All Posts from May 3, 2010

Market Watch

AMMONIA

U.S. Gulf/Tampa: Yara has now concluded business with both Mosaic and CF at the $405/mt DEL mark for May, while PotashCorp will be supplying one cargo to a trader at Tampa at $435/mt DEL for early May.

Eastern Cornbelt: Anhydrous ammonia movement to the field had tapered off significantly in the region, but tons continued to move to fill in advance of the sidedress run. The spot market was quoted at $475-$480/st FOB Illinois terminals to the dealer, with sources quoting the upper end of the range on the eastern leg at the $500/st FOB mark based on reference levels.

Western Cornbelt: The big preplant ammonia push was all but over in the region, and sources said volumes were huge. “Growers definitely boosted N rates this year,” said one Nebraska contact.

Sources quoted a slightly narrower range for spot ammonia prices out of regional terminals after the prior week’s run-up, which was fueled by strong demand and spot outages. The regional market was quoted at $440-$480/st FOB, with the low in Nebraska and the higher numbers out of spot Iowa locations. Some talked of reference pricing as low as $390/st FOB regional production points, but no tons were available at those locations in late April.

Southern Plains: Windy conditions limited spreading activity throughout the region in late April, and some areas were sidelined by wet weather.

Sources reported higher spot prices for anhydrous ammonia, along with tight supply and limited transportation availability. Out of production points, the market was quoted at $360-$385/st FOB last week. Several sources said some suppliers were still referencing tons at lower numbers, but had nothing to sell. Out of Kansas pipeline terminals, the dealer market was tagged at the $390/st FOB level where available.

South Central: Ammonia pricing out of regional terminals had firmed after a period of brisk demand and short supply in late April. The market was pegged at $450-$480/st FOB, with the low at Memphis, Tenn., and the upper end FOB Henderson, Ky.

Black Sea: Bids are now coming in under $350/mt FOB. Sources say, however, that producers are fighting to hold the line. At the same time, buyers now seem willing to walk away if the price is not to their liking.

Asian sources say the main business from Yuzhnyy remains Europe and the U.S. They say European demand is down, and the drop in the Tampa price to $405/mt DEL for May means lower prices out of Yuzhnyy.

Sources took the Tampa price and estimated a Yuzhnyy netback of $345/mt FOB. Without any other real business to help set a new price range, sources say using that level as the floor makes sense.

Until new public business is done, sources are calling the Yuzhnyy market at $345-$360/mt FOB.

Ukrainian ammonia producers got a break last week. Their parliament endorsed an agreement that allows the Russian fleet access to Ukrainian ports until 2042. In return, the Russian government granted natural gas price concessions to Ukraine.

The parliamentary session made global news as opponents to the agreement pelted the leader of the chamber with eggs. The session quickly degenerated into a free-for-all, with members pummeling each other.

Middle East: Despite the desire of most Arab producers to hold the line, the Qafco deal last month moved prices down in the region.

Even producers say they cannot maintain the idea of ammonia selling at $390/mt FOB. One source noted – and a producer agreed – that buyers will not look at anything over $380/mt FOB.

The softness in the market is mostly because demand has eased off.

Indian purchases seem to be limited to what is required under the contracts in place. Buyers are not looking for additional tons at this time.

At the same time, Iran has become a more stable supplier of ammonia.

Several cargoes shipped out during the first quarter of the year. Sources say Iran should be expected to move out two cargoes a month.

Iranian sellers often have to discount their material. Sources say the biggest issue is working out how to pay for the cargo. Buyers cannot use U.S. dollars to settle the deal because of an embargo against Iran by the U.S. government. Alternative currencies and agreed-to exchange rates require more time and effort.

To compensate for the extra work necessary, the Iranians usually shave a few dollars off the price.

Needless to say, Arab producers have not been happy with the bargains Iran has offered buyers so far this year. One producer said the price of ammonia would have been more than $400/mt FOB if it were not for the Iranian tons.

Asia: Demand remains strong in the region, and regional supplies are hurting. Sources report that the KPI plant in Indonesia is having problems. At the same time, a Mitco facility in Malaysia is operating at 80 percent of its rated value. Sources say the plant has edged up after unspecified problems closed the facility last month. One trader noted, however, that the Mitco people are saying the plant will most likely remain at 80 percent for a while.

South Korean and Taiwanese businesses continue to look for ammonia. The buyers keep asking their contract suppliers to honor the “plus” side of the contract that allows for leeway on the amount shipped. Because of the tight market, suppliers are imposing the “minus” side of their deals.

