All Posts from October 26, 2018

Muriate of Potash

Brazil, Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, Potash, Potash Muriate, Southeast Asia, U.S. Gulf, Western Cornbelt

U.S. Gulf:

NOLA prompt potash barge prices were a bit firmer, with sources quoting the market at $285-$290/st FOB, up from the week-ago $282-$285/st FOB. Others were quoting $295-$300/st FOB, but sources said those prices were before heavy discounts or upriver.

Eastern Cornbelt:

Potash was pegged at $310-$325/st FOB in the Eastern Cornbelt, with the lower end confirmed in the Illinois market for new sales and the high out of inland warehouses in the region. Potash pricing FOB Cincinnati was reported at $315-$320/st FOB at midweek.

Producer postings remained in the $320-$330/st FOB range in the region. There were reports of brisk fall potash movement in parts of Illinois in late October, along with tightening inventories at some locations.

Western Cornbelt:

Potash was quoted at $310-$320/st FOB in the Western Cornbelt, with the low end of the range reflecting another increase from last report. The St. Louis market continued to be reported at $310-
$315/st FOB, while Catoosa/Inola potash pricing had reportedly firmed to $310-$320/st FOB in late October.

Northern Plains:

Sources quoted the potash market at $310-$320/st FOB the Twin Cities, up a full $15/st from late September levels. The Saskatchewan mine price was reported at $280-$290/st FOB after netbacks, depending on grade, also reflecting an increase following higher producer postings earlier in October.

No current rail-DEL potash prices were confirmed in the Northern Plains in late October.

Great Lakes:

Potash pricing in the Great Lakes region was up from last report. Sources quoted the low end of the regional market at $315-$320/st FOB in Wisconsin, with Michigan warehouses reported at $325/st FOB for red and $329/st FOB for white granular tons.

Northeast:

Potash was tagged at $320-$325/st FOB and $340-$350/st DEL in the Northeast, with the East Liverpool warehouse market quoted firmly at the $325/st FOB level in late October.

Southeast Asia:

In Indonesia, sources said Petrokemia Gresik has finally made awards to a number of suppliers under its import tender for standard potash. Unconfirmed reports indicate a price of $315/mt CFR has been negotiated, and if confirmed, provides further confirmation of the strong potash market in the region.
Supplier sources recently indicated that they were targeting around $320/mt CFR for standard material for fourth quarter Indonesian business (GM Oct. 19, p. 15).

Petrokemia Gresik did not specify the quantity of potash it required under its tender, but is reported to have made awards for possibly as much as 400,000 mt of standard material for delivery from November 2018 through April 2019.

Under its previous tender in February, Petrokemia Gresik was reported to have paid prices ranging from $280/mt CFR up to the mid- to high-$280s/mt CFR (GM Feb. 16, p. 14).

The results of this latest tender will no doubt provide suppliers with fresh upward price impetus. Awards under another key Indonesian import tender from Sinar Mas are still awaited.

Brazil:

Sources reported strong demand and tight availability for granular tons in Brazil. Prices this week continue to be quoted in the $350-$370/mt CFR range. Belarus Potash Co. (BPC), which first concluded granular business at $370/mt CFR in late September/early October, said it is targeting $370/mt CFR as a minimum.

CVR Shrinks 3Q Loss; Improved Operations, Better Pricing Reported

Featured, News

CVR Partners LP, Sugar Land, Texas, reported a third-quarter net loss of $13.1 million ($0.12 per unit) on net sales of $79.9 million, compared to a year-ago net loss of $31.6 million ($0.28 per unit) on net sales of $69.4 million. Adjusted EBITDA was up at $18.6 million from the year-ago $5 million.

“We are pleased to report strong operating performance and improved fertilizer netbacks at both our Coffeyville, Kan., and East Dubuque, Ill., fertilizer facilities during the 2018 third quarter,” said Mark Pytosh, CVR CEO. “Market conditions have continued to improve since summer, and we are seeing strong global demand for nitrogen fertilizer. In addition, product pricing for the late fall of 2018 has increased by approximately 25 percent from the summer fill season, and we’re seeing continued pricing strength into the first quarter of 2019.”

CVR Partners said it will not pay a cash distribution for the 2018 third quarter, though it said in its teleconference that improving market conditions may give it the opportunity to return to making cash distribution in the future.

