Transportation

U.S. Gulf: High water levels in the West Canal prompted transit slowdowns at Bayou Sorrel Lock, Brazos Lock, Colorado Lock, and Morgan City, and a high-water safety advisory was in effect for Miles 37.6-45 on the Port Allen Route. Water levels were forecast to continue rising for the short term. Tow size restrictions were lifted on the Brazos and Colorado Rivers last week, but shippers continued to see delays of up to 24 hours. Crest predictions for the Gulf area were extended to May 6-7.

Passage through Industrial Lock was delayed by 16-21 hours last week, and shippers called wait times at Algiers Lock 7-9 hours. Port Allen Lock saw 2-3 hour waits, and Bayou Sorrel Lock reported navigation delays of 1-3 hours.

Daytime transit closures will remain in effect at Calcasieu Lock through May 4 with minor delays expected, and shippers warned of intermittent closures at the Colorado Floodgates through June 30. Emergency repairs closed passage beneath the Galveston Railroad Bridge 10:00 a.m. through 5 p.m. on April 23, and Bayou Sorrel will see a complete closure July 15 through Sept. 15 for dewatering and repairs, with boats set to detour through Algiers.

Lower Mississippi River: A U.S. Coast Guard rescue drill closed the Lower Mississippi River at Miles 735-745 on April 22. Elevated river flows continued between Vicksburg and the Gulf, shippers said. Delays in pickup and drop-off were reported, and tow-size reductions were slated to remain in place until the river’s second crest has receded.

Upper Mississippi River: Delays of 1-3 hours were reported at Lock 27 with an average of two boats queued for transit.

The Lock 27 auxiliary chamber remains closed for repairs through May 20, and the auxiliary chamber at Mel Price Lock will be offline through April 30 for gate replacement.

Illinois River: A complete daytime transit closure was reported at Dresden Island Lock on April 22. Shippers warned of sporadic service interruptions at Peoria Lock between April 28 and May 1.
Peoria and LaGrange Locks resumed operations last week.

Ohio River: Reports indicate the Upper and Mid-Ohio River had crested last week. Flows were below action stage as of April 23, but remained above pool stage.

Elevated flows were expected to remain on the Lower Ohio for at least another week. South Point River Port, offline due to high water, was expected to reopen on or around April 28.

R.C. Byrd Lock saw waits of about an hour, while the elevated flows allowed operators at Locks 52 and 53 to lower dams.

The Ohio’s Newburgh Lock auxiliary chamber remained down for maintenance through April 27 and was scheduled to close once again May 13-19. The lock’s main chamber will shutter April 28 through May 12. Debris buildup at Montgomery Lock kept that site’s river chamber out of operation, though the land chamber was open for use. Main chamber closures at Belleville and Racine Locks are expected to force delays May 26 through July 24.

Repairs at the Winfield Lock main chamber on the Kanawha River are projected to run through June 10, sources said. Significant slowdowns are expected.

On the Monongahela River, both Maxwell and Elizabeth Locks will experience river chamber closures between April 27 and May 29.

The Tennessee River’s Wilson Lock main chamber was offline for repairs on April 22, with plans to resume work during daylight hours on May 5 through June 11. Guntersville and Pickwick Locks will see maintenance-related intermittent closures Aug. 17-Sept. 30.

Flows returned to normal on the Big Sandy River last week, allowing navigation to resume.

Maintenance and dewatering operations will shutter Old Hickory Lock on the Cumberland River from July

LSB expands board, opts for MLP – Alert

LSB Industries Inc. and its large shareholder, Starboard Value LP, have reached agreement on board membership and company direction.

LSB said April 27 that it has elected Louis Massimo, Andrew Mittag, Richard Roedel, Ms. Marran Ogilvie and Lynn White to its board of directors. These five new independent directors, as well as incumbent directors Richard Sanders and Barry Golsen, will stand for re-election to LSB’s board at the company’s 2015 annual meeting of stockholders. Massimo and Mittag will fill the vacancies created by the resignations, effective today, of Gail Lapidus and Robert Henry.

