All Posts from March 26, 2007

Market Watch

AMMONIA

U.S. Gulf/Tampa: Yara has reportedly inked a deal to supply Mosaic with product in all of April at $360/mt DEL, which is down $10/mt from March. There were also reports of a new spot cargo being sold for the month at $363/mt DEL. Sources cited a decline in freight rates as one reason for the drop. In addition, Black Sea prices appear to be softening.

In the meantime, over at NOLA, a new barge sale was reported at $330/st FOB, down from the last reported $355/st FOB. Sources had been predicting a lower number in the area due to limited demand and equipment availability. In addition, price ideas for ammonia are off right now due to heavy rains in the Cornbelt. Ammonia suppliers worry that farmers will forego using NH3 in favor of other nitrogens.

Eastern Cornbelt: Rainy weather last week and extended forecasts for more of the same had some sources wondering if preplant ammonia volumes would see cuts in favor of later UAN applications. “Only problem is, where is the UAN to fill the void if growers don’t apply preplant ammonia?” asked one source.

Parts of the region saw steady ammonia activity at mid-month, and sources continued to report firm prices. The ammonia market remained at $470-$490/st FOB regional terminals, with most dealer quotes tagged at the $480/st FOB mark or higher. One supplier was offering forward contract ammonia for April in the $475-$485/st FOB range, with the low at Mt Vernon, Ind., and the high at Huntington, Ind.

Western Cornbelt: The anhydrous ammonia market was quoted at $455-$475/st FOB in the region, with the low in Nebraska for April forward contract tons and the high reflecting dealer pricing for cash market ammonia in Iowa. Reference prices were as high as $480-$490/st FOB out of some terminals. Sources reported strong ammonia movement in southwestern Missouri at mid-month.

California: The ammonia market remained firm at the $475/st truck-DEL mark in the state. Much of the state saw open field conditions last week. Sources in the Central Valley reported good nitrogen movement on almond trees, some prepping of corn ground, and also some topdress work on alfalfa.

Pacific Northwest: Delivered ammonia pricing had actually settled a bit from the previous range, mainly because of some actual movement to test the prices. The delivered price in Idaho and Montana was pegged as low as $444-$450/st last week, while elsewhere in the region the common dealer price for ammonia was a solid $475/st DEL. The last reference prices ranged as high as $495-$530/st DEL in the region, with the low in Montana and Wyoming and the upper numbers in Washington and Oregon.

Western Canada: While spring fieldwork was still on the horizon for most areas, the warmer weather certainly sparked some interest at mid-month, and sources continued to report firming fertilizer markets. Anhydrous ammonia pricing strengthened to $800-$844/mt DEL in the region as of March 16, up from the prior range of $773-$817/mt DEL.

Black Sea: The price has moderated according to Asian sources. While buyers are now saying the price is expected to drop to $270/mt FOB, traders say the price last week was closer to $275/mt FOB. Producers still rebuff offers of $273/mt FOB, but are willing to talk. One source noted earlier this month producers would not entertain any bid in the low-or-mid $270s/mt FOB. He figured that by the end of the month the $275/mt FOB bids will look good to the producers.

The tightness of the market in Asia and Middle East is evident by the buyers in Yuzhnyy. Sources report Mitsui is picking up tons in the area to cover its swap deals with Sabic. One observer noted that this action shows how tight the Mideast market is compared to Yuzhnyy.

Transammonia loaded a cargo last week. Sources are divided as to where the tons are going. One trader suggested the cargo was headed for India and then Taiwan. Another said the company was just taking a position.

Middle East: Nitrochem is supplying IFFCO/India with material out of Iran. Sources peg the material at $360-$365/mt CFR, for a netback just under $330/mt FOB.

Sources say producers in the area remain fully booked. Even with growing demand from India and Asia, the tons that are moving out are all under contract. Observers note the Iranian material was the only spot tonnage available.

With all the production tied up in contracts, sources are hard pressed to justify higher prices. The lack of any spot business among the main producers in the region convinces industry watchers the market is holding steady at $325-$330/mt FOB.

The Safco IV plant is down again. Sources say the facility went down as it was being handed over from the construction firm to Sabic. The exact reason for the shutdown was not clear to Asian sources. One industry observer familiar with the situation, however, said the shutdown was initially slated to repair a minor problem. Now, he says, Safco IV will be down into April.

