All Posts from June 25, 2021

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, India, Market Watch, Middle East, Northwestern Europe, South Central, Southeast Asia, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa:

July Tampa ammonia prices shot up $50/mt, to $585/mt CFR from June’s $535/mt CFR, with players citing the recent run-up in international prices, particularly in Asia.

Just a week earlier some players had argued that a major uptick was not necessary, as supplies in NOLA and Trinidad were plentiful. However, Trinidad tons were reaching as far as South Korea.

Eastern Cornbelt:

Prompt ammonia continued to be quoted at $615-$625/st FOB in Illinois and Indiana, and $615/st FOB Lima, Ohio. Sources said CF was offering limited ammonia fill tons for as low as $565/st FOB in Illinois and $570/st FOB in Indiana early in the week, but the program reportedly closed on June 24.

Western Cornbelt:

The ammonia market remained at $600-$620/st FOB terminals in Iowa, Nebraska, and Missouri for the last prompt offers. Sources reported Q4 ammonia fill offers circulating at $640/st FOB Nebraska locations and $650/st FOB Fort Dodge, Iowa.

Southern Plains:

Sources said ammonia fill offers were circulating for as low as $500/st FOB Enid, Okla., before firming to $560/st FOB for July-September shipment. Limited fill offers were also reported at $560/st FOB Verdigris and Woodward, Okla.

South Central:

The ammonia market was pegged in the $540-$590/st FOB range out of terminals in the South Central region, down from last report, with the high quoted at Donaldsonville, La., for limited truck tons.

Black Sea:

The Black Sea ammonia market experienced a quiet and stable week. Sources reported no new deals to move the price off the $530/mt FOB mark. In fact, one deal to Turkey at $570/mt CFR is said to confirm the $530/mt FOB level.

Rumors throughout the week were focused on higher prices, however. Sources pointed to anticipated strong demand in India and the Far East for August deliveries to back up their ideas of higher prices. So far, the near-term goal is $550/mt FOB, with some arguing $570/mt FOB is attainable.

Middle East:

Arab Gulf producers remain short on product. Buyers are also well aware of the shortage from the area, and are looking elsewhere for spot tons.

The lack of any spot business keeps the public price at $610/mt FOB. However, sources said India still needs product for July and August, and some public tenders may be called soon. These tenders would give the world a public view of where people see the Arab Gulf market and help move the price off its current mark.

India:

Rumors are running strong that buyers still need tons for July and August deliveries. Buyers such as FACT have been hesitant to call tenders or declare their needs too openly because of the tightness in the ammonia market.

Indian buyers usually depend on Arab Gulf suppliers for their product. However, the growing shortness of material in the Arab Gulf has led buyers to look elsewhere. The need to go farther afield has also meant incurring higher freight rates, as well as paying a higher price for the actual product as global demand strengthens.

Sources said the buying orders for July and August could show dramatically higher prices offered to the Indian buyers. One trader noted that the Indians will have no choice but to pay up or cut back on the output of the domestic facilities requiring ammonia.

Northwest Europe:

Buyers from Baltic suppliers will most likely have to step up and accept higher ammonia prices for July tons, according to sources. The $50/mt increase in the Tampa price, combined with the steady upward movement from the Black Sea, have the Baltic buyers surrounded with pressure to accept higher rates.

Sources said talks are taking place, and so far everyone is being very tight lipped. One trader said no matter how quiet everyone is, he expects to see a significant jump in the price from the current June level of $435/mt FOB.

European importers are also being quiet about their prices. Sources said the current $520-$530/mt C&F level is no longer sustainable and must soon follow the higher prices from the Caribbean to the Black Sea.

Southeast Asia:

Demand from the area, led by China, continues to put pressure on suppliers from as far away as Yuzhnyy. Sources said agents of end users are desperately searching for any discounts on material for August deliveries.

Chinese ammonia imports were up 8.6 percent for the first five months of the year, to 472,000 mt from 401,000 mt during the same period last year, according to Trade Data Monitor. May 2021 imports were down about 30 percent, however, to 54,000 mt from 77,000 mt last year.

