All Posts from July 27, 2015

New players to pressure K market, says Fitch

News, News Briefs

London — Fitch Ratings Inc. is the latest to warn that new potash projects, especially low-cost Former Soviet Union projects, coming to the market in the next five years will lead to excess potash placing pressure on prices. The international ratings agency said July 21 the new projects will introduce new competitors vying for their place in the market. Fitch believes this will help keep prices down, which will in turn favor low-cost producers – such as Uralkali (currently rated by the ratings agency as BB+/Negative) and Belaruskali – and help them gain export market share. Like many analysts, it regards Potash Corp of Saskatchewan Inc.’s offer for K+S, whose Legacy project is expected to begin production in [late] 2016, as an attempt to maintain market share, production, and "therefore pricing influence in this increasingly competitive environment." Fitch warned K+S has high costs relative to many global peers, and the acquisition [should it occur] is therefore likely to affect PotashCorp.’s financial profile. "Maintaining strong customer relations will be crucial for higher-cost producers such as Mosaic (BBB/Stable), and to a certain degree PotashCorp., if they are to maintain market share," Fitch said. "But new projects should, however, enhance the credit profiles of Acron (BB-/Stable) and Eurochem (BB/Stable) as they become vertically integrated in potash," the ratings agency said. Fitch also expects Uralkali’s 55-60 percent EBITDA margins to be able to withstand large falls in potash prices. Fitch believes potash supply may outpace demand by around 8 percent in aggregate over the next five years. "Combined with high emerging market stock levels, this suggests continued low prices. Our forecast is for prices to remain at around US$300/mt [FOB], with further pressure towards US$280/mt [FOB] once new capacities come on stream," the ratings agency said. Fitch noted that excess supply over the next five to 10 years is being driven by EuroChem’s VolgaKaliy and Usolskiy potash projects, with an ultimate aggregate capacity of 8.3 million mt/y. Post 2020, Acron’s Verkhnekamsk Potash Co. (VPC) project (2.6 mt/y), as well as Uralkali’s new Solikamsk-2 mine (2.3 mt/y), are also expected to come online. "These projects are all lower down the potash cost curve than Canadian projects such as BHP Billiton’s (A+/Negative) Jansen project and K+S’ Legacy project, which are expected to have price floors of over US$300/mt in order to meet return on capital," Fitch said.

Sulfur

Market Watch, Sulfur, Tampa, U.S. Gulf, Vancouver, West Coast

Tampa: Market insiders described continued strong demand across the domestic system, with some reporting incremental tightness as a result. “We cannot find any available tons in the spot market anywhere,” one trader said.

Mosaic’s solid sulfur melter, currently under construction at New Wales, Fla., remains on track for third-quarter commissioning. Sources expect the facility to receive its first cargo of solid material in August.

The third-quarter contract price of molten sulfur delivered to Tampa is $137/lt, a $5/lt increase from $132/lt in the second quarter.

Refinery utilization rose to 95.5 percent of capacity for the week ending July 17, according to the U.S. Energy Information Administration (EIA). The rate represented a 0.2 percent increase from the previous week’s 95.3 percent, and was also higher than both the year-ago 93.8 percent and the 93.0 percent five-year average.

The numbers continued a trend of historically high output that began in June, and represented the highest third-week July utilization estimate since 97.0 percent was recorded on July 23, 2004.

Daily crude inputs were also higher at 16.870 million barrels/d, an increase of 45,000 barrels from the previous week’s 16.825 million barrels/d.

U.S. Gulf: The Gulf sulfur market was called $135-$145/mt FOB, unchanged from the week before.

Vancouver: Sources continued to call the Vancouver spot market in a range of $140-$150/mt FOB, with most transactions coming in the low $140s/mt FOB. The numbers were mostly attributed to China spot prices in the mid-$160s/mt CFR, and some said $170/mt CFR was being tested for the next round of business.

Netbacks to Alberta producers fell in a wide range of (-)$10-$85/mt, though many expected that number to rise in step with Tampa as more third-quarter contracts are finalized.

West Coast: West Coast prills were flat at $130-$140/mt FOB last week, sources said.

Third-quarter contracts for California molten sulfur were quoted in a range of $75-$125/lt FOB, down from $90-$130/lt FOB in the second quarter.

ADNOC: Sulfur produced by the Abu Dhabi National Oil Co. carried a price of $150/mt FOB Ruwais in July, $5/mt higher than in June.

Aramco: Saudi Aramco product was listed at $152/mt FOB Jubail for August fulfillment. The July price was $144/mt FOB.

