While domestic producers are posting prices some $20/st up at inland points, the NOLA granular potash barge range is reported in the $180-$195/st FOB range. Sources say an influx of imports from various sources as well as domestic product are competing for barge sales at NOLA.
Yara International ASA made at least a couple of major announcements last week. It bought another blending plant in Brazil, its phosphate investment moved closer to production, and across the globe in Australia, it officially commissioned the long-awaited Yara Pilbara Nitrates plant.
The latest Brazilian acquisition, announced Aug. 25, is for a 300,000 mt/y blending facility from Adubos Sudoeste in Catalão, in Goiás State. The company said that this was its first investment in the state. Most of the production is expected to go to farmers in the states of Goiás and Tocantins.
Yara Brazil President Lair Hanzen noted that Goiás is responsible for a huge part of the main Brazilian export crops, such as soybeans and corn, and is essential to the company’s plans in the country. “To invest in fertilizer distribution in Goiás is strategic for Yara and reinforces our commitment to provide the best solutions to Brazilian farmers. Besides that, we maintain the efforts to increase the fertilizer production in order to reduce the national dependence on imports of raw materials,” said Hanzen.
Hanzen told Bloomberg that Goiás fertilizer use rose some 5 percent per year on average in the last ten years, while the average for Brazil was only 3.7 percent.
“In order to keep our 25 percent market share in Brazil’s fertilizer market, we need to add an asset like this every two years to our blend, distribution portfolio,” he told the news service.
Yara said the deal must still be approved by the Administrative Council for Economic Defense (Cade), and once approval is achieved it will begin the process of adapting the unit to the company’s standards.
In recent years, Yara has invested approximately US$1.5 billion in Brazil, including the acquisition of Bunge Fertilizantes (2013), the joint venture with Galvani (2014), the construction and revitalization of the most modern blending units in Sumaré and Porto Alegre, and the announcement of a $250 million investment in its Rio Grande complex, made earlier this year (GM April 15, p. 13).
In other Brazil news, Yara told Bloomberg that it plans to start phosphate mining at the Salitre site (GM Nov. 16, 2015; Aug. 11, 2014), in Minas Gerais in first-half 2017, with phosphate chemical production expected in the second half. This is from its investment in Galvani.
On Aug. 26, Yara officially commissioned the new 330,000 mt/y technical grade ammonium nitrate plant on the Burrup Peninsula in Western Australia. The plant is a joint venture between Yara (55 percent) and Orica Ltd. (45 percent,) and is expected to be operational by the end of 2016.
Yara will operate the plant, and Orica will market the product. The plant is fully integrated with the neighboring Yara Pilbara Fertilizers ammonia plant, which currently exports some 800,000 mt/y of ammonia.
Yara said the AN plant is the first in the world to be built using modularized construction, with key segments of the facility built offshore and shipped to site. At its peak more than 500 workers were required on site to complete the project. The facility will have 70 employees.
U.S. Gulf: Granular urea barges spanned a broad range last week, with trades reported in the $183-$196/st FOB range. Product began the week strong, but quickly fell before rebounding to the high-$180s/st FOB by the end of the week.
Sources said there was really no reason for the stumble. Overall, supplies continue to be reported as tight.
The latest prill trades were put in the $202-$205/st FOB range.
Eastern Cornbelt: Granular urea prices continued to edge up in the Eastern Cornbelt. The urea market was quoted at $218-$235/st FOB in the region in late August, with the low reported at Cincinnati, Ohio, and the upper end out of spot inland locations.
Western Cornbelt: Granular urea pricing was quoted at $220-$225/st FOB out of most terminals in the Western Cornbelt, with the low end reflecting a $5/st increase from last report.
Northern Plains: Granular urea pricing had reportedly inched up to $220-$230/st FOB the Twin Cities, up $10-$20/st from early August, with delivered tons pegged at $250-$260/st in North Dakota for the last business. Sources said Carrington, N.D., was out of product in late August.
