Baltimore Bridge Collapse, Port Closure Pressures UAN

The Singapore-flagged Dali, a 984-foot container ship bound for Sri Lanka, slammed into Baltimore’s Francis Scott Key Bridge and brought down the entire structure within seconds on March 26. The accident killed six people and shut down Baltimore’s port, threatening to disrupt global supply chains and the livelihoods of thousands of workers.

Federal officials told Maryland lawmakers that replacing the 1.6-mile bridge would cost at least $2 billion including cleanup, said a person familiar with the matter.

“Consistent with the president’s direction to get the port up and running as soon as possible, the Coast Guard’s highest priority now is restoring the waterway for shipping, stabilizing the motor vessel Dali and removing it,” US Coast Guard Vice Admiral Peter Gautier said at a March 27 White House press conference.

The Coast Guard is working with the Army Corps of Engineers, which is leading the salvage effort, and both have moved “aggressively” to board the vessel and ensure it remains stable since it holds more than 1.5 million gallons of fuel and lube oil on board, said Gautier. He said the vessel was carrying about 4,700 cargo containers including 56 that contained hazardous materials.

A portion of the bridge remains on the bow of the ship, which is sitting at the bottom of the channel but doesn’t appear to have any flooding, he said. That debris needs to be removed first before the ship can be re-floated. Salvage firm Resolve Marine has started mobilizing resources to re-float and remove the ship.

It’s too soon to set a timeline for the port’s reopening, according to US Transportation Secretary Pete Buttigieg, but outside estimates range from a couple weeks to more than a month. The closure is threatening the livelihoods of thousands of workers, while a dozen large ships are stuck inside Baltimore’s harbor and trade is being rerouted to other ports.

“This isn’t going to happen overnight,” Buttigieg said in an interview with Bloomberg Television. “This isn’t going to be cheap either.” Buttigieg said that rebuilding a smaller Minnesota bridge that collapsed in 2007 cost around $260 million, but warned the Key Bridge reconstruction would be pricier. “This is a larger span of a bridge, likely in many ways a more complex project,” he said. “We just don’t know the full scope yet.”

The Francis Scott Key Bridge took five years to build and was completed in 1977 at a cost of around $141 million, according to one estimate. “We rely on our infrastructure systems for our daily needs, for a huge amount of goods that we get in the US from overseas and to have it cut off so suddenly, it’s a huge crisis,” said Yonah Freemark, a researcher at the Urban Institute, who said the bridge rebuild would likely cost “several billions.”

President Joe Biden said he wants the federal government to pay and vowed “to move heaven and earth to reopen the port and rebuild the bridge.”

The aftermath of the bridge’s collapse throws another spotlight on the fragile nature of global supply chains that have already been strained by drought in Panama and missile attacks on Red Sea shipping by Yemen-based Houthi militants. Docks in New Jersey and Virginia face the threat of being overwhelmed by traffic that is being forced away from Baltimore, one of the busiest ports on the US East Coast.

“It’s a large port with a lot of flow through it, so it’s going to have an impact,” Ford CFO John Lawler, told Bloomberg TV. “We’ll work on the workarounds. We’ll have to divert parts to other ports along the East Coast or elsewhere in the country.”

There are concerns that diverted cargoes will overwhelm nearby East Coast ports. A sudden 10-20% increase in volumes through a port is enough to cause massive backlogs and congestion, according to Ryan Petersen, the founder and CEO of Flexport Inc., a digital freight platform based in San Francisco. He expects to see a shift in cargoes to as far away as the West Coast.

Baltimore is the number one US port for car imports and is also the second-largest terminal for US exports of coal. Baltimore is also a fertilizer hub, with UAN most significantly affected, according to Alexis Maxwell, Green Markets Director of Research. Maxwell estimated that the port handles about one-third of the East Coast UAN trade.