The ups and downs of the Safco IV facility are a problem for Sabic, say sources. The tons that were supposed to have been sold from the plant are being covered by a swap deal with Mitsui. The Japanese trading house is said to be drawing ammonia from sources as diverse as Malaysia and Yuzhnyy.

Once the plant is fully running, sources now estimate it will be mid-June before the tons borrowed through the swap deal are paid back.

Asia: Suppliers to buyers in Taiwan and South Korea have been encouraging these buyers to accept lighter shipments. These entreaties are being just as quickly rejected. Sources say these end users are running at full capacity and need every bit of ammonia that is possible.

Reportedly, the natural gas line to Gresik in Indonesia has been repaired. Sources are split as to whether the plant is running at full capacity. One report has the facility edging upward to 60 percent of capacity by late last week. Another says the plant has not moved that far yet. Gresik was shut down following damage to a natural gas pipeline and a cutoff of natural gas because of a contract dispute. Efforts to divert gas from another state-owned ammonia producer to Gresik proved fruitless.

Now, say sources, the pipeline is fixed and some gas is flowing. Sources add, however, the country remains short of natural gas because of disputes between the national gas company and the international companies that control the gas fields.

The joint venture plants – KPI and KPA – remain untouched by the disputes. Sources say both are running at full capacity.

Malaysian facilities are also running at their top rate.

UREA

U.S. Gulf: Granular barges were holding in the low $360s/st FOB last week, though some were predicting they may go below the $360/st FOB mark by Friday. They say UAN demand has taken off, leaving urea in the back seat. Others noted that Black Sea prices have started to soften as well. Still others said the U.S. will be short on urea this year, and they were not looking for any major price erosion.

Actual business last week was called in the $360-$363/st FOB range for granular.

Eastern Cornbelt: Granular urea pricing was pegged at $400-$405/st FOB in the region.

Western Cornbelt: Granular urea was tagged at $395-$405/st FOB in the region, with most locations at the $400/st FOB mark or higher to the dealer. As with UAN, heavy urea movement in the Southern Plains and Mid-South regions have reportedly caused outages at some warehouses.

California: Urea pricing was up from last report. While one source claimed a $360/st FOB price was still viable last week, most others pegged the market firmly in the $385-$400/st FOB range, with delivered urea quoted at $405-$415/st. Agrium reposted granular urea on March 23 at $400/st FOB West Sacramento, $420/st truck-DEL in Central California, and $425/st truck-DEL in Northern California. Those levels represent a $40/st increase from the company’s Feb. 23 urea postings in the state.

Pacific Northwest: Granular urea was quoted at $410-$420/st DEL in Montana, and roughly $415-$430/st DEL in the rest of the region. One source speculated that tight inventories would drive the market to the $440/st DEL mark for the next round of sales. On an FOB basis, the regional market was pegged at $395/st on the low end. The most recent urea postings in the region included $415/st FOB, with delivered postings ranging from $402-$420/st, depending on location.

Western Canada: Granular urea was also on the rise, although critical supply issues that were reported three weeks ago due to temporary production outages and the CN Railway strike had reportedly eased somewhat in the region. The market was pegged at $550-$575/mt DEL, up from March 9 pricing that had included urea at $535-$560/mt DEL in the region. “Actually we are doing much better in terms of supply,” said one source. “I think, however, that pricing has definitely taken the brunt of the shortages, as product which was already spoken for got forced into alternate markets and had to be replaced with higher cost prompt tons.”

Black Sea: Sources said it would have to happen eventually. The price out of Yuzhnyy showed its first signs of softening last week. With India still out of the market, with Pakistan being covered by a deal with Saudi Arabia, and with buyers in Turkey and Latin America sitting on the sidelines, the producers are hard-pressed to justify additional price increases.

Earlier this month trader-to-trader business was pegged at $330/mt FOB and higher. Now that price has dropped to $320/mt FOB, with a further softening expected until India comes back into the market.

One trader noted that a bid of $320/mt FOB will be accepted in a New York minute. Because of the apparent willingness of producers to settle, buyers are now waiting to see what better deals might be possible. Some are said to be testing the waters closer to $300/mt FOB but are being shown the door.