Northeast: Granular urea pricing in the Northeast had reportedly inched up to $235-$240/st FOB, up some $10/st from early-August pricing levels, with the low at East Liverpool, Ohio, and the upper end FOB Fairless, Pa.
Eastern Canada: The granular urea market was pegged at $340-$360/mt FOB in Eastern Canada, down $10-$20/mt from mid-July pricing levels, depending on location.
India: Sources said IPL had not moved on its tender of earlier this month for 120,000 mt. Last week, the buying house wanted offering companies to extend the validity dates of their offers from Aug. 17 to Aug. 24.
The lack of urgency in buying fits with reports coming out of the country. Sources report that local agents are telling the major trading houses that consumption of urea is down as much as 15 percent.
One trader noted that a decrease in the consumption of urea is significant, because it is the cheapest fertilizer in India available to farmers due to the large subsidies it enjoys.
Even with the lull in buying, sources said Indian buyers will have to step in sometime in late September. According to government estimates, the country will still need to import at least another 3 million mt by the end of the year to meet expected demand.
When India does come in, sources do not expect to see dramatically lower prices. The spot urea market has tightened in the past couple of weeks, largely due to U.S. purchases. Even once the sales to the U.S. ease off in the next week or so, sources point to less overhang and some tightening.
Fertilizer Minister Ananth Kumar said the Indian government will soon set up a council for fertilizer research. He said the purpose of the council will be to help farmers develop best practices for fertilizer use and application. Kumar said the government will also be looking at ways to make the use of other fertilizers more attractive to farmers.
A number of Indian governments have attempted to wean farmers from urea by encouraging the use of other inputs. Sources have said, however, that as long as urea remains heavily subsidized, farmers will stay with the cheapest option.
Middle East: The biggest beneficiary of the recent spate of U.S. spot purchases seems to have been Algeria, said sources. The lower shipping time compared to buying from the Arab Gulf or China is the big reason Algerian tons are heading for NOLA, noted one source.
Contracted material from the Arab Gulf for the U.S. had to be loaded by this week to make it to the U.S. Gulf ports before the river closes for the season.
Arab producers continue to argue the price is just under $200/mt FOB, but sources continue to point to sales around the world – notably Asia – that have netbacks closer to $190/mt FOB.
Egyptian producers once again have natural gas available to them. The Egyptian Holding Gas Co. has started sending its product to MOPCO and other urea producers. The move to release gas that had been diverted for electricity production came as most of the Egyptian urea facilities were taking routine maintenance shutdowns.
Sources said the general condition of the urea market and the natural gas diversions made the timing for the turnarounds perfect. One trader said the normal schedule would have had the plants starting up again in early September. The current state of the urea market, however, may prompt the plant operators to take their time coming back online, he noted.
The price of urea out of Egypt remains steady, largely because of the limited supplies and some European buyers looking to cover a few short sales.
Work on the Iranian Zanjan ammonia and urea operation has reportedly started back up after about seven years of stop-and-go. The plant is expected to be completed next year. Urea output is rated at about 1 million mt/y.
Black Sea: Production is down with the shutdown of OPZ. Sources said the company is expected to extend the maintenance turnaround as long as possible. One observer noted that the poor nature of the ammonia and urea markets may prompt the operator to keep the operations down until the first frost.
Prices have not shifted in the area, but are under pressure because of increased competition in the Mediterranean from North African producers.
China: The bump in prices – thanks to the U.S. spot demand – does not seem to have affected the Chinese market.
Sources said the short timeframe to get product to the U.S. Gulf ports eliminated Chinese material from the running. However, said one trader, producers were taking advantage of the atmosphere of stronger urea prices to dig in their heels and fight off bids that would take the price below $190/mt FOB.
Producers continue to ask for $200/mt FOB and up, while buyers are asking sub-$190/mt FOB. Sources said the final deals for regional purchases put the price in the low-$190s/mt FOB.
Sources said producers are now beginning to look at domestic market needs rather than fighting over prices on the export market. Domestic demand is expected to start picking up in a few weeks.
Asia and Pacific: Sources said the rains in Thailand and Australia have been improving the lot of farmers and increasing the demand for urea in those countries.