Leaky Florida Plant a Public Health Threat, Allege Enviro Groups in Federal Lawsuit

Florida, News, News Briefs, Phosphate

A former Piney Point phosphate plant in Florida that was leaking in late March/early April (GM April 16, p. 1), sending wastewater into Tampa Bay, should be declared an “imminent and substantial endangerment” to public health and the environment, conservation groups said on June 24 in a federal lawsuit, according to Bloomberg Law.

A breach in the 480-million-gallon reservoir at the site forced the state to divert 215 million gallons of wastewater to avoid a catastrophic flood in nearby communities. Florida will spend up to $100 million to start closing the plant, according to a state budget that Gov. Ron DeSantis (R) signed earlier this month.

Pollutants in the discharges are contributing to a growing algae bloom in Tampa Bay and neighboring waterways, according to the lawsuit filed by the Center for Biological Diversity, Tampa Bay Waterkeeper, Suncoast Waterkeeper, ManaSota-88, and Our Children’s Earth Foundation.

The suit was filed “to ensure Piney Point is operated and closed in a manner that complies with the Resource Conservation and Recovery Act and abates the present imminent and substantial endangerment to human health and the environment, including endangered species such as manatees and sea turtles,” the plaintiffs said in the suit.

DeSantis, the acting secretary of Florida’s Department of Environmental Protection, the Manatee County Port Authority, and the site’s owner, HRK Holdings LLC, are all named as defendants.

Neither DeSantis’ office nor an HRK Holdings spokesman immediately responded to a request for comment.

A class action lawsuit was already filed against property owner HRK Holdings in April in the Twelfth Judicial Circuit of Florida in Manatee County Circuit Court (GM April 30, p. 30).

Karnalyte Resources Inc. – Management Brief

Management Briefs

Karnalyte Resources Inc.’s Board of Directors has decided to expand its composition to five directors. Those standing for election at the June 29, 2021, shareholder meeting include:

Vishvesh Nanavaty, Gujarat State Fertilizer and Chemicals Ltd. (GSFC) Executive Vice President of Finance and CFO; Dilip Pathakjee, GSFC Vice President of Materials Management; Gerald Scherman, former Senior Vice President and CFO of AREVA Resources Canada Inc. (now Orano Canada Inc.); D.C. Anjaria, former Citibank Vice President; and Derek Hoffman, attorney with Hoffman Group.

Nutrien Boosts K Production Again; to Set New Annual Sales Record; Increases EPS Guidance

Featured, News, Potash, Saskatchewan

Nutrien Ltd., Saskatoon, on June 22 said in response to continued tightening in global potash market conditions, it plans to produce another 500,000 mt of potash, which is in addition to the 500,000 mt increase announced on June 7, 2021 (GM June 11, p. 1).

As a result, it now expects to produce 1 million mt of incremental potash in 2021 compared to expectations earlier this year. The majority of the increased production is expected to occur in the fourth quarter, with some of these additional mt expected to be sold in early 2022.

The Nutrien increases soon followed The Mosaic Co.’s announcement that it would be cutting production by 1 million mt through March 2021 due to the earlier-than-expected idling of the K1 and K2 shafts at Esterhazy (GM June 4, p. 1). News of the latest 500,000 mt increase came as the European Union was advancing sanctions on Belarusian potash (see related story).

Nutrien said the updated guidance for potash sales volumes in 2021 is 13.3-13.8 million mt, which would exceed the company’s previous record-high for annual sales volumes of 13 million mt set in 2018.

In addition, Nutrien increased its first-half 2021 earnings per share (EPS) guidance given the strength in global fertilizer markets and strong operational results. First-half 2021 adjusted net EPS is expected to be $2.30-$2.50, up from the previous guidance of $2.00-$2.20.

“The quality and breadth of our integrated network, combined with unparalleled expertise in potash mining and an exceptional transportation and logistics system, helps ensure our customers have the crop inputs they need to feed a growing world and drives tremendous shareholder value,” said Nutrien President and CEO Mayo Schmidt.

“With continued strength in global agriculture and crop input markets, we are raising guidance and expanding our potash production by a total of 1 million mt to ensure farmers get the potash they need,” he added.

Karnalyte Eyes Cost Cuts, N&K Partners

News, News Briefs, Nitrogen, Potash, Saskatchewan

Junior potash and nitrogen producer Karnalyte Resources Inc., Saskatoon, said on June 23 that results from its recently completed strategic review, completed by MNP LLP, show that going forward it needs to cut costs and find partners for its proposed Nitrogen Project and Wynyard Potash Project.  