Tasweeq: The July price of Qatar sulfur was $149/mt FOB Ras Laffen, $8/mt above the $141/mt FOB June price.

Potash

Brazil, Eastern Cornbelt, Market Watch, Potash Muriate, Southeast, Southeast Asia, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: The NOLA granular potash market continued to be reported at $305-$310/st FOB.

Some suggested that the market may have bottomed as there is very little BPC product, if any, remaining on the river. There also does not appear to be any on the way, at least in the near term, according to sources, who say this is more likely economics rather than any concern over legislation being proposed in Congress (GM July 20, p. 1).

Eastern Cornbelt: Potash fill was pegged at $345-$355/st FOB for red and $362/st FOB for white granular tons, with rail-DEL potash fill quoted at $360-$367/st in the Eastern Cornbelt.

Western Cornbelt: Potash fill was quoted at $350-$362/st FOB out of warehouses in the Western Cornbelt, with the low end for red and the upper end for white granular tons. Rail-delivered fill tons remained at $360-$367/st.

Southern Plains: The warehouse potash market was pegged at $355-$365/st FOB in the Southern Plains for fill tons. Reference prices FOB Carlsbad, N.M., included $360/st FOB for 60 percent standard, $365/st FOB for 60 percent granular and 62 percent standard, and $372/st for 62 percent granular.

The SOP Magnesia market FOB Carlsbad remained at $385-$400/st, depending on grade.

South Central: The potash warehouse market was tagged at $350-$355/st FOB in the South Central region.

Southeast: Fill prices for potash remained at $355-$362/st FOB and $360-$267/st rail-DEL in the Southeast, depending on grade.

Brazil: Potash prices are reported to be weakening further. Sources say buyers’ ideas for granular material are around $10/mt CFR below the $325-$340/mt CFR currently being indicated by suppliers.

Vale said it produced 111,000 mt of potash at its Taquari-Vassouras mine in the second quarter of 2015, marginally up from 108,000 mt in the first quarter and 15.6 percent higher than last year’s second quarter volume of 96,000 mt. First-half production volumes were 219,000 mt, up from 206,000 mt in 2014.

The mining major attributed improved physical availability at its processing plants for the year-over-year upturn. The Taquari-Vassouras mine, located in Sergipe state, is presently Brazil’s only potash mine.

Southeast Asia: The market remains largely out of season and prices continue to be seen as weak, with standard material assessed in the $305-$330/mt CFR range and granular at $325-$340/mt CFR. Prices for standard potash in the region’s larger markets of Malaysia are reported as low as $305/mt CFR, and in Indonesia at $315-$320/mt CFR.

Phosphates

Brazil, Central Florida, China, Eastern Cornbelt, Market Watch, Phosphate Rock, Southeast, Southern Plains, U.S. Exports, U.S. Gulf, Western, Western Cornbelt

Central Florida: DAP trucks continued to trade at $430/st FOB last week, sources confirmed. Truck-loaded MAP was listed $20/st higher at $450/st FOB, although no sales were reported.

U.S. Gulf: The NOLA barge market took a breather last week, with sources reporting lower trade volumes than those seen in recent periods. DAP prices were mostly flat, although MAP was said to have strengthened.

While some expected fresh direction out of the Southwestern Fertilizer Conference, the sudden possibility of greater-than-expected imports in the third quarter muddied the waters instead. The news of a diverted Chinese DAP and MAP vessel expected to discharge in August was followed by unconfirmed reports of an additional pair of cargoes rumored to arrive in August or September – one from Moroccan producer OCP and the other from Russian fertilizer giant PhosAgro.

Sources said new imports would most heavily affect DAP supplies, which had been characterized as ample through the third quarter. MAP was in shorter supply, but may also benefit from a boost. “There’s optimism on MAP because there’s not much of it,” one contact said. “DAP there’s plenty of.”

The prompt DAP market was unchanged at $433-$438/st FOB. MAP was put at $442-$445/st FOB, up from $435-$445/st FOB the week before.

Eastern Cornbelt: DAP was quoted at $460-$470/st FOB in the Eastern Cornbelt, with MAP $10/st higher than DAP.

Sources continued to report the last prompt 10-34-0 business at the $560-$590/st FOB level in the region. Effective Aug. 1, Agrium’s phosphoric acid postings for rail-DEL SPA and MGA are slated to firm to $1,020/ton of P2O5 in Wisconsin, and $1,060/ton of P2O5 in Michigan.

Western Cornbelt: DAP pricing out of regional warehouses had firmed to $460-$470/st FOB, with MAP quoted at $470-$480/st FOB in the Western Cornbelt.