Thai buyers reportedly are asking for additional spot tons above and beyond their existing contracts. Likewise, the improving conditions in Australia have prompted farmers to draw down more of the existing reserves, prompting some traders to consider additional sales into that country.
Pakistan: The government lowered the price of urea by 27 percent in a move to reduce stockpiles. The new price will be PKR1,310/50 kg bag, or about PKR26,200/mt (US$250/mt).
The order came as reserves were building because of both domestic production and imports through contracted deals, mostly with Saudi Arabia. The government estimated the excess tonnage at 850,000 mt. The move is expected to cost the government about US$25 million in losses covering the cost of the product and the sales price.
Part of the reason for the excess tonnage, the government explained, was that TCP imported about 350,000 mt last fiscal year to make up for an estimated deficit in domestic production. Of that amount, analysts said only 67,000 mt of product was able to work its way into domestic distribution. The rest was stored by National Fertilizer Marketing Ltd. It was these tons the government wants to move out of warehouses into the fields.
Lower demand by farmers due to poor weather and an overhang of about 200,000 mt held by NFML from previous year imports led to the large surplus.
Local producers were not able to operate at full capacity because the natural gas they needed was diverted to consumer-related needs, such as heating and electricity generation. Once the local producers received their full allotments, production soared.
The producers have long argued that it is cheaper for the government to import natural gas to accommodate their needs and the other needs of the country rather than importing urea. They said domestic production could easily handle demand and could more easily be adjusted if demand falls off, as it did in the past 12 months. Demand in Pakistan is pegged at 5.1 million mt/y. Domestic production is rated at 5.5 million mt/y.
In the end, the government decided the carrying costs of holding onto the excess imported urea would be more expensive than paying for the losses incurred by their current action.
U.S. Gulf: Flooding continued to hamper navigation in the U.S. Gulf, shippers said, triggering high-water operating conditions and unplanned lock closures.
Bayou Sorrel Lock remained closed to transit on Aug. 24, with the lock “diverting water due to high landside levels,” the Corps said. Port Allen Lock’s official status remained closed due to ongoing flood control measures, although shippers reported limited locking availability as of Aug. 24. Vessels were routed through Algiers Lock instead, where waits were recorded in the 11-12 hour range.
Industrial Lock is closed through approximately Nov. 29 for substantial maintenance and repair operations. The Corps is working to prepare a detour through Baptiste Collette Bayou channel and Chandeleur Sound capable of servicing high-volume traffic.
Dredging at Baptiste Collette has reduced channel width to 75 feet, sources said, and tows were required to contact the dredge to confirm compliance prior to passing. Originally expected to conclude in mid-August, the work’s ETA has been pushed back to September.
Dredge work continued at the West Canal’s Galveston Causeway Railroad Bridge, closing the site from 7:00 a.m. to 7:00 p.m. daily. The project is scheduled to proceed on a 12-days on, two-days off arrangement, lasting through January 2017. Navigation will return to normal on nonworking days and overnight hours.
Shippers reported Brazos River Floodgate delays stemming from fast river flows, with waits of 5-7 hours reported. Pipeline dredging and repairs, blamed for limiting navigation to daylight hours only, was scheduled to conclude on Aug. 17, although some sources believed the project was still underway as of Aug. 23.
Brazos Lock remained subject to normal river rise restrictions, the Corps said, with locking capped at one loaded or two empty barges per pass. Fast currents triggered Colorado Lock restrictions as well, reducing locking to a single loaded barge or two empties per turn.
Lower Mississippi River: Delays are expected in the Lake Providence area Sept. 15 through late December due to Stack Island dike work, sources said.
Upper Mississippi River: Shippers reported wait times in the 3-4 hour range at Lock 20, Lock 25, and Mel Price Lock.
Heavy rains pushed the Wabasha gauge above action stage, triggering towing restrictions in the area. The National Weather Service (NWS) called levels 10.35 feet on Aug. 25, with a 10.4-foot crest predicted on Aug. 25-26. Forecasters called for the gauge to sink below action stage on Aug. 28-29.