The review recommended the company transition Karnalyte to a low-cost operation by developing and implementing a minimum cash flow budget to preserve available cash for investment in seeking out strategic industry partners. It said the company needs to investigate alternative sources of funding to extend its operational runway, monetize existing assets to preserve a financial and liquidity foundation, and maintain the minimum requirements to sustain an exchange listing.

In response, management said it intends to investigate alternative sources of funding, divest certain assets not essential to the potash project, reduce general and administrative expenses, and potentially move Karnalyte to the TSX Venture Exchange to reduce the higher regulatory and cost burdens on the TSX.

The review said the Nitrogen Project is high risk without both an offtake agreement and a joint or independent capital investment given the current market and competitive conditions. Current major Karnalyte shareholder India’s Gujarat State Fertilizer and Chemicals Ltd. (GSFC) has indicated it is not in a position to act as lead partner on the project, but that it stands willing to act as a technical advisor, drawing on its experience as the operator of nitrogen production facilities. Plans are for the small-scale project to produce 700 mt/d of ammonia and 1,200 mt/d of urea.

In addition, per the recommendations of the report, the company will continue to seek out and attract a major industry partner with a sound financial position and long-term strategic vision to assist with the Wynward Potash Project.

Despite improvement in supply and demand and prices in the potash industry, the review also cited unfavorable market conditions as current potash prices, low interest from financial institutions, and the limited capacity from the company’s own shareholder group. Current shareholder GFSC has an agreement to take 56 percent of the project’s offtake over 20 years of phase 1 production (625,000 mt/y).

Despite the increase in potash prices in 2021 and expectations that demand will continue to grow through 2030, the review also said the market is expected to be in a prolonged state of oversupply from new mines in Belarus, Russia, and Canada (BHP Jansen).

Northern Nutrients to Build Sulfur-Enhanced Urea Plant in Saskatchewan

Featured, News, Saskatchewan, Specialty, Sulfur, Urea

Northern Nutrients Ltd., a crop nutrition company based in Saskatoon, Sask., announced on June 24 that it plans to build a manufacturing facility for sulfur-enhanced urea that will utilize Shell Thiogro technology, a patented process that incorporates micronized elemental sulfur into urea.

Construction at a site outside of Saskatoon will begin in July 2021, with expected completion in early 2022. Ross Guenther, President and Co-owner of Northern Nutrients, said the plant will have a production capacity of 56,000 mt/y, with 7,000 mt of onsite storage. Northern Nutrients is licensing the Shell Thiogro technology, and has been importing patented Shell sulfur urea into North America for three years.

“The adoption of the products by producers and the anticipated increasing demand has convinced us to produce our own form of the sulfur-enhanced urea in Canada,” Guenther said, noting that usage of the product among Northern Nutrients’ customers in North America has increased 15-fold since the first commercial season in the spring of 2019.

“We first tried the sulfur product three years ago, and all our growers who have tried it have increased their acres and moved all of their sulfur requirements over to the Shell micronized sulfur urea product,” said Northern Nutrients Co-owner Matt Owens. “They like the product (11-0-0-75) because it is readily available to the plant early and throughout the growing season, it mixes well in any dry blend, and it has a low salt index compared to other forms of sulfur.”

Rob Owens, another co-owner of Northern Nutriens, who also serves as President and General Manager of Emerge Ag Solutions, an independent crop input retail business in Eston, Sask., said the lower salt index in the product is a good fit for Western Canada. He added that the product is much less dusty than ammonium sulfate, and can be applied safely in the seed row, resulting in time savings for growers.

“Once we saw how our customers responded to it, we thought we’d like to invest in the company, so we are very optimistic about what the sulfur product and the new phosphorus product could mean for farmers,” he said. “We are very excited to bring these products to dealers and farmers in the West.”

Northern Nutrients was founded in the Netherlands in 2016 as a distributor of low salt and sustainable fertilizers. The Canada-based company Northern Nutrients Ltd. began operations in 2018 as the North American marketing and distribution partner for Korean sulfur-based fertilizer producer H Sulphur’s Super S (11-0-0-75) sulfur and urea fertilizer product (GM June 29, 2018).

