Riyadh—Ma’aden Phosphate Co. (MPC), majority-owned by Saudi Arabian Mining Co. (Ma’aden), produced 669,000 mt of ammonium phosphate at its Ras Al-Khair complex in the second quarter, largely in line with first-quarter output. But output was 7 percent below the year-ago’s 716,000 mt due to a planned reduction in phosphoric acid production, the company said. Second-quarter sales of ammonium phosphate, mostly as DAP, rose 18 percent to 705,000 mt, compared with 599,000 mt in the first quarter, largely reflecting increased seasonal demand. Second-quarter 2015 sales were 709,000 mt. Six-month production was 4 percent higher than a year ago at 1,328 million mt, and sales were 3 percent higher at 1,304 million mt. Ma’aden said the MPC ammonia plant continues to operate above its design capacity, producing 300,000 mt in the second quarter. But second-quarter external sales were 25 percent lower at 154,000 mt than the first quarter’s 204,000 mt due to increased consumption at the ammonium phosphate fertilizer plant. Ma’aden sold 140,000 mt of ammonia externally in second quarter 2015. First-half external sales almost doubled, to 358,000 mt, up from 186,000 mt a year ago.
Cary, N.C.—Verdesian Life Sciences has added a new liquid inoculant, Primo Power CL™, to its peanut seed enhancement portfolio. It said the product opens the door for more nodules, which provide more available nitrogen to increase the potential number of pegs and pods that are set. “Peanuts that get a faster, healthier start and develop a larger root mass can improve the crop’s chances for reaching its genetic potential for greater yields,” said Kurt Seevers, Verdesian technical development manager. “Its concentrated liquid formulation offers a convenient, lower use rate for more efficient application.” The product is applied in furrow at planting, and the company said it improves root development and stand count. The product is an evolution of the company’s original Primo Power inoculant. The company said its specially selected strains of rhizobia are also proven to help peanuts perform in a wide range of soils and in unfavorable conditions.
Junior potash developer Western Potash Corp.. Vancouver, has appointed three individuals to new positions. Dr. Matthew Wood has been named project director for the Milestone Potash Project. He is the former president of Vale Potash Canada Ltd. and senior project leader of Vale’s Kronau Project near Regina in Saskatchewan. He also led the design of the solution mining and wellfields both for the Kronau Project and Potasio Rio Colorado (PRC) in Argentina.
George Gao has been named senior vice president, business development. The company said he brings decades of experience in corporate compliance, business development, and capital markets. He is the former president of the Beijing Mining Exchange, and has prior experience working for the Toronto Stock Exchange and TSX Venture Exchange.
Six-year employee Jerry Zhang has been named director of administration and assistant to the president. He has nearly a decade of experience serving various levels of Chinese central governments in a wide variety of responsibilities in a range of operational assignments. He obtained a PhD degree in International Relations from the University of Melbourne.
Western also announced that it is in the process of appointing KPMG as its new external auditor.
Moscow—Uralchem said it produced 3.03 million mt of fertilizers and other chemical products in the first six months of 2016, compared with 2.99 million mt in the same year-earlier period. Ammonium nitrate and its derivatives output increased marginally year-on-year to 1.47 million mt, up from 1.46 million mt. The company’s production of MAP products (monoammonium phosphate 12:52 and monoammonium phosphate special water-soluble 12:61) increased significantly to 91,000 mt, up from 23,000 mt. Uralchem said phosphate fertilizer output at its Voskresensk Mineral Fertilizers subsidiary has increased following a large-scale investment project aimed at boosting its production level.
U.S. Gulf: Granular prompt barge prices moved up last week, with most putting the market within the $167-$179/st FOB range for new business. There were unconfirmed reports of $164/st FOB.
Sources attributed the uptick to several factors, including fewer imports than previously expected, new international business, and attractive pricing compared to the new UAN fill numbers. Second-half August trades were called $180-$181/st FOB, although some wondered if the market had much stamina beyond the $180s/st FOB due to fears that higher numbers might attract additional imports.
Prill prices continued to be called $183-$194/st FOB.