If re-elected by LSB’s stockholders at the 2015 meeting, Ogilvie, Roedel, Sanders, Golsen and White will have terms expiring at the 2018 annual meeting and Massimo and Mittag will join the class of directors with terms expiring at the 2017 annual meeting. With these appointments, the LSB board will expand to 13 directors, 11 of whom are independent and 9 of whom were appointed in the last 24 months.

“We are pleased to have reached this agreement with Starboard on the composition of the board,” said Barry Golsen, LSB CEO. “On behalf of the entire Board, I would like to thank Gail Lapidus and Robert Henry for their dedicated service and contributions to the Board and LSB. We look forward to working with the new independent directors.”

 “We remain committed to enhancing stockholder value, and we believe the improvements we are making to increase capacity and upgrade facilities will position LSB for enhanced growth and profitability,” added Golsen. “We are therefore pleased to announce our intention, once our El Dorado facility expansion projects have been completed and brought online in 2016, to the extent market conditions allow and subject to board approval, to separate the company’s Chemicals business from its Climate Control business and to explore an MLP structure for the Chemicals business.”

In connection with today’s announcement, LSB has entered into an agreement with Starboard, which beneficially owns approximately 7.6 percent of the company’s outstanding shares. Under the agreement, Starboard has agreed, among other things, not to solicit proxies or participate in any “withhold” campaign in connection with the 2015 annual meeting and to vote its shares in support of all of the company’s director nominees. Starboard has also agreed to vote all of its shares in accordance with the board’s recommendation with respect to the company’s say-on-pay proposal, subject to the recommendation of Institutional Shareholder Services.

In addition, the responsibilities of the Strategic Committee of the board, which was formed in June 2014, will be expanded to include an evaluation of company’s corporate governance and management structure, related party transactions and any other governance practices of the company deemed appropriate by the Strategic Committee. The Strategic Committee will make recommendations to the board based on its findings, and the company intends to announce the board’s decisions with respect to these recommendations concurrent with its second quarter 2015 earnings release.

The company also agreed to form an independent board committee to oversee the company’s previously announced executive search for a president of the Chemicals business; this committee will consist of Daniel  Greenwell, Sanders, Mittag and White. As previously announced the company is working with executive search firm Spencer Stuart to assist in the search.

The company also announced that Greenwell was elected lead independent director.

Jeff Smith, CEO of Starboard, stated, “We are pleased that we have been able to continue to work constructively with LSB to reach this agreement, and we look forward to meaningful

CSB releases AA safety video

The U.S. Chemical Safety Board (CSB) recently released a safety video detailing lessons learned from the release of 32,000 pounds of anhydrous ammonia that occurred at Millard Refrigerated Services Inc. on August 23, 2010 (GM Aug. 30, 2010). The accident resulted in over 150 exposures to offsite workers, thirty of whom were hospitalized, with four winding up in an intensive care unit.

The video, entitled “Shock to the System,” is based on the CSB’s recent safety bulletin entitled Key Lessons for Preventing Hydraulic Shock in Industrial Refrigeration Systems, and includes a detailed 3D animation of the events that led up to the resulting ammonia release. It is available for viewing at www.csb.gov and on YouTube.

The CSB’s investigation found that the day prior to the accident the Millard facility experienced a loss of power, during which time the refrigeration system was shut down. The next day the system regained power and was up and running. An operator cleared alarms in the control system, which reset the refrigeration cycle on a group of freezer evaporators that were in the process of defrosting.

The result was that both hot, high-pressure gas and extremely low temperature liquid ammonia were present in the coils and associated piping at the same time, causing the hot high-pressure ammonia gas to rapidly condense into a liquid. Because liquid ammonia takes up less volume than ammonia gas, a vacuum was created where the gas had condensed. The sudden pressure drop sent a wave of liquid ammonia through the piping, causing a sudden pressure surge known as “hydraulic shock.”

Hydraulic shock results in a sharp pressure rise, with the potential to cause catastrophic failure of piping, valves, and other components. In the Millard case a roof-mounted 12-inch suction pipe failed, releasing more than 32,000 pounds of anhydrous ammonia. The ammonia cloud traveled a quarter mile from the facility south toward an area where 800 contractors were working outdoors at a clean-up site for the Deepwater Horizon oil spill.