The company said it intentionally sold less product into the fill program this summer, as did some of its competitors. As a result, it said it has continued to see steady demand throughout the fall, as well as rising prices. It said prices recognized in the fourth quarter will be a blend of fill prices and higher prices. Pytosh said customers are buying more ratably than in the past because they can pull from domestic plants and not worry so much about any time lag from imports. The company said it still has product to sell in the fourth quarter.

As for the coming season, CVR expects to see good demand from its East Dubuque plant due to a switch from soybeans to corn. It also expects to have more ammonia available for the fall application season, compared to the year-ago season. CVR said the Coffeyville plant should benefit from more acres going into increased wheat plantings.

Despite the improved third-quarter, CVR posted a larger loss for the first nine-months at $48.6 million ($0.43 per unit) on sales of $253 million, compared to the year-ago loss of $45.4 million ($0.40 per unit) and $252.6 million, respectively. Adjusted EBITDA was about level at a positive $57.7 million, compared to the year-ago $58.1 million.

Sales 000 st 3Q-18 3Q-17 9M-18 9M-17
Ammonia 38 65 156 202
UAN 310 299 925 952
Plant gate prices $/st
Ammonia 297 214 329 287
UAN 170 138 169 158
Production
Ammonia (gross) 212 181 584 615
Ammonia (net) 63 46 187 204
UAN 338 307 919 962
Input Costs – Used in Production
Natural Gas (mmBtu) 3.03 3.12 3.01 3.25
Petcoke $/st 26 18 23 18
Onstream Factors – Percent
Coffeyville
Ammonia 100 94 90 97
UAN 97 94 88 93
East Dubuque
Ammonia 99 76 93 92
UAN 98 77 93 92

 

 

CF to Use Simplot’s Rivergate Terminal for NH3 Distribution

Ammonia, Featured, News, Urea

CF Industries Holdings Inc., Deerfield, Ill., and Boise, Idaho-based J. R. Simplot Co. announced on Oct. 22 that they have entered into an agreement that allows CF to ship, store, and distribute anhydrous ammonia from Simplot’s Rivergate Terminal in Portland, Ore., starting in 2019.

Simplot’s Rivergate facility is the largest deep water ammonia terminal on the U.S. West Coast, and has two 25,000 st ammonia storage tanks. The terminal is located on the Willamette River in Portland, approximately 2.5 miles upstream from its confluence with the Columbia River.

CF said the arrangement will enable it to meet growing demand for anhydrous ammonia in Pacific Rim countries, a region that imported more than 4.1 million mt of ammonia in 2017. CF said it intends to supply ammonia to Rivergate from its Medicine Hat, Alta., nitrogen complex, which the company noted has some of the lowest production costs in its manufacturing network.

CF did not specify the total annual ammonia volumes it plans to distribute through Rivergate, but the company added that it also anticipates selling ammonia to “local customers” from the terminal.

“We are delighted to partner with our customer, J. R. Simplot Co. at Rivergate, to further expand CF’s best-in-class ammonia distribution capabilities and leverage our Medicine Hat complex’s low cost production and logistics advantages,” said Bert Frost, CF’s senior vice president of sales, market development, and supply chain. “Through this state-of-the-art, multi-mode point of sale, we will increase our ability to serve customers on the Pacific Rim, a region whose consumption is growing and imports account for over 25 percent of global seaborne ammonia trade.”

Simplot purchased the Rivergate Terminal in 2000. In addition to the ammonia tanks, Rivergate also has extensive urea storage capacity, with two warehouses rated at 30,000 st and 40,000 st, respectively. Rivergate has two rail and two truck loading stations from which Simplot ships urea to markets throughout Western North America.

Simplot also operates a new 600 st/d ammonia production facility at its Rock Springs, Wyo., phosphate fertilizer complex (GM Sept. 29, 2017), which the company said will enable it to produce its own ammonia for nitrogen fertilizer production rather than importing it. The Rock Springs plant also produces MAP, phosphoric acid, and fluorosilicic acid, and has 18,000 tons of ammonia storage and 80,000 tons of dry fertilizer storage capacity.