UREA

U.S. Gulf: While part of the market was trying hard to hold the market at the $285/st plus level, several players last week were clamoring for lower prices, saying that $280/st or below was on the table. Skeptics claimed these were tons off a vessel from EuroChem due in May and should not be considered. Others said these were not the only tons, and that they could be regarded as prompt regardless. Adding to the speculation was the suggestion that Koch might bring in a vessel from Venezuela.

As for the EuroChem tons, some wondered if this might raise dumping concerns; however, that issue appears to have been settled in 2008 (GM May 26, 2008), when the U.S. Department of Commerce awarded the Russian producer zero percent weighted-average margins on solid urea imports from the Russian Federation. EuroChem successfully argued that it has never been affiliated with any Russian exporter or producer who exported solid urea to the U.S. during the antidumping duty order period of investigation. This was contested by the Ad Hoc Committee of Domestic Nitrogen Producers, which argued that EuroChem was not eligible for a new-shipper review because its factories existed and produced urea during the period of investigation, and because it was affiliated with entities that were part of the non-market-economy entity that produced and exported subject merchandise during the period of investigation.

Eastern Cornbelt: Granular urea pricing remained at $340-$350/st FOB regional terminals to the dealer. One dealer quoted delivered urea at the $355/st level to his location, with netbacks bringing the Cincinnati market to roughly $342-$343/st FOB.

Western Cornbelt: Granular urea remained at $335-$350/st FOB in the region, with the low out of river locations in southern Missouri and the upper end in Iowa. Several sources put the common dealer range at $340-$345/st FOB in the region last week.

Southern Plains: Sources tagged the granular urea market
at $320-$325/st FOB the port of Catoosa, Okla.

South Central: Fertilizer movement slowed in the region in late April as growers focused on planting activities and waited for the rice topdressing season to ratchet up. “We’re in an in-between status,” said one contact, noting that phosphates and potash continued to dribble to the field in some areas, but urea movement on rice won’t slip into high gear until early-to-mid-May.

The granular urea market had reportedly slipped to $320-$325/st FOB regional terminals to the dealer, with few new sales to test the market.

Southeast: The granular urea market was pegged at $345-$350st FOB port terminals to the dealer, down only slightly from last report.

India: The government released numbers that say the country will need 13.6 million mt of urea for the upcoming season. Most of that will come from domestic production.

Just how many tons are sitting in warehouses ready for use once the weather cooperates is a debate among international traders. Some argue that the warehouses from port to field are full. Others say the supply pipeline is not as full as farmers would like.

There is agreement, however, that eventually India will have to call a tender. And that is where the agreement ends.

Sources say a tender could be called as early as this week. Others are saying Indian importers could wait until after the IFA meeting in Paris, May 30-June 3.

While some look at the amount of urea already in place, some are also looking at the political side of the issue.

Observers speculate that if MMTC, IPL, or STC do not issue a tender by the middle of this month, farmers might become nervous that there will not be enough urea for the upcoming application season.

Under this scenario, before any panic buying would occur, however, calls to local politicians demanding government action would take place. And then the government could force a tender to placate the seemingly aggrieved farmers.

One trader noted that so far India has played the market well. He pointed out that the buying since early 2009 has been just strong enough to prevent a collapse of the urea market, but not so large as to soak up all available tons.

Likewise, the price has gone down within a month of each tender.

Right now, the weather in India has not been conducive to application. The rains that are appearing do not seem to be enough to get the full season really started, said one source.

Delaying the tender call until June, said once source, would mean that Chinese urea would be a factor in the offers.

The new subsidy plan that went into effect April 1 appears to have had no impact on the nitrogen market. Sources say the urea-buying trend remains the same as under the old system. The new system offers subsidies for nutrient content instead of a specific fertilizer. Some in the industry speculated that buyers might start looking at nitrogen-based fertilizers other than urea. So far, however, urea remains king of the nitrogen buyers.

Pakistan: Like India, Pakistan will need more tons for the upcoming season. Unlike India, however, TCP is clear about how many tons it wants to buy.

The government announced that it would need to import an additional 200,000 mt for the upcoming application season. These tons are in addition to the 150,000 mt TCP recently bought in three tenders and the 300,000 mt Sabic will send under a government-to-government deal with Pakistan.

Sources in the area say TCP will most likely call its tender by the middle of this month.

Pakistan is not the same powerhouse India is in the urea market. Sources say TCP purchases help stabilize the market or point to a trend, but that by itself TCP is not a market mover.