Eastern Cornbelt: The granular urea market was quoted at $205-$220/st FOB in the Eastern Cornbelt.
Western Cornbelt: Granular urea was pegged in the $205-$215/st FOB range for prompt tons in the Western Cornbelt.
California: The granular urea market had reportedly slipped to $310-$320/st FOB port terminals in California, down $10/st from last report.
Pacific Northwest: The granular urea market remained at $270/st FOB port terminals in the Pacific Northwest, with delivered tons quoted in the $280-$290/st range in the region.
Western Canada: Granular urea remained at $370-$380/mt DEL in Western Canada.
India: Sources said another tender from MMTC could come as early as this weekend. The most likely scenario will be a tender call that places restrictions on tonnage and discharge port, in a manner similar to the IPL tender that closed earlier this month.
When IPL did not buy the full 420,000 mt called for in its tender, government planners reportedly got nervous because urea availability is a politically sensitive issue. Sources said the government needs to have enough urea in the pipeline and also on hand in order to prevent outcries from farmers and their elected officials.
IPL did not buy the full tender amount this month because offers into two ports were too high for the company. Instead, IPL only picked up 300,000 mt at $179-$181/mt CFR. The two remaining cargoes were priced in the upper-$190s/mt CFR.
Sources said they expect the pending MMTC tender to also be for just under 500,000 mt. One trader noted, however, that the Indian government publicly stated it would import a total of about 7 million mt by the end of the year, but only about 2 million mt have been imported so far. Sources said that leaves the government having to arrange for imports of about 1 million mt per month.
The amount of material to be imported this year is less than last year. The government has stepped up its campaign to produce more urea in the country or with joint venture operations with dedicated sales contracts into India so the government can reduce the amount it pays in urea subsidies.
Traders expect to see continued softening in prices. The restrictive nature of the IPL tender, which is likely to be replicated in the upcoming MMTC tender, means traders will only have one shot at getting an award. With everyone talking about a glut in the urea market, sources said it should not be difficult to secure tons that support a mid-$170s/mt CFR price.
China: New figures show Chinese exports for the first half of 2015 were 25-30 percent lower than the same period last year. Sources said they were not surprised at the decline.
The reduction in exports is explained by a number of factors, said traders. A strong domestic season this year encouraged producers to keep more material in the country. At the same time, a glut of urea in the global market pushed prices well below the domestic price, leading to fewer tons being offered offshore.
The lack of exports was further aggravated by aggressive offers from Iran, Yuzhnyy, and North Africa into the Indian tenders, which left Chinese producers out in the cold.
Finally, said one trader, Chinese production has been cut back in the past few months. Some plants have shut down for extended maintenance work, while others have cut back output. Sources estimate the entire Chinese urea production output is only at 65 percent of rated capacity.
Granular and prilled urea remain at parity at $187-$188/mt FOB. Sources said, however, that one deal with Fu Dao material to Australia came in at $190/mt FOB. One trader called that price an aberration rather than a signal of a price rebound.
Indonesia: Producers are still holding firm at $221/mt FOB for granular material. Sources said they might be willing to accept a few dollars less for prilled product.
Industry observers estimate that Indonesia has 60,000-90,000 mt of granular product and about 20,000 mt of prilled available for export. One trader added that producers are not desperate to export, and appear willing to wait for the global price to rebound.
Middle East: Sources reported spot sales this week at $181-$185/mt FOB out of Oman and Kuwait. Contracts deals continue to hover in the $170s/mt FOB.
Brazil continues to fight for – and often get – lower prices in spot deals. Some of the deals are close to contract prices. A reported but unconfirmed sale of $185/mt CFR into Brazil has a netback to the Arab Gulf at just under $170/mt FOB. The last confirmed deal showed a price closer to $190/mt CFR, for a netback in the low-$170s/mt FOB.
Australian buyers appear to be helping hold up the price by accepting deals with higher netbacks, sources said. However, said one trader, the trend remains on a downward projection across the board.
Egypt is in an on-again/off-again situation. The government needs to occasionally divert natural gas from industries to step up electrical production.