One observer called the low end of the market closer to $310/mt FOB. Others were not so sure anything that low was actually concluded.

One observer noted the trick now is for buyers to know when to come back into the market. Coming in too early could result in being caught in a declining market with expensive material. Come in too late, and the buyer could be caught on the wrong side of a rising market.

The conventional wisdom is that as soon as IPL and MMTC of India announce their buying schedule, the price will shoot up.

Some in the industry are even predicting that after India settles its contracts the price may soften a little, but will not crash as it did during the last half of 2006.

Sources say India will need about 4 million mt between now and December. Had the Indian buyers started their plan of stretching out purchases across the months earlier, the price may have come off. Now, said one observer, the Indians will need close to 600,000 mt each month, with loadings starting in May.

The removal of that many tons from the market each month – along with whatever other deals take place – will be enough to put a solid floor under the price.

For now, however, the Yuzhnyy price remains over-valued when compared to the Mideast and Asian prices. Sources say the current prilled price out of China at $310-$315/mt FOB bagged means the Yuzhnyy price has to come down significantly.

Likewise, when compared to the Middle East price, the Black Sea producers are overpriced by at least $10/mt. One source said Yuzhnyy would have to drop to below $310/mt FOB to be competitive with the Middle East and Chinese tons.

Middle East: Try as they might, the producers cannot get the price to move up. In fact, said one observer, a softening is beginning to occur. One source noted that the producers could have pushed up the price by making a reasonable offer in the Iranian tender earlier this month. Instead, they tried to push the market up $20/mt overnight and the business went elsewhere.

The Indian buyers and Mideast producers remain at an impasse. The buyers are still calling for a formula pricing plan for contracted tons between now and December. Producers are asking for a firm price to be set now.

Saudi Arabia remains in a comfortable situation. It has a development deal with Pakistan that will ensure steady shipments of urea without TCP having to hold a public tender. Other producers may not be as fortunate as the Saudis, but none are hurting.

Sources say that even though the Black Sea price is dropping, the producers in the Mideast are not concerned. Reportedly, the producers might be willing to just move their product to warehouses and wait out the buyer if the price isn’t right.

For now, the price is showing a slight softness. The only real tons moving out are ones tied to earlier contracts. Observers say finding a new price in the absence of new spot business is difficult to confirm.

Indonesia: Indonesian suppliers may soon re-enter the export market. Sources say the Indonesian government is “about 99 percent ready” to issue export permits to PIM and Kaltim.

The first cargo of prills from PIM is expected to be offered for sale in early April. Sources estimate the selling tender will be for 20,000 mt. In the past, PIM – under the government’s guiding hand – divided the 20,000 mt lot into units more easily handled by local traders. These traders, in turn, will then offer the tons to international traders – after tacking on a couple of extra dollars. The smaller lots could most likely end up being 4-5,000 mt each.

International traders looking to move Indonesian material to major buyers will have to cut a deal with each of the local traders.

All told, sources say PIM and Kaltim should move out 150-200,000 mt of prills and granular by year’s end.

Sources say the government is willing to allow prills offshore because the Indonesian planting season was not up to expectations. The powers that be were convinced it would be better to sell the excess urea on the international market than to keep it locked up in local storage.

Vietnam: Importers are looking at the possibility of snagging some Chinese or Indonesian material if the price is right. Government officials estimate the country will need to import just under 1 million mt of urea this year. The real deciding factor will be how Phu My acts. The domestic urea producer has a habit of lowering its prices until imported urea is too expensive for the local market.

China: Sources report the dockside price is coming down. Prills and granular are now pegged at $310-$325/mt FOB bagged, with granular getting the lower price. The softening in prices around the globe might help buyers in Taiwan and South Korea, where demand for granular continues.

South Korea: Buyers continue to look for tons to satisfy their own domestic needs, as well as NPK production for shipment to North Korea.

NITROGEN SOLUTION

U.S. Gulf: Demand for UAN was reported to be surging last week, and several inland production points were said to be on allocation. As a result, barge pricing was moving up, with UAN being undoubtedly the hottest and most in demand nitrogen last week. Several players reported $238/st FOB ($7.44/unit) being achieved early in the week, with sellers soon moving price ideas into the $240s/st FOB. In fact, $246/st FOB ($7.69/unit) was reported toward the end of the week, with quotes then moving into the $250s/st FOB.