Middle East: About the only thing holding up the Middle East urea market, said one trader, are the contracts. A lack of spot business is leading to a lot of speculation about where the market currently sits. Because the contracts are often based on published numbers, buyers are running around low-balling the price while producers argue there has been little slippage.

Both sides agree that the price for prilled and granular material has slipped below $280/mt FOB.

The sale out of Egypt late last month moved prices into the $260s/mt FOB. The price difference between Egypt and the

Arab Gulf puts the Gulf price in the $270s/mt FOB. Arab Gulf producers argue that the price should be closer to $280/mt FOB, but get quiet when asked about beyond $280/mt FOB.

Sources now say the most likely spread in the area is $265-$280/mt FOB for prills and granular.

Black Sea: Sources say producers would easily accept a bid at $240/mt FOB. The only problem is then finding an end user willing to accept that price. Some buying did take place as buyers continue to operate on a hand-to-mouth basis.

There were reports last week that a couple of cargoes to Africa and Latin America concluded in the low $240s/mt FOB.

Sources now peg the market at $240-$250/mt FOB.

Indonesia: Evidence of just how soft the urea market has gotten was evident in last week’s Pusri tender. The price of its urea dropped $44/mt in just one month.

The state-owned company offered 20,000 mt in 5,000 mt lots. In last month’s tender the winner paid $315/mt FOB. In this latest tender, the winners – Summit and Youngwoo – paid only $271/mt FOB.

One source said that the Parna bid was disqualified. He did not elaborate.

Pusri must sell its urea in 5,000 mt lots because of the shallow draught of the river leading to the company’s dock.

Some reported sales out of the Arab Gulf and Yuzhnyy have shown glimpses of a global market price drop. This sale indicates how severe the slide could be.

NITROGEN SOLUTIONS

U.S. Gulf: Barges were put in the $200-$208/st FOB ($6.25-$6.50/unit) range last week. Some still felt deals could be had below $200/st FOB if a buyer worked hard enough; however, others were saying prices were stronger.

Sources said a stray UAN import cargo may start to put some pressure on the barge market if it does not find a home soon.

Eastern Cornbelt: The UAN market was pegged at $7.68-$8.13/unit FOB regional terminals to the dealer, with the low reported for UAN-28 tons out of the Cincinnati market. One Ohio source quoted dealer prices out of inland terminals in the $219.80-$225/st ($7.85-$8.04/unit) FOB range in late April, while the upper end of the UAN-32 market was consistently tagged at $260/st ($8.13/unit) FOB in the region.

Western Cornbelt: UAN-32 was quoted in the $248-$260/st ($7.75-$8.13/unit) range FOB regional terminals, with the low in Nebraska and the upper end reported by Iowa and Missouri sources as the common dealer price in late April.

Southern Plains: UAN-32 was in tight supply, and was quoted at $245-$255/st ($7.66-$7.97/unit) FOB regional terminals, with the low out of production points on a spot basis and the upper end out of terminals in western Texas. Several sources tagged the common dealer price at the $250/st ($7.81/unit) FOB range at most production locations in late April, with reference levels at the $260/st ($8.13/unit) FOB mark.

South Central: UAN-32 out of regional terminals was generally pegged in the $225-$245/st ($7.03-$7.66/unit) FOB range to the dealer, although some claimed tons were being wholesaled to dealers at slightly lower numbers on a spot basis.

Southeast: The UAN-30 market was confirmed by several sources at the $201-$202/st ($6.70-$6.73/unit) level FOB Wilmington, N.C., and Norfolk, Va., on the low end. UAN-32 out of Georgia terminals remained in the $235-$245/st FOB ($7.34-$7.66/unit) FOB range.

AMMONIUM NITRATE

U.S. Gulf: Recent price indications appeared stronger at $250-$255/st FOB.

Western Cornbelt: Ammonium nitrate had reportedly firmed to $295-$305/st FOB in the region, and remained in very tight supply.

Southern Plains: The ammonium nitrate market was
tagged at $295-$305/st FOB Oklahoma terminals, up some
$10-$15/st from last report, with the low at Catoosa and the
upper end at Pryor. Sources said product was in very tight
supply.

South Central: Ammonium nitrate was in very tight supply. Sources pegged the dealer market at $295-$300/st FOB in the region “when you can get it.”