Illinois River: Delays were noted in the Lockport and Marseilles areas due to fast river flows. The conditions prompted closures at Lockport Lock and Brandon Road Lock on Aug. 24. The Corps noted limited locking availability at Marseilles Lock, with waits estimated as high as seven hours on Aug. 25.
A fish barrier closure is scheduled to block daytime transit in the Lemont area on Aug. 22-26. The closure will affect Miles 296-297.
Ohio River: Work at Emsworth Lock, underway since July 5, concluded on Aug. 18. Shippers quoted waits up to 30 hours in recent weeks.
The Greenup Lock main chamber closure continued to snag navigation, pushing lock delays in excess of 10 hours for the week. The project was officially slated to run through Sept. 30, although some sources were optimistic that work might conclude sooner, possibly as early as Aug. 26. Vessels relied solely on the site’s auxiliary chamber for passage, and the Corps warned that assist boats could be required, depending on river levels.
The Corps lowered dams at Locks 52 and 53 for the week, allowing boats to pass without locking. The Lock 52 main chamber is scheduled to undergo cell-banding maintenance on Sept. 5-17, and again from Sept. 19 to Oct. 1, leaving the auxiliary chamber as the sole navigation channel.
A Montgomery Lock main chamber closure on the books for Aug. 29 through Nov. 17 is projected to cause “major” delays, shipping operators said. Transit will be limited to the auxiliary unit during daylight hours, although the main chamber will reopen for eight hours nightly subject to an 80-foot width restriction. The main chamber will also open on Sept. 3-4, Sept. 17-18, Oct. 1-2, Oct. 15-16, and Oct. 29-30.
R.C. Byrd Lock maintenance will close the auxiliary chamber Oct. 3 through Dec. 9.
The Tennessee River’s Wilson Lock exited a four-day turbidity curtain installation on Aug. 19, but was set to close again Aug. 29 through Sept. 2 to complete the job. Kentucky Lock will face guidewall repairs on Oct. 4-19. Vessels are encouraged to use Barkley Canal as an alternate route.
The Monongahela River’s Braddock Lock and Dam river chamber remained offline due to equipment failure. Vessels were routed through the site’s land chamber instead.
Arkansas River: Repairs closed Webbers Falls Lock to navigation on Aug. 22, blocking access to Inola and Catoosa. The lock is expected to reopen on Sept. 11. David D. Terry Lock is slated for a full shutdown Aug. 29 through Sept. 4, leaving shippers without access to Little Rock during the closure.
Brussels—Tessenderlo Group reports that construction work on Tesssenderlo Kerley Inc.’s (TKI) two new ammonium thiosulfate plants (Thio-Sul ®) in East Dubuque, Ill., and Rouen, France (GM Nov. 3, 2014; May 11, 2015), are both expected to be complete in second-half 2017. The East Dubuque plant is adjacent to the CVR Partners LP (formerly Rentech Nitrogen LP) nitrogen complex, and will receive ammonia from that plant. Borealis will supply ammonia to the French plant. The East Dubuque completion date has been pushed back from earlier estimates. Tessenderlo also expects to complete a new electrolysis plant in Loos, France, in second-half 2017. The company has announced the startup of a new sodium hydrosulfide (NaHS) plant in Billings, Montana, within its joint venture Jupiter Sulphur LLC.
Kelvin Westbrook, president and CEO of KRW Advisors LLC, has been elected to The Mosaic Co.’s board of directors. In 2007 he established the firm KRW, which provides strategic and general business and consulting services to companies in telecommunications, media, and other industries. He previously founded Millennium Digital Media LLC and served as president and chairman at LEB Communications (an affiliate of Charter Communications), and as executive vice president of Charter Communications. He was also a partner in the national law firm of Paul, Hastings, Janofsky & Walker.
Westbrook holds a B.A. in business administration from the University of Washington and a J.D. from Harvard Law School.