The video presents a number of key lessons learned from the CSB’s investigation, including avoiding the manual interruption of evaporators in defrost; requiring control systems to be equipped with password protection to ensure that only trained and authorized personnel have the authority to manually override systems; designing ammonia refrigeration systems so that each evaporator coil is controlled by a separate set of valves; and initiating an emergency shutdown in the event of an ammonia release if a leak cannot be promptly isolated and controlled.

Ammonia leaks caused problems at two other facilities recently. The U.S. Occupational Safety and Health Administration (OSHA) is investigating an ammonia leak at the Reser’s Fine Foods plant in Topeka, Kan., where some 100 employees reportedly had to be evacuated due to a leak from a refrigeration unit.

The Texas Commission on Environmental Quality (TCEQ) is investigating an anhydrous ammonia release reportedly caused when a forklift was driven into a supply line at the Pepsi bottling plant in Mesquite, Tex. One worker was taken to the hospital with respiratory problems and skin burns, and the entire Pepsi plant was evacuated while emergency responders spent an hour sealing the leak.

Lystek offers fertilizer option for wastewater plants

Lystek International Inc., an organic materials recovery firm, recently presented the city of Southgate, Ont., with a $20,000 revenue-share check based on 2014 market sales of the biosolids-based LysteGro fertilizer product. Founded in 2000 at the University of Waterloo, Lystek helps municipalities and other generators reduce waste, costs, odors, and greenhouse gas emissions through its approach to biosolids and organics management.

The largest single operating cost for most wastewater treatment plants is related to biosolids and organics management. Lystek’s system transforms non-hazardous organic materials into nutrient rich, federally registered fertilizer products. Their system can also be used at wastewater treatment plants to optimize the performance of digesters and BNR systems while reducing overall volumes and increasing biogas production for green energy.

Lystek’s proprietary process combines heat, alkali, and high-shear mixing to break down the biological material in the biosolids. The resulting liquefied material, LysteGro, can be used in agriculture, sod farming, and horticulture. The recycling of Lystek-processed biosolids to anaerobic digesters enhances biogas/methane production by 25 percent or more and reduces biosolids generation requiring offsite disposal by 30 percent or more. In addition, Lystek’s process results in a pathogen free, federally registered Canadian Food Inspection Agency (CFIA) and recognized Class A EQ (U.S.) biofertilizer product.

LysteGro contains high concentrations of N-P-K (4.5-7-2.5), as well as a variety of micronutrients such as sulfur, calcium, iron, and magnesium. Like manure, LysteGro is high in organic matter and nutrients that are released slowly over time, which also helps improve water retention, soil tilth, and pore space. Lystek fertilizer production depends on the size of the wastewater facility, with the smallest annual fertilizer capacity to date at 3,500 mt/y.

So far over 94,000 cubic meters of LysteGro have been sold and applied to approximately 8,000 acres of farmland. Lystek provides a turn-key solution, with all fertilizer sales & marketing included for the first five years. The company estimated that it has produced 25 million U.S. gallons of fertilizer to date, and will have produced 35 million gallons by the end of 2015.

Lystek’s own Organic Materials Recovery Centre (OMRC) serves a number of municipalities and is capable of diverting up to150,000 mt/y from landfill for conversion. Full-scale Lystek systems can be found in a number of locations, including the regional Southgate OMRC, Third High Farms Ltd., the cities of Guelph and North Battleford, the Town of St. Mary’s, and the Township of Centre-Wellington. The company is also expanding into the food waste sector.

Lystek’s first U.S. facility is also currently under development in California. Kevin Litwiller, director of business development for Lystek, told Green Markets that “An agreement … is under final legal review by all parties and is expected to be announced during or before the first week of May.”

Lystek provides design, build, and transfer, as well as design, build, own, and operate solutions. Revenue is primarily generated from sales of the technology, tipping fees, and fertilizer product sales. Lystek will also explore engagements that involve avoided cost modelling, conversion and sale of biogas into green energy, and revenue-sharing models based on product sales.