Imports into the East Coast were called in the $270s/mt DEL.

Eastern Cornbelt: UAN-32 was quoted at $268.80-$275.20/st ($8.40-$8.60/unit) FOB regional terminals. One supplier was reportedly referenced at the $8.50/unit FOB mark to wholesalers for the next round of business. Forward contract UAN-32 for April was referenced by one supplier at $273.80-$278.60/st ($8.56-$8.71/unit) FOB in the region, depending on supplier.

Western Cornbelt: UAN-32 was reported at $265.60-$275.20/st ($8.30-$8.60/unit) FOB regional terminals, with the upper end reflecting dealer reference pricing. One Iowa source quoted the dealer price last week firmly at the $268.80/st ($8.40/unit) FOB mark.

UAN supplies were on tight allocation in the Southern Plains region, with some suppliers there reportedly uncertain about meeting even prepay commitments. Terra reported minor plant interruptions at its Verdigris, Okla., plant from Sunday through Wednesday, prompting the company to go on truck allocation at both Verdigris and Woodward, Okla.

California: Sources tagged the UAN-32 market at $298-$310/st ($9.31-$9.69/unit) FOB and $315-$320/st ($9.84-$10.00/unit) DEL in the state, and in tight supply. Agrium’s UAN-32 postings moved on March 23 to $318/st ($9.94/unit) FOB Sacramento, $335/st ($10.47/unit) truck-DEL in Central California, and $340/st ($10.63/unit) truck-DEL in Northern California. That was the fourth pricing increase from the company since Feb. 26, and represents a $55/st increase from published prices at that time.

Agrium’s March 7 UAN-32 postings included $268/st ($8.38/unit) FOB Sacramento, $285/st ($8.91/unit) truck-DEL in Central California, and $290/st ($9.06/unit) truck-DEL in Northern California. On March 12, those reference levels moved to $283/st ($8.84/unit) FOB Sacramento, $300/st ($9.38/unit) truck-DEL in Central California, and $305/st ($9.53/unit) truck-DEL in Northern California. Another increase took place on March 21, with UAN-32 postings moving on that date to $298/st ($9.31/unit) FOB Sacramento, $315/st ($9.84/unit) truck-DEL in Central California, and $320/st ($10.00/unit) truck-DEL in Northern California.

Pacific Northwest: UAN-32 was generally quoted in the $280-$300/st ($8.75-$9.38/unit) DEL range in the region last week, and some were doubtful of the low end of that range as the week progressed. Sources talked of very limited inventories. “If you’re not in the plan, you don’t get any tons,” was how one source described the supply situation last week. With railcars increasingly tied up in the Midwest, transportation remained a key issue in the region.

Agrium’s March 21 UAN-32 included $280/st ($8.75/unit) DEL in Washington, northern Idaho, and Oregon excluding Malheur County, up $15/st from the company’s Feb. 21 list prices. Other UAN-32 postings in the region as of March 21 include $280/st ($8.75/unit) rail-DEL and $285/st ($8.91/unit) truck-DEL in southern Idaho, Nevada, Utah, and Oregon’s Malheur County, and $305/st ($9.53/unit) truck-DEL in Montana and northern Wyoming. Agrium’s March 21 UAN-28 postings included $269/st ($9.61/unit) DEL in Idaho, Montana, and northern Wyoming.

Western Canada: UAN-28 continued its upward march in the region, moving on March 16 to $341-$356/mt ($12.18-$12.71/unit) DEL, up from the prior range of $332-$347/mt ($11.86-$12.39/unit) DEL.

AMMONIUM NITRATE

U.S. Gulf: Barge price ideas spanned a broad range last week. While several players continue to call AN a ho-hum market in the $245-$250/st FOB range, there was one report of a sale late in the week as high as $255/st FOB.

Western Cornbelt: Ammonium nitrate was pegged at $295-$305/st FOB in the region, reflecting an increase from last report. Effective March 26, reference pricing for Terra will move to $295/st FOB Yazoo City, Miss.