10-34-0 remained at $565-$590/st FOB for the last confirmed sales. Effective Aug. 1, Agrium’s phosphoric acid postings for rail-DEL SPA and MGA are slated to firm to $1,020/ton of P2O5 in Nebraska, Missouri, Iowa, and Minnesota, and $1,035/ton in the Dakotas.

Southern Plains: DAP had reportedly firmed to $465-$470/st FOB Catoosa, up $10/st from last report, with MAP roughly $5/st higher at the port.

Sources continued to quote the 10-34-0 market at $545-$570/st FOB in the Southern Plains for the last sales. One contact said he expects “very tight” 10-34-0 supplies again for the 2016 planting season due to acid production cutbacks.

Effective Aug. 1, Agrium’s phosphoric acid postings are slated to firm $60/ton of P2O5, to $1,020/ton for rail-DEL SPA and MGA in Colorado and Kansas, and $1,035/ton for rail-DEL SPA and MGA in Oklahoma and Texas.

South Central: DAP was reported in the $465-$470/st FOB range out of warehouses in the South Central region, reflecting a $5/st increase from last report. TSP had firmed slightly as well, to $410-$415/st FOB in the region.

U.S. Export: Mosaic announced the sale of 6,000 mt of DAP into Latin America last week. The cargo was due to sail in August and carried a price tag of $465/mt FOB.

The U.S. Gulf phosphate market was called $465/mt FOB for the week based on confirmed transactions, down from $470/mt FOB at last report.
The contract price of phosphoric acid to India is $810/mt for second-half 2015.

Brazil: The Brazil MAP market grew murkier last week. Sources confirmed trades on a softening market as low as $470/mt CFR. However, Moroccan producer OCP was said to claim transactions into the market at $490/mt CFR.

Saudi Arabia: Rumors describe

Ammonium Sulfate

Ammonium Sulfate, Eastern Cornbelt, Market Watch, Southeast, Southern Plains, Western Cornbelt

Eastern Cornbelt: The granular ammonium sulfate market was reported at $275-$285/st FOB in the Eastern Cornbelt, with rail-DEL tons at the $290/st level before discounts. Interoceanic Corp. (IOC) moved its postings for Rentech’s Premium Grade Ammonium Sulfate up to $285 Midwest river terminals and $295 inland Midwest terminals after close of business on July 17.

Ammonium thiosulfate remained at $335-$360/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate was steady at $280-$290/st FOB for fill ton offers in the Western Cornbelt.

The ammonium thiosulfate market was unchanged as well at $325-$345/st FOB in the region.

Southern Plains: The granular ammonium sulfate market remained at $260-$295/st FOB in Texas for prompt pull, depending on location.

Ammonium thiosulfate was unchanged at $295-$300/st FOB in the Southern Plains.

South Central: Granular ammonium sulfate was quoted at $285-$295/st FOB in the South Central region last week, down $5-$10/st from last report, with the low confirmed in Little Rock, Ark., and the upper end in Memphis.

Ammonium thiosulfate was steady at $310-$325/st FOB in the region.

Southeast: Ammonium sulfate fill programs were announced in the Southeast last week. Sources put the fill market for granular product at $250/st FOB Augusta, Ga., and Hopewell, Va., with rail-delivered fill tons quoted at $255/st in the Carolinas, $265/st in Georgia and Alabama, and $285/st in Florida.

Standard grade ammonium sulfate fill tons were being offered at $200/st rail-DEL in Florida last week.

Ammonium Nitrate

Ammonium Nitrate, Market Watch, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: The last done business continued to be called $255-$260/st FOB, but sources said if anyone really wanted a barge they could likely have it at $250/st FOB, if not lower. Several aging barge-loads were reported to be available on the river system.

Western Cornbelt: Ammonium nitrate was quoted in a broad range of $305-$340/st FOB in the Western Cornbelt, depending on location and availability.

Southern Plains: The Catoosa, Okla., ammonium nitrate market was quoted at $330-$340/st FOB for the last spot sales.

South Central: Ammonium nitrate remained at $335-$345/st FOB in the South Central region for the last business.

Southeast: The Tampa ammonium nitrate market remained at $330-$340/st FOB for truck tons.

Nitrogen Solutions

Eastern Cornbelt, Market Watch, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: The UAN barge market continued to be called $197-$215/st ($6.16-$6.72/unit) FOB. Players appeared to be on either side of a broad chasm, with $197-$200 st ($6.16-$6.25/unit) playing against $210-$215/st ($6.56-$6.72/unit) FOB.