In the city of Guelph, Ontario, Lystek’s system has been contributing to landfill diversion since 2006. “The addition of the state-of the-art, Lystek solution to our Wastewater Treatment Plant operations is playing a vital role in contributing to our goal of being a progressive, industry leader in biosolids management,” said Janet Laird, former executive director,

The Week in Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 106.03 107.21 94.27
CF Industries CF 289.77 292.96 243.19
CVR Partners UAN 13.84 13.90 21.01
Intrepid Potash IPI 12.15 12.22 15.67
Mosaic MOS 44.88 46.02 48.84
PotashCorp POT 33.76 33.11 35.14
Rentech Nitrogen RNF 15.18 15.35 17.95
Terra Nitrogen TNH 131.93 145.09 149.50
Distribution/Retail
Andersons Inc. ANDE 42.93 41.60 64.07
Deere & Co. DE 88.59 88.94 93.57
Scotts SMG 66.46 65.45 59.22

Yara Q1 hit by Lifeco writedown, foreign exchange losses; sales boosted by acquisitions

Yara International ASA reported first-quarter 2015 net income after non-controlling interests of NOK 729 million ($92.3 million) on sales of NOK 27,767 million. Net income was down 59 percent from the year ago NOK 1,773 million despite higher year-on-year sales, up from NOK 21,709 million.

Yara said net income was negatively impacted by a NOK 929 million writedown (US$112 million) on Lifeco, which left a remaining book value of $18 million on the joint venture. In addition, Yara had an NOK 1.831 billion foreign exchange loss. However, the company’s margins benefitted from continued lower gas costs and a stronger U.S. dollar in the first quarter.

Global fertilizer deliveries were up 3 percent from a year earlier at 6.566 million mt, due to the acquisitions of OFD Holding Inc. in Latin America and a 60 percent stake in Galvani in Brazil. Excluding their contribution, Yara said deliveries were "slightly" lower than last year.

Yara’s fertilizer deliveries in Europe – at 3.008 million mt – were 3 percent lower in the first quarter compared with a year earlier, due mainly to a more normal spring this year following 2014’s early spring. Fertilizer deliveries outside of Europe were up 8 percent at 3.558 million mt, driven by higher sales to Latin America and trade to Africa. But excluding OFD and Galvani, Yara said fertilizer deliveries outside of Europe were flat on the year-earlier quarter.

As for the Lifeco writedown, Yara cited the worsening security outlook in Libya. The company sees a high likelihood in 2015 of a further deterioration of the operating ability of the Lifeco jv plants. Yara said the jv’s feedstock and financial situation was already challenging. Yara noted that the political and security situation in Libya has worsened rapidly, and may deteriorate further over the next year. In light of this, Yara is evaluating the operation of the plants on an ongoing basis in cooperation with the other partners in order to protect the employees as well as the assets. The company said it will continue participating in the governance of Lifeco, with the aim of resuming full production once real improvements are seen in the security and political situation in Libya, creating a sustainable improved operating outlook for Lifeco.

In the meantime, Lifeco continues to operate, though with reduced capacity due to gas supply constraints. Yara completed the jv with Libyan partners in 2009 (GM Feb. 16, 2009). Capacity is put at 900,000 mt/y for urea and 150,000 mt/y of merchant ammonia. It had only a few years of normal operations until unrest began in 2011, leading to the fall of Prime Minister Muammar Gaddafi and more instability thereafter.

Ammonia

U.S. Gulf/Tampa: May Tampa business was concluded last week at $465/mt CFR, down $20/mt from April’s $485/mt CFR. Sources had expected the drop in light of lower international pricing.

May NYMEX natural gas closed at $2.531/mmBtu on April 23, down from April 16’s $2.684/mmBtu.

Eastern Cornbelt: The ammonia market remained at $625-$640/st FOB regional terminals in the Eastern Cornbelt, with the lower numbers reported in Illinois on a spot basis. Sources reported supply outages last week at several locations in the Illinois market due to heavy preplant movement. The dealer market in Indiana was pegged at $630-$640/st FOB, with the low reported at Huntington.