Sources said the announcement earlier this month that production would stop was more drama than reality. According to one trader, the reduction in natural gas simply means that production will have to either slow down or temporarily shut down until supplies are reinstated.
Prices in Egypt are now pegged at $184-$185/mt FOB, reflecting producers responding to the global slide in prices.
Rio de Janeiro—Vale SA produced 101,000 mt of potash at its Taquari-Vassouras mine in Segipe state in the second quarter of this year, a nearly 10 percent reduction on the year-ago’s output of 111,000 mt. The company cited an unscheduled maintenance stoppage at the Taquari-Vassouras beneficiation plant, as well as the mining of a lower grade ore, for the decline. First-half 2016 production was 211,000 mt, some 9 percent down on the year-ago’s 219,000 mt. Vale produced 969,000 mt of phosphate rock at its Brazilian operations in the second quarter, 12 percent less than the 1.1 million mt produced in the same-year earlier quarter. The company attributed the downturn to unscheduled maintenance stoppages at the Catalão, Tapira, and Cajati plants in the second quarter and the stoppage of the Patos de Minas plant since July 2015. After the unscheduled maintenance stoppages, all of these plants have now resumed operations. Six-month phosphate rock production at Vale’s Brazilian operations fell 24 percent year-on-year to 1.67 million, down from 2.2 million mt. Production at Bayóvar in Peru, in which Vale owns a 40 percent stake, was 836,000 mt in the second quarter, 17 percent lower than in the second quarter last year due to an unscheduled maintenance stoppage at the concentration plant. First-half production slipped 8 percent year-on-year, falling to 1.75 million mt. Vale in the second quarter produced 454,000 mt of SSP (470,000 mt Q2 2015), 246,000 mt of TSP (240,000 mt ), 235,000 mt of MAP (287,000 mt), and 114,000 mt of DCP (84,000 mt). Six-month production of SSP was 780,000 mt (934,000 mt in 1H 2015), 459,000 mt of TSP (471,000 mt), 493,000 mt of MAP (578,000 mt), and 236,000 mt of DCP (222,000 mt). Ammonium nitrate production was 128,000 mt in the second quarter, compared with 122,000 mt a year earlier. The production uptick reflected a scheduled maintenance stoppage at the Cubatão plant in April 2015. Vales reports its Cutatão ammonia plant remains under “corrective maintenance,” a process begun in the second quarter. As a result, Vale’s six-month ammonia output fell to 66,000 mt, down from the year-ago 90,000 mt.
U.S. Gulf: The U.S. Gulf import market was noted in a range of $45-$50/mt CFR for the week, unchanged from last report. Acid sales quoted at $5-$10/mt FOB from Northwest European smelters informed current Gulf levels, along with Atlantic freight quoted at $35-$40/mt.
Market players put cargoes to Brazil in the $45-$55/mt CFR range, with Chilean buyers seeing tons at $55-$65/mt CFR.
Acid delivered to the Gulf domestic market was called in a range of $90-$95/mt DEL, while tons headed for the Midwest were said to command $80-$90/mt DEL. Cargoes bound for the West Coast saw prices in the $110-$115/mt DEL range, sources said.
Trading on the London Metal Exchange was down for the week, with aluminum, copper, lead, nickel, and zinc closing lower on July 27 than the week before.
Aluminum fell to $1,584.00/mt from $1,609.00/mt a week earlier, and copper was logged at $4,869.50/mt, down from $4,900.50/mt at last report. Lead was $1,806.00/mt, down from $1,823.00/mt the week before, and nickel slipped to $10,360.00/mt from $10,445.00/mt the week before. Zinc fell to $2,212.00/mt from $2,232.00/mt one week earlier.
U.S. Gulf: Shipping operators quoted Algiers Lock delays in the 2-5 hour range for the week. Waiting at Bayou Sorrel Lock averaged three hours with four boats queued, and Port Allen Lock navigation fell in the 1-2 hour range.