Western U.S.: AN was steady at $327-$335/st DEL in the Pacific Northwest, with the upper end in Montana. CAN-17 was pegged at the $222/st rail-DEL mark in Washington. In California, the CAN-17 market was quoted at $220-$235/st FOB. AN-20 was reportedly referenced at $220/st DEL in the state.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate continued to be quoted in a wide range at $205-$225/st FOB in the region, but supplies were limited both for granular and mid-grade product, and no actual sales were confirmed at the upper end of that range.

Western Cornbelt: Granular ammonium sulfate remained at $200-$205/st FOB in the region, with tight supplies reported. Sources even talked of allocations on mid-grade sulfate last week.

California: Ammonium sulfate was pegged at $195-$210/st FOB in the state, with some claiming the low end of that range had firmed to the $200/st FOB level last week following supply outages at some shipping points.

Pacific Northwest: Most sources tagged the delivered price for granular ammonium sulfate firmly in the $210-$215/st range in the region last week. While some claimed tons could be had at lower levels in Idaho (with some quotes as low as $185-$195/st DEL last week), the higher numbers were much more prevalent in the region. Some in fact reported reference pricing as high as $225/st DEL, although these numbers were untested. Agrium’s March 9 ammonium sulfate postings included $210/st FOB warehouse and $215/st DEL in Washington, Oregon, Idaho, Montana, and Wyoming.

Western Canada: Granular ammonium sulfate was quoted at $323-$328/mt DEL in the region last week, but a $10/mt increase was reportedly slated for March 23.

PHOSPHATE

Central Florida: Mosaic and CF last week were offering DAP and other phosphates at reduced prices . . . for summer delivery. Mosaic’s price for selective customers for rail delivery between June and August was $360/st FOB, while CF was said to be offering July rail deliveries at $355/st FOB. Guess what? Sales were made at those prices, but the price was heading north for the same period this week, at least for Mosaic, although how much, had still not been decided. “They’re offering a fill program at those levels,” one amazed buyer noted. “Who would have thought that could happen (just a few months ago)? What does that say about the market?”

CF brought its Plant City phosphate processing plant back online after a turnaround, which one source said was done as quickly as possible, in order to get product out and sales and money flowing.

Meanwhile, inventories in Florida, the Gulf, and the rest of the world continued to be extremely low, while demand continued to be far greater than normal. The southern part of the U.S. remained short of supply and the northern areas have not even begun their season, but that should happen within the next week or two, weather depending. In the Northeast and Mid-Atlantic regions, snow turned to ice storms and then rain, so little – if any – field work had begun. Demand will continue to outstrip supply for the remainder of the season.

Commenting on market conditions, one trader said, “Anybody involved in the fertilizer business this year who doesn’t make record profits is an idiot.” It would be hard not to. Warehouse operations were trying to keep pace with the barge market and were priced based on replacement costs, as opposed to the actual prices paid, which was necessary in order to not get caught short. For farmers, the high prices were still a good deal. Corn was still being priced above $4/bushel, and a few more dollars per acre to fertilize will not be important to them. Most crop prices are way up, and that will be reflected at the grocery store when the crops start to come in, if not before.

How high will phosphate prices go? No one seemed quite certain last week. No one expected them to get even close to where they are now, and the reality is there are no market conditions to stop the upward trend, and not much to even slow it down. Predictions are there may be a slight decrease in the current price by June, but it may not be much and it may not happen. The world demand continues to surge, and that will have the effect of continuing to suppress inventories during the summer. By fall, the U.S. demand will be back in full swing, which leaves only the winter months for a possible cooling off period.

Last week both CF and Mosaic were pricing rail-delivered DAP at $370/st FOB, with no discounts and no negotiations. At least one sale was made at that price, and Mosaic plans to hike its price again this week – possibly as much as $10/st FOB. As has been the case for some time, last week’s price will be a bargain this week. PotashCorp increased its Central Florida reference price on March 14 to $370/st FOB from $350/st FOB, but will probably hike it again soon.

In Texas, Agrifos, which was running behind on delivery dates according to buyers, was selling truck loads at $420/st FOB.

The Central Florida DAP price range last week was a flat $370/st FOB, but will likely increase this week. The previous week, the range was $350-$355/st FOB.