Western Cornbelt: Preplant ammonia movement was winding down in the Western Cornbelt last week. Sources quoted the terminal market at $610-$620/st FOB in Iowa and Missouri, depending on location, with the low end of the regional range pegged at $590-$600/st FOB in Nebraska.

Northern Plains: The anhydrous ammonia market was quoted at $600-$620/st FOB in the Northern Plains, with the low reported in the Twin Cities and the upper end FOB Velva, N.D. Delivered ammonia was pegged at the $635/st level in the North Dakota market last week.

Great Lakes: Wisconsin sources reported that a period of heavy preplant movement had resulted in sold-out ammonia inventories at several terminals in northern Illinois. Michigan sources pegged the dealer market last week at $635/st FOB Courtright, Ont., and Huntington, Ind.

Middle East: Producers really aren’t saying a lot about their current situation. Rumors abound that Sabic has at least two cargoes it is trying to unload, but Sabic says it is sold out and has nothing to spare for the spot market.

No matter how the supply looks, sources say the price of ammonia in the area remains lower than producers would like. Based on the delivered price into East Asia, sources estimate the netback to the Arab producers remains in the $380s/mt FOB.

Black Sea: The actual price out of the area is in dispute. Sources working prices back from Morocco say the netback is about $350/mt FOB. Other sources figure the price is closer to $390/mt FOB. And the producers are holding firm to the idea the floor is $400/mt FOB.

Backing up the producers’ claim is the latest price out of Tampa. Take back freight, they say, and the Tampa price is a Yuzhnyy equivalent of $400-$405/mt FOB.

The key term, said one source, is “equivalent.” Industry watchers say even though there is no longer an organic link between Yuzhnyy and Tampa pricing, the two prices often offer an opportunity to calculate appropriate pricing levels in each location.

The lack of any new business is adding to the confusion of exactly where the price is sitting this month. Few are willing to firmly state that the Yuzhnyy equivalent from Tampa should be used as a hard and firm guidepost. Most say it is a useful mathematical model to get in the right neighborhood.

By the middle of May, however, everyone should have a better idea of where Yuzhnyy prices are headed, based on actual business. Turkey is expected to make a few purchases for the first half of next month. When that happens, says one trader, the industry will most likely see prices settling in the $380s/mt FOB.

For now, no one other than the producers seems to accept $400/mt FOB and up as a pricing idea. Many are using the $390s/mt FOB in their models, with a softening trend to occur in May.

India: Prices seem to be hovering around the $447-$449/mt CFR range. However, sources are reporting some special deals coming in about $20/mt cheaper.

The lower-priced product may

Urea

U.S. Gulf: Prompt granular barge prices continued to move up last week. While loaded barges at NOLA were reported to be trading as high as $312/st FOB last week, those to be loaded in two weeks were still down in the $280s/st FOB.

Upriver barges were receiving a larger premium, called $300-$325/st FOB on a NOLA basis, with the lower end reported as Chinese product. One player said upriver was the place to be, as buyers wanted to product right now.

While some initially called May barges $260-$265/st FOB, others last week thought those, too, would firm, though others said the vessel-to-barge delays should soon abate and pricing stabilize.

Prills also followed the granular boost, up at $270-$280/st FOB.

Eastern Cornbelt: The granular urea market was pegged in a broad range at $330-$360/st FOB in the Eastern Cornbelt, up $5-$15/st from last report, with the low reported in Cincinnati, Ohio, and the upper end out of inland terminals in Ohio and Indiana.

Western Cornbelt: The granular urea market was reported in a broad range at $325-$345/st FOB in the Western Cornbelt, with the upper end in Iowa and the low in Missouri on a spot basis.

Northern Plains: Granular urea pricing had reportedly firmed to $340-$350/st FOB the Twin Cities, up $15/st from last report. In North Dakota, sources quoted the urea market at $392-$410/st DEL, with the low end also reported on an FOB basis out of Carrington for “very limited tons.”