“We are excited about this opportunity to partner with CF Industries to leverage available capacity at our Rivergate terminal, a key asset in our supply chain,” said Doug Stone, president of Simplot’s AgriBusiness Group. “With the commissioning of the anhydrous ammonia plant at our Rock Springs facility, the opportunity to provide available storage and warehousing of ammonia became a mutually beneficial arrangement with one of our long time partners, CF Industries.”

CF’s Medicine Hat manufacturing facility will also be supply an additional 150,000 st/y of ammonia to the company’s distribution terminal in Garner, Iowa, according to an August announcement from CF (GM Aug. 10, p. 1). Total ammonia and urea production capacity at Medicine Hat is estimated at up to 1.5 million mt/y.

Nutrien Closes Sale of Equity Position in APC

China, Featured, News, Potash, Saskatchewan

Saskatoon-based Nutrien Ltd. announced on Oct. 24 that it has completed the sale of its minority equity investment in Arab Potash Co. (APC) to China’s state-owned SDIC Mining Investment Co. Ltd., Beijing, for gross proceeds of $502 million.

Completion of the APC sale was required by the Competition Commission of India and Ministry of Commerce in China in providing their clearance for the merger of Agrium Inc. and Potash Corp. of Saskatchewan Inc. to form Nutrien. APC is a traditional supplier of potash to China, agreeing to sell about 700,000 mt/y in a contract inked last year (GM Aug. 3, 2017).

Nutrien announced in July (GM July 27, p. 1) that it had entered into a definitive agreement with SDIC to sell its 23,294,614 common shares of APC, which represent the entirety of Nutrien’s 28 percent holdings in APC. Nutrien was the largest APC shareholder, according to Bloomberg, while others include the Government of Jordan at 26 percent, Arab Metals Co. at 20 percent, Social Security Corp. at 10.4 percent, and the Government of Iraq at 4.7 percent.

Headquartered in Amman, Jordan, APC said it is the eighth largest potash producer worldwide. Capacity is put at approximately 2.5 million mt/y, according to the Green Markets Global Potash Quarterly. The company in early August (GM Aug. 3, p. 29) posted first-half net profits after tax of JD52.7 million ($74.3 million) on revenues of JD227 million, with six-month potash production volumes reported at 1.21 million mt. APC reported that 37 percent of its first-half potash sales this year went to China and India.

MMLP to Acquire Martin Truck

News, News Briefs

Martin Midstream Partners LP (MMLP), Kilgore, Texas, announced on Oct. 24 that it has reached an agreement with Martin Resource Management Corp. (MRMC) to acquire Martin Transport Inc. (MTI) for $135 million, with $125 million of this cash and $10 million debt. There is also a potential additional $10 million earn-out based on a performance threshold.

MTI, incorporated in 1988, transports molten sulfur, sulfuric acid, resins, and petroleum products, including crude oil, lube oil, solvents, and asphalt, as well as pressurized liquids such as propane, butane, LPG, and LNG. MTI owns 23 terminals located throughout the Gulf Coast and Midwest, and as of September 2018 had 561 trucks and 1,307 trailers. MRMC has owned and operated MTI or its predecessor for over 40 years, and is integral to MMLP’s routine movements of sulfur and NGL’s.

MMLP noted the acceleration in tank truck demand growth over the past 18 months. It said the purchase integrates with core businesses to ensure customer needs are met in a tight transportation market. MMLP was 22 percent of MTI revenue in 2017, and the general partner was 7 percent.

In total, MTI’s top 10 customers, a significant portion of whom are investment grade, make up 75 percent of revenues. MMLP said MTI had been recapitalized between 2012-16 and it will reap the benefits over the next few years with a low mileage fleet of trucks and trailers.

“Based on operational estimates and current transportation market conditions, this acquisition from our general partner will provide strategic long-term growth for the partnership,” said Ruben Martin, Martin Midstream GP LLC president and CEO. “In the first twelve months of operation, the acquisition is expected to contribute approximately $23.6 million and $14.7 million of EBITDA and distributable cash flow, respectively, to the partnership. This will drive our estimated distribution coverage ratio to approximately 1.20 times by year-end 2019, which forms the basis for management’s continued support of the current distribution level.

“Further, due to continued rising line haul rates combined with MTI’s available truck capacity, we estimate net income, EBITDA, and distributable cash flow attributable to MTI to grow to approximately $17.0 million, $33.2 million, and $20.9 million, respectively, for the year of 2022. In addition, this drop down will provide stability in our quarterly cash flows to offset the seasonal nature of our fertilizer and butane businesses. We expect this transaction to close in January of 2019.”