U.S. Gulf: Prices continued to move up last week as buyers sought floating barges on the river. On Tuesday, a NOLA DAP barge in the Gulf was the next best alternative, and it sold for $406.50/st FOB. On Wednesday, the best deal available was a barge being loaded this week, and it sold for $408/st FOB. However, shortages in the southern part of the country remained at near-critical levels last week, and many areas were out of product. Within the next week or two the northern part of the U.S. will spring into action, assuming the weather cooperates. The market was holding its collective breath to see what the impact will be in an already tight market. How much higher will that send prices? Much of that northern territory includes large portions of the Cornbelt, and farmers there will be more concerned about increasing production than paying a little more per acre for fertilizer.

Although most in the industry believe the price of phosphates will remain strong, some were fearful it may drop after the spring season and were expressing reluctance to place an order for summer fill. “If the price goes down, we’re in trouble. If it goes up another $10/st FOB, is it really worth it to fill my warehouses now? I’m not sure.” Another pointed out that dealers will have to take out bank loans in order to fill their bins during the off season, and that may be too costly and risky for them to do.

CF and Mosaic were offering summer fill programs for some customers at prices lower than the current market. CF was said to be offering NOLA DAP barges for June loading at $385/st FOB, and July-August barges at $375/st FOB. Mosaic’s price for that period last week was $385/st FOB for loading between June and August. Sales were made at those prices for a few customers, but Mosaic’s price for that period was going up this week, based on the current market.

Back in December and January, now known as the “good old days,” Mosaic and maybe other producers made sales on a prepay and forward basis in the range of $222-$228/st FOB for river opening. At the time, that was very reasonable – maybe even a little high. Well, those barges were being loaded last week at those prices, so those who bought then will make profits they could have only imagined in their wildest dreams. It meant a profit of around $200/st FOB, when in normal times they would have settled for around $2/st FOB. However, for some in the production end a high dive into a shallow pool would be the only relief, after missing out on the big bucks. The truth is, no one could blame the producers for setting the price so low back then, because no one could have foreseen what the market became. No one.

“I don’t see anything to slow this market down,” a source said last week. Indeed, last week there were no factors to put the brakes on the skyrocketing prices of phosphates. Even if and when the market takes a dramatic plunge, the price will not likely fall below $300/st FOB, say some sources, and may not get anywhere near that close.

On the Arkansas, terminals were out or virtually out of all phosphates, both DAP and MAP, and demand remained extremely strong. That situation existed in many other areas as well. And here come the upriver folks just down the road.

Based on actual sales, the Gulf’s NOLA DAP barge price range last week was $400-$408, with the lowest prices paid for barges to be loaded at the beginning of the week and the high for those on the water. Mosaic was asking $410/st FOB, but had little or nothing to sell on a prompt basis. Buyers should keep in mind that the upriver will be in full swing within the next two weeks, and prices are likely to take another big jump up.

Eastern Cornbelt: DAP and MAP were quoted at a solid $425-$435/st FOB regional warehouses, with some new reference levels as high as $440/st FOB in the region. No current prices were reported for TSP. 10-34-0 was reported at $320-$325/st FOB, up significantly from last report and in tight supply.

Western Cornbelt: Phosphates remained in tight supply, and the price continued to firm rapidly. DAP was quoted at $420-$435/st FOB in the region, with MAP tagged at $425-$440/st FOB. The low end of both ranges was reported out of the St. Louis, Mo., market early in the week, but sources were doubtful that those prices were available as the week advanced. Several regional suppliers had firmed their reference price for DAP to the $430-$435/st FOB range by midweek, with one Missouri source quoting the dealer reference for MAP firmly at the $440/st FOB mark by Wednesday.

No current pricing was available for TSP in the region. 10-34-0 was reported at $310-$325/st FOB in the region, and in very tight supply. New sales at the upper end of that range were reported in Iowa.

California: Sources continued to report firming phosphate prices. DAP was quoted at $422-$427/st FOB or DEL, with MAP pegged at $415-$420/st FOB or DEL in the state. Those ranges reflect a $20/st increase from last report. 10-34-0 had reportedly firmed to $275-$285/st FOB. 16-20-0 was pegged at $285-$290/st FOB or rail-DEL on the low end, with reference pricing as high as $325/st FOB or DEL.

Super-phosphoric acid was steady at $5.70-$5.80/unit DEL, and merchant grade acid remained at a firm $5.70/unit DEL in California.