Great Lakes: The granular urea market was pegged at $365-$370/st FOB in the Great Lakes region, with the upper end FOB Webberville, Mich., and the low FOB Burns Harbor, Ind., and out of terminals in Wisconsin. Sources said they expected a price increase in the near term due to stronger NOLA barge values.

Northeast: Granular urea was pegged at $345-$360/st FOB in the Northeast, with the low at East Liverpool, Ohio, and the upper end FOB Fairless, Pa.

India: The final take in the STC tender moved closer to a half million tons.

Sources report MTPL added two more cargoes to its initial award of 60,000 mt. Its 180,000 mt, combined with the 300,000 mt coming from Global and Transglobe, will ease concerns in India about having enough product on hand to deal with the upcoming application season and have enough in reserve for the next season.

MTPL may face a serious problem, say sources. Reportedly, the company is offering Chinese product. Producers are upset with the low price offered and are threatening to not back any deal that means a netback lower than $260/mt FOB.

The MTPL offer has a netback in the mid-$250s/mt FOB.

The trading house may still be able to salvage its deal without a financial loss, say sources. The Chinese domestic season has now ended. At the same time, urea production remains at the same levels. All the tons now being produced are heading for the export market. In another week or so, said one trader, the port-side warehouses will have too many un-booked tons. To move the material, the price will have to drop.

MTPL has until May 27 to ship its material to India. Sources say this is plenty of time for the price to slip.

If the price does not move enough, however, sources say MTPL will most likely swallow hard and accept a loss on the deal rather than not perform. Indian buying companies continue to ban a couple of companies that did not perform last year after Chinese producers raised the price of their product to levels that could have caused near financial ruin for the firms if they bought and delivered tons based on the tender results.

Industry watchers say another tender will have to be called soon, however. The STC tender was supposed to

Nitrogen Solutions

U.S. Gulf: UAN barge prices continued to move down last week and were called $240-$250/st FOB ($7.50-$7.81/unit) for recent trades. Others predicted that business could be done as low as $230/st FOB in the near term and said the market is poised for large drop this summer. Much of the negative sentiment is coming from new import price ideas. Recent East Coast vessel numbers were put in the $250-$255/mt CFR range, with buyers now eyeing the $240s/mt CFR.

Eastern Cornbelt: UAN-28 was quoted in a broad range at $265-$285/st ($9.46-$10.18/unit) FOB in the Eastern Cornbelt, depending on location, with the low reported in the Cincinnati market and the upper end FOB Toledo, Ohio.

Indiana sources pegged the market at the $275/st ($9.82/unit) level FOB Burns Harbor, while Illinois contacts quoted the UAN-32 market at $305-$320/st ($9.53-$10.00/unit) FOB and $315-$325/st ($9.84-$10.16/unit) rail-DEL.

Western Cornbelt: UAN-32 was unchanged at $305-$315st ($9.53-$9.84/unit) FOB in the Western Cornbelt.

Northern Plains: The UAN-28 market slipped to $285-$295/st ($10.18-$10.54/unit) FOB in the Northern Plains, down $5-$10/st from last report. Delivered tons in North Dakota remained in the $315-$317/st ($11.25-$11.32/unit) range.

Great Lakes: Michigan sources quoted the UAN-28 market at $280-$290/st ($10.00-$10.36/unit) FOB, with the low at Courtright and the upper end FOB Muskegon, Mich. Other terminal prices in the state included $285/st ($10.18/unit) FOB Wayland, Bay City, and Wawaki, and $287/st ($10.25/unit) FOB Webberville.

The UAN-32 market was commonly pegged at the $305/st ($9.53/unit) FOB level in the Wisconsin market last week, representing the low end of the regional range.

Northeast: Sources continued to report pressure on UAN pricing in the Northeast. The UAN-32 market was quoted at $260-$267/st ($8.13-$8.34/unit) FOB Baltimore, Md., down roughly $15/st from last report, with UAN-30 pegged at the $250/st ($8.33/unit) FOB level at that location.

Out of terminals in upstate New York, the UAN-32 market had reportedly slipped to $320/st ($10.00/unit) FOB, down $8/st from last report.

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