The East Coast vessel price remained at $235/mt CFR, with no new business last week. Buyer price ideas are reported as $230-$235/mt and sellers at $235-$240/mt CFR.

Trammo was reported to have won a recent Abu Qir tender for 30,000 mt of Egyptian UAN. The price was reportedly around $180/mt, with possible freight to the U.S. at around $50/mt.

Eastern Cornbelt: UAN-28 remained at $222-224/st ($7.93-$8.00/unit) FOB Cincinnati for fill ton offers, with the upper end of the regional range pegged at $240-$245/st ($8.57-$8.75/unit) FOB for spot tons out of some terminals in Indiana and Ohio.

Illinois sources reported the UAN-32 market at $256-$270/st ($8.00-$8.44/unit) FOB, with the low again reported for fill ton offers.

Western Cornbelt: The UAN-32 market was unchanged at $260-$275/st ($8.13-$8.59/unit) FOB in the Western Cornbelt, depending on location and time of delivery.

Southern Plains: UAN-32 was tagged at $230-$250/st ($7.19-$7.81/unit) FOB terminals in the Southern Plains, depending on location and time of delivery, with the low end reported out of spot production points for what one source described as a possible “second round” of fill tons offered for July/August pull.

South Central: UAN-32 was quoted at $260-$270/st ($8.13-$8.44/unit) FOB terminals in the South Central region for any remaining sidedress business. Sources also reported some prepay UAN being sold for next spring at around the $250/st ($7.81/unit) FOB level in the Memphis market.

Southeast: The UAN-32 market continued to be quoted at $225-$240/st ($7.03-$7.50/unit) FOB in the Southeast, depending on location, with the low for either prompt or fill tons out of port terminals in the region. Sources continued to report little in the way of new sales, however.

Urea

China, Eastern Cornbelt, India, Market Watch, Middle East, Pakistan, Southeast, Southern Plains, Sri Lanka, U.S. Gulf, Urea, Vietnam, Western Cornbelt

U.S. Gulf: While early week business was reported as low as $280/st FOB, most players last week put prompt granular trades in the $284-$290/st FOB range. All and late August were called $277-$280/st FOB.

Mid-to-late August prills were called in the $280s/st FOB, but the last done for July continued to be reported as $310-$315/st FOB.

Eastern Cornbelt: Sources quoted the granular urea market at $380-$390/st FOB in the Eastern Cornbelt for limited prompt tons, down $10-$15/st from last report, with the low confirmed in Cincinnati, Ohio.

Some areas were still trying to complete aerial nitrogen applications on corn to compensate for rain-related nutrient losses, but in most locations the “season is all but closed out,” as one Ohio source said last week.

Western Cornbelt: Granular urea remained in tight supply in the region after steady movement on rice and in aerial applications on corn. The dealer market was quoted at $380-$400/st FOB in the Western Cornbelt last week, with the low reported out of spot river locations.

Southern Plains: The granular urea market in the Southern Plains region was quoted at $360-$370/st FOB, where available. Sources said barge traffic had resumed on the Arkansas River after high-water restrictions severely limited activities throughout much of June, and some facilities were operating again after production hiccups last month.

South Central: Urea movement on rice was starting to wind down in the region, with some locations already finished and others wrapping up the final application. Sources also reported a slim application pace on cotton and pastures at mid-month. “We’re mostly just trying to get empty and then deciding when to recharge our system,” said one contact.

Granular urea pricing had reportedly slipped to $355/st FOB Memphis and $370/st FOB Little Rock, Ark., down some $25-$30/st from early July levels. Out of Convent, La., the urea terminal market was quoted at $335/st FOB last week.

Southeast: The granular urea market was reported at $355-$365/st FOB port terminals in the Southeast, down some $10/st from last report.

Sri Lanka: The big news in the industry for the week was the Sri Lanka Agriculture Ministry tender for 36,000 mt of granular urea and 12,400 mt of either granular or prilled urea.

Usually the Sri Lanka tenders confirm existing market trends. This time, however, the tenders confirmed what traders were thinking and made a mockery of what Chinese producers were saying. With the exception of one offer by ETA, all tonnage offered came from Chinese sources. One offer even came from a Chinese firm.

The netback for the lowest offers put the prilled product in the low $270s/mt FOB. This came as producers were arguing that the going price for prills is at $280/mt FOB.

The Sri Lankan ministry is expected to make awards by early this week. The tally for the two tenders follows.