Repairs and nearby bridge work continued to complicate Industrial Lock transit, stretching delays to 14-17 hours. Claiborne Avenue Bridge repairs restricted Inner Harbor Navigation Canal access to nighttime hours only. Guidewall work at the lock itself coincided with the bridge closure and limited locking to overnight hours. Repairs to the lock were scheduled to conclude July 28, though no estimated completion date for the bridge has been announced, shippers said.
Industrial Lock is slated to go offline Aug. 1 for major repairs. The Corps will route traffic through Bayou Baptiste Collette, where dredging was underway last week in preparation for the expected rush of traffic. Industrial Lock is scheduled to reopen on or around Nov. 29.
The Coast Guard closed the Houston Ship Channel following a sulfur dioxide leak at the Pasadena Refinery in Galena Park, Texas, on July 25. The channel was reopened after a 2.5-hour wait, sources said.
The Corps reported Brazos Lock restrictions, with locking limited to a single loaded barge or two empties per turn. Shippers estimated delays of up to eight hours with 10 vessels in line for service. Repairs and pipeline dredging closed the Brazos River Floodgates to overnight transit July 18 through Aug. 17.
Colorado Lock waits were reported at about an hour.
Lower Mississippi River: Stack Island dyke work, slated to kick off Sept. 15, is likely to trigger transit delays in the Lake Providence area, shippers said. The project is scheduled to run through the end of December.
Vicksburg depths were reported at 17.92 feet on July 28. Levels were forecast to begin rising on July 29-30, climbing to 19.3 feet on Aug. 1.
Upper Mississippi River: Twin Cities-area navigation remains possible following a round of heavy rains noted at last report, although the elevated water levels slowed both loading and transit, sources said. Congestion in the area further slowed navigation.
The St. Paul gauge crested just below the 10-foot action stage on July 23-24 before falling to 8.79 feet on July 28. The NWS expected declining levels to reach 5.6 feet on Aug. 3. Wabasha levels were pegged at 10.6 feet on July 28, higher than the 10-foot action stage, with expectations of a 9.4-foot reading on Aug. 3.
Mel Price Lock delays averaged four hours for the week, and Corps data showed seven vessels queued for service on July 28. Movement through Lock 27 necessitated 1-4 hours’ additional travel time, while Lock 20 waits were described in the 1-2 hour range.
The Corps’ annual rock removal project near Thebes, Ill., remained on track for a mid-to-late August startup, shippers said. Work is expected to get underway when Cape Girardeau levels sink below the 15-foot mark. The Cape Girardeau gauge read 25.16 feet and falling on July 28, with levels predicted to hit 23.2 feet on Aug. 1. Delays and barge restrictions are expected once work begins.
Illinois River: Delays stemming from a July 27 daylight-hour closure at Dresden Island Lock stretched into the next day, with shippers reporting backups extending to eight hours on July 28. Marseilles Lock transits were quoted at 1-3 hours with five vessels queued for service, and waiting at Starved Rock Lock swelled to 2-4 hours with two boats queued.
Dams were down at both Peoria Lock and LaGrange Lock, allowing vessels to transit without locking.
Power line installation blocked daytime navigation through the Meredosia, Ill., area. Nighttime-only transits are expected through Aug. 13.
Ohio River: Montgomery Lock transits were noted in the 1-2 hour range, while travel through New Cumberland Lock was called just over an hour. Both Pike Island Lock and Belleville Lock waits ran about an hour, and average Racine Lock delays were quoted at 95 minutes. R.C. Byrd Lock navigation was reported up to an hour, and wait times at McAlpine Lock ran 1-2 hours. With repairs scheduled at Greenup Lock through Sept. 11, shippers noted delays of 1-2 hours for the week.
Lock 52 saw queue times climb to the 2-3 hour range on July 27 with four boats in line. Vessels were free to pass without locking at Lock 53, but congestion pushed transit into the 2-3 hour range. Boats continued to lock through the Olmsted Lock riverside chamber, where tows were capped at 15 barges.
Main chamber repairs continued at Emsworth Lock, increasing wait times to as high as seven hours on the week. The chamber is scheduled to temporarily resume locking on July 30-31, en route to a planned Aug. 10 reopening date. Transit through Emsworth will be completely unavailable Aug. 8-10.