Pacific Northwest: Phosphate supplies, though tight, were “doing alright” in the region last week. “Western producers are taking care of western customers first due to better netbacks,” was how one source described it. Pricing continued to firm; DAP was quoted at $417-$422/st FOB or DEL in most of the region, with MAP at $415-$420/st FOB or DEL. In Idaho, DAP was quoted in the $412-$417/st DEL range last week, while Montana and Wyoming MAP pricing was reported as low as $405-$407/st DEL.

TSP was reported at $360-$370/st DEL in Idaho and $380-$400/st DEL in Montana and Wyoming, where available. 16-20-0 was quoted at $280-$285/st DEL in most of the region, and up to $295/st DEL in Montana and Wyoming. The 10-34-0 market was pegged at $275-$280/st FOB, with reference pricing now at the $280-$285/st FOB range to cover higher conversion costs.

Phosphoric acid pricing in the region remained firm at $5.70-$5.80/unit DEL for SPA and $5.60-$5.70/unit DEL for MGA.

Western Canada: MAP was pegged at $540-$575/mt DEL, up significantly from last report, with another increase slated to bring the regional range on March 23 to $560-$595/mt DEL.

U.S. Export: Phosphate producers worldwide moved to hike their prices to the general range of what the U.S. producers were charging, as their own inventories were reaching bottom. In Tunisia, the price climbed to $430/mt FOB, $415/mt FOB at Morocco, and $410/mt FOB for Russia, the Baltics, and North Africa. Still, the most profitable market for U.S. producers remained the Gulf’s NOLA DAP barge market, where the price reached a high of $408/st FOB last week. But American phosphate producers cannot afford to abandon their offshore customers, who will play a critical role when the domestic market slows after the spring season – if that actually happens.

Last week, PhosChem made a sale of 15,000 mt of DAP into Brazil at $423/mt FOB, and the export price was set to go up again with its next sale. The offshore market must remain competitive against the domestic price in order to continue to be served. The sharp rise in spot sales prices for export also helps PhosChem’s members, whose contract prices are generally determined at the time of shipment based on current indexes.

The export DAP price range increased to $420-$423/mt FOB, up from $410-$418/mt FOB the previous week. Prices will rise again this week.

Pakistan: The country has awarded two contracts each for the import of 25,000 mt of DAP for delivery in May. The first was awarded by Fauji Fertilizer Co. to Multi-Commerce for the import of 25,000 mt at the rate of $420/mt C&F from China. The second was awarded by Azgard for the import of 25,000 mt from Transammonia at a cost of $420/mt C&F from China, according to sources. According to data released by the National Fertilizer Development Centre (NFDC), Pakistan would need 300,000 mt of DAP through imports to meet requirements in the 2007 Kharif season.

POTASH

Eastern Cornbelt: Potash was generally quoted at $212-$224/st FOB regional warehouses, depending on grade and location.

Western Cornbelt: Potash remained at $210-$222/st FOB in the region, depending on grade and location, with the low reported for import tons on a spot basis. A Missouri source pegged the common dealer market for red granular potash at $212-$215/st FOB in his area, with white granular at $215-$218/st FOB. In Iowa, granular potash was generally quoted at $218-$222/st FOB last week.

California: Potash was reported at $244-$250/st FOB in the state, depending on grade. Potassium nitrate pricing was unchanged at $485/st FOB for bulk and $540/st FOB for bags. Sulfate of potash (SOP) was pegged at $346-$358/st FOB in the state, with rail-DEL SOP quoted at the $350/st mark in the Central Valley.

Pacific Northwest: Sources reported spot shortages of potash in the Columbia Basin due to brisk movement in recent weeks. Potash was tagged at $239-$251/st DEL, depending on grade, location, and supplier. One source said warehouse postings had firmed to as high as $253-$254/st FOB from one supplier on March 19.

Western Canada: The potash market was tagged at $260-$275/mt FOB plant sites or warehouses following a $10/mt increase on March 9.