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, Market Watch, Middle East, Southeast, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: Players were awaiting news of Tampa business for August, but it was not forthcoming at press time. While some predicted a rollover of the July price of $460/mt CFR due to relatively flat global prices, others argued that the NOLA market was a bit long, which could translate into lower price ideas for Tampa.

The last done business on the NOLA market was reported at $457/st FOB for spot barges, but there were reports last week that new business may have occurred at a much lower $410/st FOB. Some sources indicated that ammonia might be a tad long in the area, with speculation that the urea turnaround time at CF might have prompted excess ammonia.

Others questioned such a decrease, however, saying it was a large drop and it was not shopped around to other buyers.

August NYMEX natural gas closed July 23 at $2.816/mmBtu, down slightly from the July 16 close of $2.854/mmBtu.

Eastern Cornbelt: The ammonia market was steady at $545-$555/st FOB for fill tons and $555-$565/st FOB for fall prepay in the Eastern Cornbelt, with the lower numbers in Illinois and the upper end in the Indiana market.

Sources talked of tows being diverted away from Illinois River ammonia terminals due to high water in recent weeks, with more rain likely over the coming weekend.

Western Cornbelt: The anhydrous ammonia market remained at $505-$535/st FOB in the Western Cornbelt for fill tons shipped in July and August, with the low in Nebraska and the upper end FOB Palmyra, Mo. Fall prepay was reportedly being quoted at a $10/st premium to the fill market.

Southern Plains: Anhydrous ammonia was quoted at $460-$480/st FOB regional production points in the Southern Plains, depending on location, with the low for summer fill shipment in July and August and the upper end for fall prepay. Pricing out of Kansas pipeline terminals was reportedly $30/st higher.

South Central: The anhydrous ammonia market had reportedly slipped to $550/st FOB Henderson, Ky. No activity was reported in Memphis, Tenn., to test the ammonia market at that location.

Black Sea: The Bosporus Strait was closed early last week for about a day, but caused little disruption in delivery schedules.

The stoppage came Wednesday morning when a dry cargo vessel had a rudder malfunction and smashed into a straits-side villa just north of Istanbul. Tugboats moved the stricken vessel to a nearby port for inspection and repairs. The straits were re-opened by the late afternoon.

The event had the potential to cause major disruption in ammonia shipments out of Yuzhnyy, but one trader who watches Black Sea traffic said the ongoing Bosporus Bridge repair work near Istanbul has had a greater impact on schedules. The Bosporus is closed from 5 a.m. until 11 a.m. each day while major repairs take place on the bridge.

Prices out of Yuzhnyy remain stable as the industry settles into the summer doldrums.

Middle East: Sources report that the removal of tons from the global market by the starting of Safco V urea production has so far caused no impact in the market.

One trader noted that it will take a while for the impact to be felt, but it should be a minor blip in the market. He said there is plenty of production that can be ramped up to ensure contracts are met and time schedules kept.

Prices remain stable as demand remains steady.

Uralkali registers subsidiary in Latvia

News, News Briefs

Riga, Latvia — Russian potash producer Uralkali has registered its subsidiary, Uralkali Trading, in Latvia, according to the news agency Interfax, citing information on the database of Latvia’s information services provider Lusoft. The Uralkali subsidiary, through which Uralkali exports its potash, was registered on July 15 with a share capital of €2 million ($2.2 million). Uralchem, which holds a 19.99 percent stake in Uralkali, owns a trading company in Latvia – SIA Uralchem Trading (Latvia) – and a controlling share (51 percent) in the 2 million mt/y Riga Fertilizer Terminal. Uralchem owner Dmitry Mazepin, who is also co-deputy chairman of Uralkali, is reported to be seeking a merger with Uralkali, according to Russia’s Vedomosti newspaper, and is said to be in talks with lender VTB for a reported $1.5 billion loan to finance the purchase of Onexim Group’s stake (20 percent) in the potash company (GM July 20, p. 15). According to an analyst who did not want to be identified, this latest move by Uralkali is another signal that the potash producer is moving in the direction of a merger with Uralchem. It could also be interpreted, he said, as a possible early preventative move by Uralkali to cushion itself against any potential U.S. sanctions. Last week, a bill was introduced in the U.S. House seeking to reinforce U.S. sanctions against Belarus, specifically targeting Belaruskali and its trading company Belarus Potash Co. (GM July 20, p. 1). U.S. and EU sanctions already are in place against certain Russian individuals and businesses in response to the conflict in Ukraine.

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Sri Lanka Agriculture Ministry Tender for
12,400 mt Prilled or Granular Urea

Supplier