Southeast: The Tampa ammonium nitrate market remained at $280-$285/st FOB. A South Carolina source quoted rail delivered ammonium nitrate at the $305/st level from MidSouth shipping points, with inventories described as short.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate remained
at $240-$260/st FOB or rail-DEL, with the upper end reflecting
new dealer postings.

Western Cornbelt: Several regional suppliers also reported being out of granular ammonium sulfate by the end of April. An Iowa source said the last sales took place at the $240/st FOB level, while a Nebraska contact reported spot pricing firmly at $248/st FOB at midweek. Reference prices remained as high as $260/st rail-DEL in the region; one source said the market is lagging at that level, but it will get there based on the limited inventories.

Southern Plains: Effective April 26, ammonium sulfate postings from American Plant Food firmed $10/st. As a result, the company’s granular ammonium sulfate prices in Texas moved to $215/st FOB Freeport, $225/st FOB Galena Park, $240/st FOB Fort Worth, and $255/st FOB Littlefield. Coarse grade postings moved to $205/st FOB Freeport, $215/st FOB Galena Park, $230/st FOB Fort Worth, and $245/st FOB Littlefield, while standard grade ammonium sulfate firmed to $200/st FOB Freeport and $240/st FOB Littlefield. APF’s N-Pac Compacted posting moved on April 26 to $230/st FOB Galena Park.

Ammonium sulfate postings FOB Plainview, Texas, firmed on April 26 as well, to $255/st for granular, $245/st for coarse, and $240/st for standard.

Sources said ammonium thiosulfate was virtually nonexistent in the region.

South Central: Granular ammonium sulfate had reportedly firmed to $215-$225/st FOB regional terminals to the dealer, although postings were higher at some locations. Effective April 26, granular ammonium sulfate postings from American Plant Food firmed to $245/st FOB Mermentau, La.

Southeast: Granular ammonium sulfate was up from last report. Sources tagged the Hopewell, Va., market at $200-$210/st FOB. April 12 reference prices from DSM Chemicals included granular ammonium sulfate at $220/st FOB Augusta, Ga., and $235/st DEL in Florida, with standard moving to $166/st FOB Augusta and $175/st DEL in Florida.

PHOSPHATES

Central Florida: Heavy rains in the Northeast and Eastern Cornbelt kept farmers from the fields and slowed trading from Central Florida. Weather conditions were better in the Southeast and Florida, but the season in Florida was essentially over anyway.

The season will be over in most areas within the next two-to-three weeks, and most dealers do not plan to fill during the summer. For producers, that will not be a major problem, because most have a large book of business already scheduled for the summer months. In May, PhosChem has scheduled 11 vessels for delivery to India, which means PotashCorp and Mosaic will be in a good position with any domestic business.

The Central Florida DAP price range last week was unchanged from the previous week at $410-$415/st FOB. Mosaic’s posted price was $415/st FOB, while CF’s price was $410/st. PCS Sales was charging market-based prices. Agrifos’ prices were $440/st FOB for DAP and $450/st FOB for MAP, but railcars were about $5/st FOB less, if available.

U.S. Gulf: Many or most of the warehouses on the Gulf river system were either out or close enough to count the grains of dust on the bottom of the bins. However, DAP barges on the upper Mississippi were bringing a premium in comparison to those at New Orleans.

Although the season will probably run another two to three weeks and maybe longer in a few areas, virtually no trader or dealer wants to have any product to carry over for the fall season. Unless producers offer attractive fill plans, not much will be moving in the domestic market this summer. Rice and cotton will be exceptions to that pattern, but those are limited markets. Instead, producers will concentrate on the export market.

One source said, “Domestic buyers won’t put anything in and producers won’t need to sell (to them),” so deals in the off months will be few and far between.

Heavy rain in the Cornbelts slowed the flow of new business last week, but that situation should improve this week, assuming the weather is not a problem. Supply, not demand, will be the problem.

The all important price of corn for December was $3.82/bushel on April 28, which made it possible for farmers to still make a profit, although $4/bushel would be a boost.

In Oklahoma, most terminals were out, and what selling occurred was from the few that still had some DAP inventory. Two DAP barges were delivered to the areas last week, although CF, which was out of product last week, may have replenished its stock in early May.

The NOLA DAP barge price range last week was $410-$428/st FOB, compared to a flat $425/st FOB the previous week. The $410/st FOB had not been loaded, and the upriver price range was between $420/st FOB and $428/st FOB, depending on location. This week, the price will likely stabilize and trading may be limited to barges in place, especially in the upriver area; however, prices are not likely to rise much – if at all – due to the desire to have empty bins at the end of the season.