SULFUR

Tampa: Negotiations for second quarter pricing for sulfur contracts continued last week, but the parties did not appear to be close to an agreement. One of the major sulfur producers had offered to settle at $6/lt up from the first quarter, but changed its mind and was preparing to ask for even more. The sulfur industry was basing its argument on two factors – the world market and the tight market in the Gulf. Because of the situation in Vancouver, the world market was not likely to improve anytime soon, but the case in the Gulf was different. Refineries were beginning to come back online last week although some were still down, and supplies were still tight.

Mosaic was working off its reserves but saw hope on the horizon, and its phosphate production was not expected to be affected.

Probably the biggest thorn in the side of the sulfur producers was the $4.50/lt cut they took in the previous quarter. Still smarting from that and the fact the market was growing tight by the time the settlement was reached, most want that amount back and a bit more. They may just get it, too. The phosphate producers were enjoying the highest DAP prices on record, and sulfur suppliers say they can now afford some appeasement.

One source predicted a final settlement in the range of $3-$5/lt up, and that would not be unrealistic.

The sulfur industry’s ace-in-the-hole is the pellet plants, which can convert molten sulfur for the export market. Currently, there are only two on the Gulf Coast, but that may soon change. Martin Midstream Management Corp. announced it was going into the business of building pellet plants, which could greatly increase the amount of sulfur for export, or reduce the need for importing in countries that do. One such plant will be built at Martin’s Stockton plant in Northern California, which had little or no sulfur available as of last week. If the idea takes off, it could affect future sulfur supplies for phosphate companies. Phosphate producers were already running at full capacity, and when the refineries are back to the same status, a glut could easily occur, and pellets would be the answer for them.

MARKET NOTES

India: The government’s new urea policy will allow explicit approval to all debottlenecking proposals. Presently there are projects for an estimated 5.0 million mt of urea awaiting approval for expansion. Taking a cue from this policy, IFFCO has decided to go ahead with the debottlenecking plans for its ammonia-urea complexes in Aonla and Phulpur. This enhancement will result in an additional annual increase in urea of 511,00 mt.

Members of a FACT/NFL team recent visited Egypt to explore the possibility of setting up a urea plant in the country in collaboration with Adi Industries. Adi has reportedly procured some gas allocation for potential partners in the US$1.25-$1.50/mmBtu range, though any new allocations are reportedly frozen as of December 2006. The team reported that recent prices have been $1.25/mmBtu and are expected to be increased to $4.00/mmBtu in due course.

The team proposed that the Government of India share of the 50 percent stake in any joint venture be divided 35/15 to NFL and FACT. The team is awaiting more details from Adi.

Russia: EuroChem reports that its management has approved two investment projects to purchase 200 mineral hoppers (special-purpose cars for mineral fertilizers bulk carriage) and 25 tank cars for wet-process phosphoric acid. In 2007, the company plans to purchase over 600 mineral hoppers, 250 various-purpose tank cars, and three shunting locomotives, one per subsidiary – EuroChem-Belorechenskie Minudobrenia, Novomoskovsk Joint-Stock Company Azot, and Lifosa AB. In addition to new rolling stock, EuroChem logistics strategy involves the upgrade of existing and construction of new railway tracks and stations to optimize corporate expenses, improve quality and reduce car loading time.

At two EuroChem sites in Belorechensk and Novomoskovsk, the company plans to construct new car freight stations. In addition, EuroChem-Belorechenskie Minudobrenia plans a full-scale upgrade of three tracks, with replacement of five track switches and overhead system repair through to the Russian Railways connecting station. Novomoskovsk Joint-Stock Company Azot has been carrying out a full-scale upgrade of the Agregatnaya station to ensure direct access to the Russian Railways network for bulk transport routing. Another large project planned for 2007 is the construction of its own car-maintenance depot capable to repair up to 5,000 units per year at Nevinnomyssky Azot.

Eurochem said in 2006 that it purchased 700 mineral hoppers, 43 open wagons, and 253 tank-cars for various purposes, as well as one shunting locomotive.

Currently, Eurochem-controlled enterprises own over 5,000 units of specialized various-purpose rolling stock. By 2015, it expects this number to reach 8,600 units. Most of the new cars will be purchased by 2010.

Thailand: The local press recently reported that a large crowd of protestors threw betel juice on Udon Thani Rajabhat University President Charoon Thavornchak to express their opposition to a proposed Udon Thani potash mine. Thavornchak chairs a panel soliciting public opinion on the project.