Tampa: Despite early fears that the recent flooding in Louisiana could impact the domestic sulfur market, sources said the floods have had minimal effect. “I don’t believe there have been any significant reductions in production,” commented one market player.
Known Louisiana production curtailments were limited to a pair of refineries. Reports put production at ExxonMobil Corp.’s 502,500 barrel/d Baton Rouge refinery at roughly 60 percent for the week. The lost capacity was traced to a 110,000 barrel/d CDU shut down by the flooding, an idled coking unit, and a 210,000 barrel/d CDU scheduled for a 50-percent turnaround prior to the flooding.
Additionally, Motiva Enterprises’ 235,000 barrel/d Convent facility retained minimal operating capacity following an Aug. 11 hydrocracker fire, sources said.
The third-quarter contract price of molten sulfur delivered to Tampa is $65/lt DEL.
Domestic refining capacity softened last week, according to data released by the U.S. Energy Information Administration (EIA). Utilization fell to 92.5 percent for the week ending Aug. 19, a 1.0 percent drop from 93.5 percent on Aug. 12. Current-week capacity trailed the year-ago rate of 94.5 percent and matched the 92.5 percent five-year average.
Average daily crude inputs also sank, the EIA said. Inputs were logged at 16.679 million barrels/d, a 194,000 barrel/d decline from the previous week’s 16.865 million barrels/d.
U.S. Gulf: Last-done out of the Gulf was quoted at $60-$65/mt FOB.
Reduced domestic demand stemming from the recent flooding in Louisiana could lead to greater volumes being offered out of the U.S. Gulf, sources speculated, potentially reducing netbacks in the next round of business.
Vancouver: The Vancouver market was quoted in the $65-$70/mt FOB range, down from $70-$75 in the prior week.
Despite possessing an estimated 1.8-1.9 million mt of sulfur inventory at port, sources described firming signals in the Chinese spot market. Although last-done business remained in the $81-$82/mt CFR range, recent strengthening in both the Qatar and Iran spot markets suggested a possible lift at China, some said.
Not all were convinced, however. Some attributed the rising Middle East prices to supply weakness rather than firming Chinese demand. “There is lots of inventory in China. I believe there is firmness in supply offerings,” one source commented. “The $72/mt Tasweeq price doesn’t really make sense in China,” added another.
Vancouver has surpassed Tampa as the preferred destination for Alberta sulfur producers in the third quarter, sources said. Drawn by Vancouver’s $10/mt price advantage over Tampa, along with an additional currency exchange-related boon from the strong U.S. dollar, “most” Alberta producers have vacated the Tampa market, some contacts claimed.
The shift could translate to stronger Alberta netbacks in the third quarter, observers speculated. The Alberta market was quoted at (-)$55-$20/mt FOB for the second quarter.
West Coast: West Coast prills followed Vancouver lower, and were called $60-$65/mt FOB. Buyers and sellers quoted third-quarter molten contracts in a $50-$75/lt FOB range.
ADNOC: August formed sulfur offered by the Abu Dhabi National Oil Co. was priced at $70/mt FOB Ruwais. ADNOC offered $80/mt FOB cargoes in July, a $10/mt difference.
Aramco: Saudi Aramco priced August-loading cargoes at $66/mt FOB Jubail, down $7/mt from the previous month’s $73/mt FOB.
Tasweeq: Qatar state-run oil company Tasweeq listed August prills at $65/mt FOB Ras Laffan, a $7/mt decline from July’s $72/mt FOB. Despite the list price, sources reported a recent spot cargo transacting at $72/mt FOB.
Iran: Market players reported a crushed-lump sulfur cargo sold out of Iran last week. The material was priced at $64/mt FOB, a $7/mt increase from recent transactions out of Iran.
U.S. Gulf: Market watchers reported a flat U.S. Gulf market, with price ideas holding steady at $45-$50/mt CFR.
Sources traced the levels to Northwestern European smelter offers in the $10-$15/mt FOB range, along with recent business at Brazil reported at $45-$55/mt CFR. Atlantic liquid freight was called $30-$35/mt. Cargoes headed to Chile were expected to fetch $55-$65/mt CFR.