Houston-based Shell launched its UreaPlusS sulfur-enhanced urea in 2015 (GM May 18, 2015), following the earlier release of its Thiogro phosphates technologies, which enables producers to incorporate micron-sized particles of elemental sulfur and other nutrients into products such as MAP, DAP, TSP, and NPKs.

Alberta Carbon Grid Could Benefit Province’s Fertilizer Producers

Alberta, News, News Briefs

Pembina Pipeline Corp. and TC Energy Corp., both based in Calgary, Alta., have announced plans to collaborate on a massive carbon transportation and sequestration infrastructure project that will be able to transfer more than 20 million mt of carbon dioxide per year when completed, potentially having a significant impact on Canadian fertilizer operations.

Both major energy companies operate pipeline networks that transport crude oil, natural gas, and liquid natural gas. Pembina recently agreed to acquire Inter Pipeline Ltd., a Calgary multinational petroleum transportation and infrastructure company, for approximately C$15.2 billion.

TC Energy announced on June 9 that its controversial $8 billion Keystone XL Pipeline connecting the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, plus oil tank farms in Oklahoma, has been officially terminated after U.S. President Joe Biden signed an executive order in January revoking its permit.

The Pembina/TC Energy CO2 distribution project will be built around a new sequestration hub called the Alberta Carbon Grid (ACG), which will connect existing pipelines through an open-access system linking the Fort McMurray region, the Alberta Industrial Heartland, and the Drayton Valley region. The first ACG phase tentatively will operate as soon as 2025, with project completion set for 2027.

The grid would connect Alberta’s largest sources of industrial emissions to a sequestration location northeast of Redwater. Future legs could extend to Joffre, Christina Lake, Cold Lake, or Swan Hills.

There is a great deal of fertilizer production located in Alberta, including Redwater and Joffre (Nutrien Ltd.) and Fort McMurray (Chemtrade Logistics Income Fund).

The open-access system is designed to scale up to more than 60,000 mt of CO2 per day capacity, or 20 million mt per annum, representing about 10 percent of Alberta’s industrial emissions.

“Pembina is proud of our commitment to all stakeholders and pleased to leverage our expertise to provide a key market solution toward a lower carbon economy with another industry leading partner,” Pembina CEO Mick Dilger said, noting the project will stimulate economic development across Alberta, provide high-value economic opportunities, lower emissions, and use existing infrastructure to decrease environmental impact.

TC Energy CEO/President François Poirier said, “It is innovative partnerships like this that excite me about our collective energy future. Industry players collaborating to leverage our existing energy infrastructure and expertise to support meaningful emission reductions and reduce our carbon footprint is a great example of how we can secure meaningful new investment opportunities, serve current and future customers and achieve operational excellence while continuing to safely and responsibly deliver the energy people need.”

Canada’s enhanced climate targets include a 45 percent reduction in greenhouse gas emissions below 2005 levels by 2030.

A coalition of leading Canadian oil sands producers also announced they were cooperating to achieve net-zero greenhouse gas emissions from their operations by 2050 as they face challenges in meeting Canada’s energy transition target, after the governments of Canada and Alberta introduced substantial relief packages for emission-reduction projects. Participants include Suncor Energy Inc., Canadian Natural Resources, Cenovus Energy, Imperial Oil Limited, and MEG Energy.

Alberta is a global leader in Carbon Capture, Utilization, and Storage (CCUS) technology, with more than $1.24 billion committed to the emissions reduction technology that is considered cost-effective and environmentally tangible.

Yara International ASA – Management Brief

Management Briefs, Scandinavia

Yara International ASA, Oslo, on June 23 announced new appointments to its Group Executive Board effective July 1, 2021, aimed at strengthening the company’s transformation focus and portfolio development.

Lars Røsæg has been appointed EVP Corporate Development & Deputy CEO. He has served as EVP & CFO since November 2018. In this new role, Røsæg will be responsible for overseeing operations and capital allocation across the company, as well as Yara’s Strategy, M&A, Portfolio Development, Corporate Communications, and Corporate Affairs functions.

Thor Giæver has been appointed EVP & CFO. He has served as SVP Investor Relations since 2011, and has previously held the positions of Acting CFO (2014-2015) and Head of Controlling & Risk Management (2009-2011), having joined the company in 2004. Giæver will be responsible for Corporate Finance, Market Intelligence, Investor Relations, Accounting, Funding, Treasury, Insurance, and Sustainability Governance functions.

