct. 10 or so – or too late for river close – were seen as being at a significant discount at $418-$425/st FOB.

Prills were called $420-$425/st FOB.

Eastern Cornbelt: Granular urea pricing had reportedly slipped to $480-$490/st FOB in the Eastern Cornbelt region.

Western Cornbelt: Granular urea pricing had reportedly slipped to $475-$490/st FOB regional terminals in the Western Cornbelt, with the upper end reflecting dealer reference levels from some suppliers. Several sources pegged the common dealer market in the $475-$480/st FOB range in the region last week.

Southern Plains: Granular urea pricing had reportedly slipped to $465-$475/st FOB the Tulsa market, with several sources touting $470/st FOB as the common dealer price. Sources reported good urea movement in the region, with long truck lines at Inola, Okla., at midweek.

South Central: Granular urea pricing had reportedly slipped to $470-$480/st FOB most terminals in the South Central region. Some locations were still posted as high as $505/st FOB, but sources reported no sales at that level.

Southeast: Granular urea was pegged at $500-$510/st FOB port terminals in the Southeast, with rail-delivered tons also quoted in that range in the region.

Parts of the Southeast continued to receive the country’s share of rainfall last week. Areas of northeastern Georgia and northern Alabama were under a flash flood watch early in the week.

One Carolina source said his location has been both “blessed and plagued” with heavy rains as growers struggle to get the corn harvested.

India: The STC tender closed Thursday, Sept. 20.

Leading up to the tender, sources figured the final price would be in the upper $390s/mt CFR to just under $410/mt CFR. By and large, that is what happened.

Sources commented after the MMTC tender last month that $400/mt CFR should have been the average price at that time. In the end, because of a low offer, the final sale price was $389/mt CFR for only 415,000 mt.

The ETA offer of $390.47/mt CFR in this tender, however, took away any idea that $400/mt CFR would be broken this time.

Just hours before the tender documents were opened, traders commented that there was a real possibility that at least one offer would be way off the beaten path. The results of that out-rider offer could include STC taking just a few hundred thousand tons instead of the nearly 1 million mt expected.

India is still short about 3 million mt for this season and for preparation for the next. Anticipation before the tender was that STC would take 1-1.5 million mt. If STC tries to hold other companies to the ETA offer, one trader said the company would be lucky to get 100,000 mt booked.

Excluding the ETA and Qafco offers, the average offering price was $402.80/mt CFR.

The tally for the tender follows.

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Offering Company Origin Quantity ‘000 MT US$/mt (UAE Dinars) Discharge Port
    Firm Option FOB CFR  
Qafco