She noted that CF Industries Holdings Inc. ships to the East Coast ports from New Orleans, though UAN is mostly consumed in the Cornbelt. Yara North America and other fertilizer companies also participate in the Baltimore market. CF and Yara had not responded to inquiries at press time.

“It has been a real challenge getting prices this week with the bridge collapse in Baltimore,” one fertilizer industry contact told Green Markets. “At this time, we can’t even purchase UAN let alone get prices.”

“Most UAN terminals have pulled offers at this time as most of those players had resupply vessels scheduled to arrive in the coming days and weeks, so their vessels are now stranded and they will be scrambling to try and find alternative options,” added another source.

Baltimore is also one of the nation’s leading gateways for farm equipment and construction machines like combines, tractors, hay balers, excavators, and backhoes, according to Dean Croke, a principal industry analyst at DAT Freight & Analytics. March “is the peak import month in Baltimore for farming equipment ahead of planting season in the Midwest,” he said.

About 35,000 people used the bridge every day. The annual value of goods going over is about $28 billion, according to the American Trucking Associations.

Brush Fire Impacts Mosaic Production at Riverview Plant

The Mosaic Co. on March 27 reported that its Riverview phosphate fertilizer production facility in Florida sustained limited damage to ancillary operations from a brush fire earlier in the week, but production impacts associated with the incident may last four to six weeks.

The run rate at Riverview is approximately 30,000 mt per week. At the time of the fire, the company said the facility was configured to produce phosphate products primarily for export to Brazil.

Hillsborough County Fire Rescue (HCFR) responded to the brush fire at a phosphogypsum stack at the Mosaic facility just before 6 p.m. on March 25. The fire had extended to involve polyethylene pipes. HCFR said firefighters worked for several hours as high winds accelerated the fire and the pipes burned at extreme temperatures.

The fire was reported to be under control by 10:30 p.m., but firefighters remained onsite to deal with hot spots and ensure the fire did not reach Mosaic’s main facility on the property. One hot spot did develop around 10:30 a.m. on March 26.

HCFR reported that one firefighter was transported to a hospital but was released and is recovering. No other injuries were reported and no evacuations were called. Mosaic told the local press that no hazardous materials or chemicals were involved and there were no environmental impacts.

USDA Projects Lower US Corn, Wheat Acreage; Soybeans, Cotton, Rice Acreage Climbs

USDA’s March 28 Prospective Plantings report estimates planted 2024 acreage at 90.0 million acres for corn, 86.5 million acres for soybeans, 47.5 million acres for wheat, and 10.7 million acres for cotton. Compared with last year, the projections reflect a 5% drop for corn, a 3% increase for soybeans, a 4% drop for wheat, and a 4% increase for cotton.

Corn futures for May delivery jumped as much as 5% on the Chicago Board of Trade – their biggest daily gain since November – while soybeans fluctuated between gains and losses. USDA’s corn acreage estimate fell below the average of analyst estimates compiled by Bloomberg, and also came in under USDA’s February estimate of 91 million acres (GM Feb. 16, p. 1).

The reduction in corn acreage comes at a time when corn prices are under downward pressure amid ample global supplies and sluggish demand for US exports, Bloomberg reported, with soybeans trading at relatively higher prices. 

Underscoring how ample corn supplies are, US inventories on March 1 totaled 8.35 billion bushels, up 13% from a year ago, USDA said in a separate report. The amount of grain held in farms was 24% larger.

Compared with last year, USDA said planted corn acreage is expected to be down or unchanged in 38 of the 48 estimating states, while planted soybean acreage is up or unchanged in 24 of the 29 estimating states. The 86.5 million acres of estimated soybean acreage is down from USDA’s February estimate of 87.5 million acres.

USDA’s wheat acreage estimate is roughly in line with the average analyst estimates compiled by Bloomberg. Plummeting prices and lukewarm global demand have made wheat less attractive for planting, Bloomberg reported, as US wheat faces strong competition from cheaper supplies worldwide, including from the politically volatile Black Sea region.