Domestic sulfuric acid delivered to the West Coast was quoted at $110-$115/mt DEL, while business in the U.S. Gulf was reported at $90-$95/mt DEL, unchanged from the previous report. Sales into the Midwest were called $80-$90/mt DEL, also flat from the prior week.
London Metal Exchange zinc climbed higher last week, trading at $2,312.50/mt on Aug. 24, a 2.2 percent increase from $2,260.50/mt in the previous report.
Sociedad Química y Minera de Chile SA (SQM) reported a second-quarter net income of $83.1 million ($0.32 per share), in line with the year-ago $83.2 million ($0.32 per share). Revenues rose 1.1 percent, to $489.6 million from the year-ago $484.3 million, as a doubling in lithium sales helped offset a 27 percent drop in potassium chloride and potassium sulfate revenues amid weaker prices.
Potassium Chloride and Potassium Sulfate revenues were down to $97.3 million from the year-ago $132.5 million, with volumes up 3 percent to 375,100 mt from 362,900 mt. However, SQM said average prices for the business line fell 29 percent when compared with the second quarter of 2015.
Second-quarter Specialty Plant Nutrition (SPN) revenues were down slightly, to $191.1 million from the year-ago $192.2 million. Volumes were up at 254,000 mt from 244,500 mt.
“Pricing in the SPN business line has been more stable than in the potassium chloride and potassium sulfate business segment, but we did see a slight decrease of almost 4 percent during the first half of the year, mainly as a result of lower potassium chloride prices,” said Patricio de Solminihac, SQM CEO. “These lower prices were mostly offset by higher sales volumes, specifically related to our water soluble products, a market where we still expect to see market growth during 2016.”
SQM reported six-month net income of $141.6 million ($0.54 per share) on revenues of $881.5 million, down from the year-ago $154.9 million ($0.59 per share) and $871.8 million, respectively.
First-half potassium chloride/SOP sales volumes were up over 14 percent year-on-year, and SQM expects sales volumes for the full-year to be at least 20 percent stronger than last year’s sales. De Solminihac noted some slight recovery recently in potash prices following the settlement on major contracts with China. “We expect an increase in average prices of potassium chloride during the second half of the year,” he said. Sales volumes were 660,300 mt, up from 577,800 mt, while revenues were off 18 percent to $181.6 million from $220.4 million.
Six-month SPN revenues were marginally off, at $332.2 million from the year-ago $335.3 million. SQM said SPN sales prices decreased as a result of pressure related to lower prices in the potash market, and noted prices in the SPN business line dropped almost 7 percent compared to the first quarter of the year. It said six-month SPN sales volumes increased 3 percent, to 428,100 mt from 415,500 mt, with sales volumes of water soluble products outweighing those of field fertilizers. The company said it expects to see continued growth in the water soluble market. Within the SPN segment, potassium nitrate and sodium potassium nitrate volumes were marginally off, at 263,300 mt from the year-ago 266,500 mt.
Chittagong, Bangladesh—A major ammonia leak occurred at the Bangladesh Chemical Industries Corp. (BCIC) DAP Fertilizer Co. facility here the night of Aug. 22, with local reports of over 200 people being impacted. Although local officials reported that some 52 were admitted to a local hospital, no deaths or serious injuries were reported. A huge fish kill was reported to local waterways. BCIC Chairman Mohammad Iqbal told reporters that the concentration of ammonia in the air was recorded at 600 ppm within 140 meters of the place of occurrence at 3:00 a.m. Aug. 23, while the standard (tolerable) amount was 25 ppm. However, he said the concentration was down to 20 ppm by 9:00 a.m. A technical team was formed to investigate the incident. According to Amal Kanti Barua, the factory managing director, there were three ammonia tanks at the factory, with a large tank at 5,000 mt and two smaller tanks with 500 mt capacity. One of the smaller tanks, which contained approximately 250 mt, leaked its contents. The company denied reports of an explosion. The factory was closed during the accident.