MMLP said the price paid for MTI reflects an EBITDA multiple between 5.7 times and 6.0 times based on MTI’s forecasted 2019 net income of $9.3 million and EBITDA of $23.6 million. The acquisition will be funded from MMLP’s revolving credit facility, allowing it to redeploy much of the $193.7 million in net proceeds received when it sold its interest in the West Texas LPG Pipeline LP (WTLPG) on July 31, 2018.

The company said despite redeploying capital of only 70 percent of the net proceeds received for the WTLPG interest, the acquisition is estimated to generate roughly $16 million of additional incremental EBITDA in 2019 over the average historical cash flows received from WTLPG.

Salt Lake Potash Ltd. – Management Brief

Australia, Management Briefs, Specialty, Sulfate of Potash

J

Junior sulfate of potash (SOP) producer Salt Lake Potash Ltd., Perth, Western Australia, reports that Tony Swiericzuk will join the company on Nov. 5 as managing director and CEO. He recently spent nine years with Fortescue Metals Group, East Perth, Western Australia, including stints as director business development and exploration, general manager Christmas Creek Mine, and general manager of port operations. He holds an Honors Degree in Mining Engineering from The University of Queensland, an MBA from Deakin University, and is a graduate of the Australian Institute of Company Directors.

Salt Lakes said current CEO Matthew Syme has been integral to Swiericzuk’s appointment and will remain a director and consultant to the company, ensuring a seamless handover.

“We are delighted to have secured the services of an outstanding mining executive to lead the company into development and production at the Goldfield Salt Lakes Project (GSLP),” said Ian Middlemas, Salt Lake Potash chairman. “Tony’s skills base is ideal for us and not easy to find, so we are particularly pleased that he has accepted the role based on his enthusiasm for the sector, absolute belief in the quality of the GSLP assets, and strong determination to develop the first salt lake SOP operation in Australia.”

“I would also like to pay tribute to outgoing CEO Matt Syme, who has done a superb job to get the company to this stage, accumulating a formidable portfolio of salt lake properties and managing the critical early days of technical achievement and team and relationship building to get us to where we are today.

“An exciting new chapter is commencing for the company,” Syme continued. “With a new CEO committed to deliver the GSLP fast and at low cost, and our offtake relationships with Mitsubishi and Sinofert in place, we are now poised to deliver on the significant potential of this project for our shareholders and stakeholders.”

SQM – Management Brief

Chile, Management Briefs, Specialty

SQM, Santiago, said on Oct. 24 its board of directors requested that CEO Patricio de Solminihac Tampier´s resignation become effective on Jan. 7, 2019, instead of Dec. 31, 2018, as was previously announced in July (GM July 27, p. 24). SQM said the change is to insure a smooth transition. Consequently, the board agreed that the nomination of CFO Ricardo Ramos as CEO become effective Jan. 8, 2019.

American Plant Food Corp. – Management Briefs

Management Briefs

American Plant Food (APF) Corp., Galena Park, Texas, on Oct. 25 announced the creation of several new key positions to help manage growing volume and expansion.

Loran D. Thom will join APF effective Nov. 1, 2018, as the Western Regional Director. He will be responsible for business strategies, national accounts, and ammonium sulfate sales in the west. Thom comes to APF after 30-plus years of management experience in sales, supply, and distribution, and recently served eight years as the Northwest Regional Director for CHS Inc. He will continue to reside in Lemmon, S.D., and can be contacted at 605-228-2811.

Spencer Tibbitts has joined APF as an agronomist, and will help develop APF’s portfolio of plant nutrition and bio stimulant products. He spent the last seven years working in research and agronomy roles across the Midwest and Western U.S. regions.

Josh Ogden has been appointed as Turf and Ornamental Director at APF. Ogden’s 25-year work history includes diverse management roles in specialty, turf, and professional products including fertilizers, chemicals, wetting agents, and adjuvants. He also spent more than a decade in the golf and lawn care markets with businesses such as Trugreen and the PGA Tour.

John Cantrell has joined APF as regional sales representative in the Fort Worth, Texas, area. Cantrell’s previous work experience includes roles in sales, operations, and agronomy with retail agriculture businesses in the Texas panhandle.