Area planted to rice, a big user of topdress urea, is estimated at 2.93 million acres this year, up 1 percent from last year’s 2.89 million acres and slightly above USDA’s February estimate of 2.9 million acres.

OCP 2023 Net Income Slumps 49%; 4Q Revenues Climb

OCP Group SA reported a 49% drop in net income for the 12 months to Dec. 31, 2023, to MAD14.37 billion (approximately $1.4 billion at current exchange rates) from MAD28.19 billion the previous year.

Full-year EBITDA fell by 41%, to MAD29.40 billion ($2.9 billion) from the prior year’s MAD50.08 billion ($4.93 billion), while revenues were down 20%, to MAD91.28 billion ($9.02 billion) from MAD114.57 billion ($11.28 billion).

“The significant downward pressure on prices seen in the first half of 2023, following the exceptional price levels of 2022, eased during the third and fourth quarters,” the company said in a March 28 media release.

OCP noted that this improvement was driven by a number of factors, including lower Chinese exports coupled with a gradual increase in demand across major agricultural regions, including the US, Europe, and Brazil, driven by depleted inventory levels and favorable economic conditions for farmers.

The company also highlighted that since the start of July 2023, the cost of raw materials, especially ammonia, increased sharply as a result of unforeseen supplier shutdowns and a significant uptick in gas prices in Europe, further contributing to the upward pressure on fertilizer prices during the second half of the year.

OCP cited lower selling prices across all its product categories compared with 2022 for the decrease in FY2023 revenues. The company provided a preliminary report on its FY2023/4Q 2023 revenues in late February (GM March 1, p. 27).

OCP FY2023 Revenues

$ million FY2023 FY2022 % change
Total revenue 9,020 11,284 (20)
       
Phosphate Rock  1,506 1,812 (17)
Phosphoric Acid 720 1,215 (41)
Fertilizers 5,976 7,278 (18)

The company noted that despite a material fall in fertilizer export prices, its full-year fertilizer revenues were only 18% below FY2022 levels in local currency. It said the decline was somewhat mitigated by rising export volumes, bolstered by improved demand in some regions including South America and Europe.

Rock revenues were down 18% and phosphoric acid revenues down 40% compared to the previous year in local currency. OCP said these results primarily reflected the normalization of prices after 2022, which was partially offset by increased export volumes in the second half of 2023. The company highlighted a significant increase in exports to India to serve last-minute demand late in the third quarter and through the fourth quarter.

Fertilizers contributed 66% to OCP’s revenues in 2023, with TSP volumes increasing substantially year-over-year, accounting for 15% of fertilizer sales volumes, up from 11% in 2022. The company said TSP saw increased demand particularly among clients in India, Brazil, and other parts of South America and Africa “due to its efficacy in responding to demand for fertilizers across various soil types.”

OCP said it sold 11.3 million mt of fertilizers in 2023, a 30% increase on the 8.7 million mt sold the previous year. Of that total, it sold 1.7 million mt of TSP last year, up from 0.9 million mt in 2022, with 0.5 million mt going to Bangladesh and 0.8 million mt to Brazil.

The company brought into operation the first of two TSP fertilizer production lines at the Jorf Lasfar Chemical Site in May and December last year, and is scheduling the third line to become operational by the end of this year’s first quarter. OCP said it would deploy the new TSP capacities gradually “to support the anticipated demand recovery.” Each of these three lines is capable of producing 1 million mt/y equivalent of DAP, it said.

OCP reported a 72% increase in fourth-quarter EBITDA, to MAD12.22 billion ($1.20 billion) from MAD7.11 billion ($615 million) in 2022. Fourth-quarter revenues rose 21%, to MAD30.24 billion ($2.99 billion) from MAD25.04 billion ($2.33 billion) in 2022. OCP cited higher 4Q demand and a “substantial” increase in volumes across all product categories compared with 2022, which more than offset the impact of lower prices.