The Montgomery Lock main chamber will be offline during daylight hours, Monday through Friday, starting Aug. 22, shippers said. Navigation will be limited to the auxiliary chamber during the day, with the main chamber expected to reopen overnight, subject to an 80-foot length restriction. Normal operating hours will resume Nov. 10.
The R.C. Byrd Lock auxiliary unit will be closed Oct. 3 through Dec. 9.
Tennessee River transit was unavailable at the Eggners Ferry Bridge July 25-26 due to bridge demolition. Navigation was also halted at Chickamauga Lock, where repairs underway through Aug. 11 have effectively closed the river.
The Monongahela River’s Braddock Lock and Dam remained partially closed last week, where the river chamber was shuttered due to ongoing equipment failure. Vessels detoured through the land chamber instead.
Arkansas River: Webbers Falls Lock is scheduled to close Aug. 22 through Sept. 11 for structural rehabilitation and miter gate painting. Downstream miter gate seal repair will shutter the David D. Terry Lock between Aug. 29 and Sept. 4. No auxiliary chamber is available at either lock.
Potash Corp. of Saskatchewan Inc. reported a 71 percent drop in second-quarter earnings, to $121 million ($0.14 per diluted share) on sales of $1.05 billion, down from the year-ago $417 million ($0.50 per share) and $1.73 billion.
The company said it intends to cut its quarterly dividend by 60 percent, from $0.25 to $0.10 per share, when it declares its next dividend in September.
Full-year guidance has been lowered to $0.40-$0.55 per share, down from the earlier guidance of $0.60-$0.80 per share. Third-quarter guidance is $0.05-$0.10 per share. Full-year guidance for Potash gross margins has been adjusted down to $400-$600 million from the previous $500-$700 million, while Nitrogen/Phosphate margins are now seen as $400-$500 million, down from $600-$800 million.
Despite the downturn, the company said it believes potash prices have hit their low point. “Fertilizer markets have been under pressure through the first six months of 2016; however, we believe the uncertainty that weighed on potash market sentiment is now lifting and a recovery is beginning,” said PotashCorp President and CEO Jochen Tilk. “With key Asian contract prices settled by a number of producers – and buyer inventories at reduced levels – we are seeing improved engagement in all key markets.”
PotashCorp confirmed that Canpotex Ltd. has reached agreements with customers in India for shipments over the next three months at prevailing rates. Tilk said negotiations continue with China, and Canpotex expects to deliver tonnage to China in the second half. He said that traditionally when major Indian and Chinese contracts are reached late in the year, demand goes up. While the company has tweaked its guidance for full-year global annual potash shipments to 58-61 million mt, down from 59-61 million mt, it sees 2017 achieving 61-64 million mt.
Other notable items for the second quarter included a $0.02 per share, or $33 million cost, for the company’s share of the Canpotex exit from building the Prince Rupert terminal (GM June 24, p. 1), as well as an impairment of $0.01 per share on its investment in Sinofert Holdings Ltd. The company also had a $29 million charge for a phosphate inventory writedown.
Second-quarter Potash gross margins were $123 million on sales of $393 million, down from the year-ago $417 million and $748 million, respectively. North American volumes were up at 850,000 mt from 648,000 mt, while Offshore were down at 1.27 million mt from 1.86 million mt. Averaged realized North American prices dropped to $196/mt from $349/mt, and Offshore to $125/mt from $247/mt. Gross margins per ton were $63/mt, down from $168/mt.
Second-quarter Nitrogen gross margins were $130 million on sales of $383 million, down from $222 million and $559 million, respectively. Nitrogen sales volumes were 1.5 million mt, down from 1.63 million mt. The average realized nitrogen price was $244/mt, down from $334/mt, while the gross margin was $84/mt, down from $133/mt.
Second-quarter Phosphate margins were in the loss column at $10 million on sales of $277 million, down from a year-ago positive $72 million and $424 million. The company cited lower North American demand. Sales volumes were down at 512,000 mt from 679,000 mt, while average realized sales prices were $485/mt, down from $553/mt. Gross margin per mt was a negative $21, compared to a year-ago positive $103.