“These changes to our Group Executive Board will strengthen our transformation focus, in line with our corporate strategy and capital allocation policy,” said Yara President and CEO Svein Tore Holsether.

Mónica Andrés has been appointed EVP Europe. Andrés is currently VP Farming Solutions Europe and a member of the Yara Europe regional leadership team with the overall responsibility for shaping Yara Europe’s strategic agenda, and has previously held several leading commercial and operational positions in the company, including SVP Business Unit Asia and Commercial Director Mediterranean.

Solveig Hellebust has been appointed EVP People, Process and Digitalization. Hellebust has served as Yara’s Chief HR Officer since December 2020, before which she was Group EVP People & Operations in DNB. She has previously held senior roles in Pronova BioPharma and Telenor. Hellebust will have overall responsibility for Yara’s people and competence development, and for the data architecture and infrastructure to enable the digitalization of Yara’s core processes and operations.

CNH Industrial to Acquire Raven Industries, Expand Precision Ag Portfolio

London, News, News Briefs

London-based CNH Industrial N.V. on June 21 announced that it has entered into an agreement to acquire 100 percent of the capital stock of precision ag company Raven Industries Inc. for $58 per share, representing a $2.1 billion enterprise value and a 33.6 percent premium to the Raven Industries four-week volume-weighted average stock price.

CNH said the acquisition builds upon a long partnership between the two companies, and will enhance its position in the global agriculture equipment market by adding innovation capabilities in autonomous and precision agriculture technology. CNH said the transaction will be funded with available cash on hand.

Closing is expected to occur in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including approval of Raven shareholders and receipt of regulatory approvals. Raven is headquartered in Sioux Falls, S.D.

“Precision agriculture and autonomy are critical components of our strategy to help our agricultural customers reach the next level of productivity and to unlock the true potential of their operations,” said Scott Wine, CEO of CNH. “Raven has been a pioneer in precision agriculture for decades, and their deep product experience, customer driven software expertise, and engineering acumen offer a significant boost to our capabilities.”

“Our board and management are excited about this partnership and what it means for our future,” said Dan Rykhus, President and CEO of Raven. “We look forward to CNH Industrial leveraging the Raven talent and culture, as well as the Sioux Falls community, as part of their vision and future success.”

Raven is a global technology partner for key strategic OEMs, agriculture retailers, and dealers. The company is organized into three business divisions: Applied Technology (precision agriculture), Engineered Films (high-performance specialty films), and Aerostar (aerospace). The company posted consolidated net sales of $348.4 million for the twelve months ended Jan. 31, 2021.

CNH said it plans to undertake a strategic review of each business to best position them for future success and maximize shareholder value. The transaction is expected to generate approximately $400 million of run-rate revenue synergies by calendar year 2025, resulting in $150 million of incremental EBITDA.

Raven joins a stable of ag companies in CNH’s portfolio, including Case IH, New Holland Agriculture, and Steyr. CNH also owns Case and New Holland Construction for earth moving equipment; Iveco for commercial vehicles; Iveco Bus and Heuliez Bus for buses and coaches; Iveco Astra for quarry and construction vehicles; Magirus for firefighting vehicles; Iveco Defense Vehicles for defense and civil protection; and FPT Industrial for engines and transmissions.

Fertilizer Maker Fined $25,500

News, News Briefs, Pacific N.W.

The Washington Department of Ecology, Spokane, reported on June 21 that it has fined Pacific Northwest Solutions, a Pasco fertilizer manufacturer, $25,500 for operating a mobile fertilizer reactor without an air quality permit. The penalty is the third in the past two years for the company, which was previously fined $5,000 in 2019 and again in 2020, both times for failing to properly test their equipment to ensure it met air quality emissions standards.

The $25,500 penalty was issued after an Ecology inspector found a Pacific Northwest Solutions’s mobile fertilizer reactor operating without a permit on March 8, 2021, at a site near Moses Lake. An investigation found that the reactor produced a total of 650 tons of ammonium polyphosphate liquid fertilizer over three days.

Pacific Northwest Solutions can appeal the penalty within 30 days.

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