“This is an exciting time for American Plant Food and our new team members,” said Toby Hlavinka, APF president and CEO. “We are experiencing a period of incredible growth through the expansion of our product lines, as well as entering new markets. As we do so, we are creating a forward-looking team to find innovative ways to serve our customers.”

California Judge Reduces Damages in Roundup Case

California, News, News Briefs

A California judge on Oct. 22 reduced the damages awarded in a landmark lawsuit brought by California landscaper Dewayne Johnson against Monsanto Co. A jury in San Francisco’s Superior Court of California ruled on Aug. 10 (GM Aug. 17, p. 29) that Bayer AG, which recently acquired Monsanto for $66 billion, must pay $289 million in damages to Johnson, who alleged in a lawsuit that RoundUp herbicide caused his cancer.

San Francisco Superior Court Judge Suzanne Ramos Bolanos on Oct. 22 reduced the punitive damages from $250 million to $39.25 million, however, and left the $39.25 million compensatory damages unchanged.

In her decision, Bolanos upheld the jury’s findings that Bayer acted with malice by failing to warn Johnson and other consumers of the cancer risks posed by Roundup, but said punitive damages more than seven times as large as the compensatory award aren’t legally justified. Instead, she said that under constitutional law, the ratio should be 1-to-1.

The judge set a Dec. 7 deadline for the plaintiff to accept a total of $78.6 million. If Johnson rejects it, Bayer is entitled to a new trial on punitive damages, she said.

“Although we believe a reduction in punitive damages was unwarranted and we are weighing the options, we are pleased the court did not disturb the verdict,” the law firms of Michael Baum and Michael Miller, Johnson’s attorneys, said in a statement. “The evidence presented to this jury was, quite frankly, overwhelming.”

Bayer, which currently faces more than 8,700 Roundup-related cases, called the reduction in punitive damages “a step in the right direction,” but said in a statement that it plans to file an appeal with the California Court of Appeal because it believes “that the liability verdict and damage awards are not supported by the evidence at trial or the law.”

“Glyphosate does not cause cancer,” Scott Partridge, a vice president at Monsanto, said in an August statement posted on the company’s website. “The jury got it wrong. We will appeal the jury’s opinion and continue to vigorously defend glyphosate, which is an essential tool for farmers and others.”

 

Karnalyte Provides Update on Nitrogen Project

Ammonia, Midwest, News, News Briefs, Saskatchewan, Urea

Karnalyte Resources Inc., Saskatoon, said on Oct. 22 it continues to explore the development of the Proteos Nitrogen Project (GM May 18, p. 1) in Central Saskatchewan. “We are very pleased with the interest shown by the technology providers/contractors in our Proteos Nitrogen Project, as well as the positive first phase independent market study, both of which support and confirm our decision to pursue the development of the project,” said Frank Wheatley, Karnalyte president.

Karnalyte said it has received a total of eight expressions of interest (EOIs) from a select group of international technology providers and engineering, procurement, and construction contractors, for developing the project on a lump sum turn-key basis. It, along with strategic partner and largest shareholder Indian nitrogen producer Gujarat State Fertilizers & Chemicals Ltd. (GSFC), is currently classifying these EOIs in order to short list the providers to receive a formal Request for Proposal (RFP) for development of the project on an EPC basis. The company is hoping to issue the RFP and locate a site for the plant in fourth-quarter 2018.

The small-scale nitrogen fertilizer plant would have a nameplate production capacity of approximately 700 mt/d of anhydrous ammonia and approximately 1,200 mt/d of urea. It would target a customer market of independent fertilizer wholesalers within a 400-kilometer radius of Saskatoon.

A secondary target market is U.S. Midwest fertilizer wholesalers near to the Canadian-U.S. border. The proposed plant would be the first greenfield nitrogen fertilizer plant built in Canada in the last 26 years.

In addition to the nitrogen project, Karnalyte owns the construction-ready solution mining Wynyard Potash Project, with planned phase 1 production of 625,000 mt/y of high grade granular potash, and two subsequent phases of 750,000 mt/y each, taking total production up to 2.125 million mt/y. The company said all environmental permits remain valid, preliminary detailed engineering is complete, and the existing offtake agreement with GSFC remains in effect. Further development is dependent on improved potash prices.

 

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