Looking ahead, the company sees a balanced supply and demand market in 2024 reflecting anticipated continued demand recovery in North America, Southeast Asia, and Europe, and “at least stable” imports for India and Brazil thanks to globally low stocks and favorable weather. OCP also sees continued growth in Africa.

OCP, which is 94.6% owned by the Moroccan government, plans to pay out MAD9.1 billion (approximately $889 million at current exchange rates) in dividends for 2023, despite the 49% drop in its net income, according to a Bloomberg report on March 28.

St Petersburg Halts AN Transshipments, Reports Say

Russia’s Port of St Petersburg is reported to have stopped the transshipment of ammonium nitrate (AN) due to concerns about attacks by Ukrainian drones, according to reports this week by UAWire and Pravda, citing the Kommersant newspaper.

According to the reports, the port authority halted AN handling operations at the port in February following a directive from the St Petersburg Governor. The directive follows a drone attack on the St Petersburg oil terminal in January and comes amid increasing concerns that an attack on the port’s AN transshipment terminal could cause a disaster.

According to Kommersant, the port handles about 3 million mt/y of AN, but it is unclear if this volume is a current level or the pre-Western sanction level.

Russian Railways from Feb. 13 imposed restrictions on the loading of AN destined for St Petersburg’s Bronka terminal and to rail unloading stations at the port. The ban was initially set to run until the end of February but was then extended through March. The rail company’s decision followed the St Petersburg authorities’ ban on AN transshipment by the port.

The ban has left AN producers and exporters who previously shipped through St Petersburg looking for alternative export options. Unnamed sources contacted by the media outlets pointed to the lack of other Russian port capabilities to handle AN, and much of the capacity that exists is already fully utilized, they said.

AN transshipment is most likely to be shifted to the Russian Baltic port of Ust-Luga, according to Kommersant. But infrastructure upgrades will be required at the port, and approvals and installation of the new equipment at Ust-Luga and at other suitable ports will take time and investment. Furthermore, sources told the newspaper that domestic demand for AN is currently high during spring planting.

The last available full-year Russian export figures from Trade Data Monitor show the country exported a total of 4.3 million mt of AN in 2021, before Western sanctions were implemented, of which roughly 46% was exported to Brazil.

Brazil in recent years has relied on Russia for much of its imported AN. In full-year 2023, it imported 1.127 million mt of AN from Russia, Trade Data Monitor reported, out of an annual total of 1.137 million mt exported from Russia.

Mosaic P&K Volumes Outpace 2023, Revenues Trail

The Mosaic Co. on March 27 released January and February sales volumes and revenues for its three major segments, with potash and phosphate sales volumes outpacing year-ago figures. Revenues for the segments, as well as for Mosaic Fertilizantes, trailed the year-ago numbers.

First-quarter potash sales volumes and MOP prices at the mine are expected to be within the previous guidance range of 2.0-2.2 million mt, and $225-$250/mt, respectively.

Phosphates sales volumes are expected to be within the previous guidance range of 1.6-1.8 million mt. Included in that estimate are 175,000-200,000 mt of low margin products purchased from third parties to offset the impact of Mosaic’s previously announced turnaround schedule in the first half of 2024. DAP prices at the plant are expected to be within the previous guidance range of $580-$605/mt.

Potash Jan/Feb 2024  Jan/Feb 2023
Sales Volumes (000 mt) 1,417 1,100
Sales Revenues (M US$) 418542
Phosphates  Jan/Feb 2024 Jan/Feb 2023
Sales Volumes (000 mt) 1,0871,066
Sales Revenues (M US$) 760 827
Mosaic FertilizantesJan/Feb 2024 Jan/Feb 2023
Sales Volumes (000 mt)1,238 1,462
Sales Revenues (M US$)650 971

Tessenderlo Shares Fall on Lower Results

Brussels-based Tessenderlo Group shares slumped as much as 9.5% on March 27 after reporting full-year adjusted EBITDA that missed estimates. KBC Securities said the Belgian chemicals company posted “poor” full-year results and guidance was “clearly a disappointment,” according to Bloomberg.