Six-month net income was $196 million ($0.23 per share) on sales of $2.3 billion, down from $787 million ($0.94 per share) and $3.4 billion, respectively.
Six-month Potash margins were $211 million on sales of $774 million, down from $845 million and $1.5 billion, respectively. North American sales were 1.63 million mt, up from 1.45 million mt, while Offshore dropped to 2.28 million mt, down from 3.41 million mt. The average North American price was $187/mt, down from $349/mt, while Offshore was $149/mt, down from $249/mt. Gross margin per mt was $57, down from $175.
Six-month Nitrogen margins were $237 million on sales of $811 million, down from $403 million and $1.04 billion. Nitrogen volumes were up at 3.17 million mt from 2.94 million mt, while the average price was $244/mt, down from $341/mt. The gross margin per mt was $72, down from $134/mt.
Six-month Phosphate margins were $29 million on sales of $677 million, down from $130 million and $869 million, respectively. Volumes were 1.23 million mt, down from 1.33 million mt, while average prices were down at $493/mt from $563/mt. Gross margin per mt was $22, down from $95.
Tampa: In the week following third-quarter pricing announcements from fertilizer producers Mosaic and PotashCorp, conversations regarding the state of domestic molten sulfur were commonplace in the market.
Despite the latest $5/lt price reduction to $65/lt DEL, most agreed the new third-quarter price did not represent the end of falling prices in the domestic market. “I don’t think $65/lt is the floor, said one observer. “We seem to be oversupplied everywhere.”
Another source remarked that the Tampa price is now more influenced by the U.S. Gulf price, as well as the price of solid sulfur imported to Tampa. “So it’s more difficult to guess where the floor is now,” he said.
Others commented that it would take a shift in current fundamental conditions – domestic refinery curtailments, reduced Middle East production, or phosphate market strengthening – to “curb the downward momentum.”
“Refinery curtailments could happen, but the Middle East appears to have endless supply,” said one source. “A phosphate price rise is possible this fall, but I believe upside will be limited.”
Refinery runs softened last week, according to the U.S. Energy Information Administration (EIA). Domestic capacity was 92.4 percent for the week ending July 22, a 0.8 percent decline from the prior week’s 93.2 percent, and also down from the previous year’s 95.1 percent and the five-year average of 92.9 percent.
Average daily crude inputs were lower as well, EIA data indicated. Inputs were logged at 16.586 million barrels/d, a 277,000 barrel/d drop from 16.863 million barrels/d at last report.
U.S. Gulf: Price ideas for formed sulfur offered from the U.S. Gulf fell to $65/mt FOB, down $5/mt from the previous week’s $70/mt FOB.
Vancouver: More than two months after devastating Fort McMurray-area wildfires forced sweeping oil and sulfur curtailment in the Oil Sands region of Alberta, several sources declared the Alberta-supplied Vancouver export market to be recovered. “Vancouver is back to normal,” said one market player in late July.
Vancouver spot was quoted in the $75-$80/mt FOB range. Weakness in the Chinese market is expected to eventually pressure Vancouver lower, but recent sales into Mexico and Australia were said to have largely detached Vancouver from China’s last-heard $78-$80/mt CFR level.
Contract talks for third-quarter Alberta pricing were underway last week, leaving the market temporarily unchanged at (-)$55-$20/mt, despite the price cut at Tampa.
West Coast: Price ideas for West Coast formed product continued to fall in the $70-$75/mt FOB range. Third-quarter molten ran $50-$75/lt FOB.
ADNOC: The Abu Dhabi National Oil Co. offered July cargoes at $80/mt FOB Ruwais, $6/mt below the June price of $86/mt FOB.
Aramco: Saudi Aramco July offers were priced at $73/mt FOB Jubail. Cargoes were valued at $82/mt FOB in June, a $9/mt difference.
Tasweeq: Qatar state-run oil producer Tasweeq listed prilled sulfur at $72/mt FOB Ras Laffan for July. The June price was $83/mt FOB.
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All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