Adjusted EBITDA was €318.7 million, down 27% from the year-ago €434.8 million and below the Bloomberg Consensus estimate of €366 million. The group expects 2024 adjusted EBITDA in line with that of 2023. Revenues were €2.93 billion, up 13.2% from the year-ago €2.6 billion. Analyst estimates were €3.14 billion.

“For 2024 we are expecting that the first half of the year will still be under pressure, but we see gradual improvement towards H2, because in H1 we are still stressing out expensive inventories from last year, which are being sold at bad margins,” CEO Luc Tack told analysts in an earnings call.

The Agro segment posted full-year adjusted EBITDA of €82.3 million on revenues of €793.9 million, down 52.5% from 2022’s €173.4 million and €974.5 million, respectively. The company cited lower volumes and margin pressure due to decreasing selling prices in combination with high-valued inventory. The NovaSource unit increased its adjusted EBITDA, helped by the contribution of the Lannate® product line acquired in the second half of 2022.

Tessenderlo said the construction work for new plants in Defiance, Ohio, and Geleen, Netherlands, remains on schedule. Defiance will produce Thio-Sul®, KTS®, and K-Row 23® (Agro segment) and sulfite chemicals for industrial markets (Industrial Solutions segment). The plant is scheduled to start operations by the end of 2024. The Geleen Thio-Sul plant (Agro) is expected to be operational in mid-2024.

Company-wide, second-half 2023 adjusted EBITDA was off 39.3%, to €113.6 million from the year-ago €187.2 million, while revenues were up 4.3%, to €1.3 billion from €1.25 billion. Second-half Agro adjusted EBITDA was off 25%, to €38.8 million from the year-ago €51.8 million. Revenues were down 18.3%, to €350.3 million from €428.6 million.

Exxon, JERA Ink Low-Carbon Ammonia Agreement

ExxonMobil has signed a Project Framework Agreement with Japanese energy corporation JERA to explore the purchase of low-carbon ammonia from Exxon’s Baytown facility outside of Houston, Texas, with JERA having ownership participation in the project. 

Exxon is currently developing a low-carbon blue ammonia facility at Baytown that is expected to produce 900,000 mt/y of low-carbon hydrogen and more than one million mt/y of low-carbon ammonia, with production commencing in 2028. Exxon recently threatened to scrap the project given that the Inflation Reduction Act 45V proposed guidance would not give the project enough credits to compete against other projects.

JERA will explore procurement of 500,000 mt/y of the low-carbon ammonia produced at Baytown for demand in Japan. JERA, which is a joint venture between Tokyo Electric Power Company Holdings and Chubu Electric Power Co, was recently reported to have started a project demonstration on co-firing ammonia for power generation in Japan (GM March 15, p. 27).

Japan’s Inpex to Invest in US Ammonia Projects

Japanese energy corporation Inpex is preparing to invest in low-carbon ammonia in the US that will produce ammonia for power generation in Japan. The President of Inpex, Takayuki Ueda, spoke of the investments at CERAWeek in Houston, Texas, last week.

Ueda said the investment is possible due to the assistance from the US government in the form of the Inflation Reduction Act credits. They are considering plans to produce 1.1 million tons of ammonia annually in Houston by 2027, which would cost several hundred billion yen. They plan to work with US and European partners.

FuelPositive Files Patent for Green Ammonia Module

Canadian technology company FuelPositive Corp., Waterloo, Ont., has filed a provisional patent for its new green ammonia add-on module systems.

The systems, once fully commercialized, could enable farmers to independently produce green aqueous ammonia fertilizer on-site. FuelPositive said the ammonia would be produced at a lower cost and with lower GHG emissions than existing methods.

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