Eastern Cornbelt: DAP was quoted in a broad range at $450-$470/st FOB, with the low out of spot river warehouses in Illinois and the upper end at inland locations in Ohio. MAP was $10-$15/st higher than DAP. Sources continued to talk of tight phosphate inventories in the region.

10-34-0 was tagged at $340-$360/st FOB, with the low in Illinois. Those numbers were down from last report.

Western Cornbelt: Phosphate inventories were thinning at regional warehouses as the spring push winds down. “I want to be able to see the back of the bin,” one source said. “The back of the bin is your friend.”

Sources quoted DAP at $450-$460/st FOB regional warehouses, with MAP $10-$15/st higher. Nebraska and Missouri sources pegged delivered MAP in the $483-$485/st range last week. 10-34-0 had reportedly slipped to $335-$355/st FOB in the region, with the low in Nebraska and the higher numbers quoted by Iowa sources.

Southern Plains: DAP was pegged at $445-$455/st FOB the Tulsa market, with MAP $10/st higher. One eastern Kansas source quoted delivered MAP at the $485/st level to his location. Phosphate inventories remained tight in the region. The 10-34-0 market was quoted at $335-$345/st FOB in the region, depending on location.

South Central: DAP was quoted at $435-$440/st FOB regional warehouses, with MAP $10-$15/st higher. TSP was pegged at $385-$390/st FOB, where available. Sources said there’ll be a little phosphate movement for soybeans in the coming weeks, but DAP demand “was on the backside” in the region. “I don’t want a whole lot of anything in my house when it’s over with,” said one.

U.S. Export: The DAP export market was relatively slow last week, and only one transaction was found. Transammonia made a sale of 6,000 mt of MAP at $482-$483/mt FOB and 3,000 mt of DAP at $472-$473/mt FOB into Central America. Unlike Brazil and Argentina, MAP commands a higher price than DAP in Central America.

The export DAP price range last week increased from $465-$470/mt FOB the previous week to $472-$473/mt FOB.

PhosChem will be concentrating on India this summer, with some 11 vessels scheduled for delivery.

India: Sources report the new subsidy system is affecting the buying of phosphates. The new system is based on the nutrient content of a fertilizer instead of a specific type of fertilizer.

Asian traders are noting more TSP and MAP buying from India than in previous years. At the same time, more NPK and NP also seem to be in the buying mix.

Sources say the TSP is most likely headed for NPK production in the country.

Inquiries for vessels to lift Chinese DAP seem to be on the increase. One Asia trader noted that Indian buyers are looking for ships to arrive in Chinese ports as close to June 1 as possible. June 1 is when the export duty on DAP drops from its current 110 percent to 7 percent. The Chinese tons will round out the purchases made earlier this year from the United States, Russia, Morocco, and Jordan.

POTASH

Eastern Cornbelt: Potash was generally reported in the $395-$405/st range FOB regional warehouses, with reference levels as high as $420/st FOB. Ohio sources confirmed spot offers from resellers at the $405/st FOB level in late April.

Western Cornbelt: Potash was pegged at $395-$410/st FOB most regional warehouses. The dealer market FOB St. Joseph, Mo., was quoted at the $400/st mark last week, while a Nebraska source tagged delivered tons at $415/st to his location.

Southern Plains: Sources quoted the potash market at $397-$405/st FOB regional warehouses to the dealer. Potash postings FOB Carlsbad, N.M., remained at $385/st for 60 percent standard, $390/st for 60 percent granular, $392/st for 62 percent standard, $395/st for 62 percent fine standard, and $398/st for 62 percent granular.

South Central: Potash pricing had reportedly slipped to $385-$390/st FOB regional warehouses, with dealers and resellers “just trying to clear the bin.” Several sources said spring potash volumes were definitely better than last year, but still below typical volumes and, for some locations battling wet conditions, not as good as expected.

Southeast: Potash pricing was down from last report. Sources quoted rail-delivered tons in the $420-$425/st range, with warehouse inventories pegged roughly at the $410/st FOB level.

SULFUR

Tampa: Last week, phosphate producers and their sulfur suppliers reached an agreement on second-quarter sulfur prices for deliveries of molten to Tampa. The new price called for an increase of $55/lt, to $145/lt. Both Mosaic and PotashCorp completed negotiations with all of their sulfur suppliers, so the Green Markets index was changed to reflect the new pricing. Industry sources said the new deal was fair, based on international prices and current supply and demand. Another positive effect was the agreement was reached before the end of the month, which will allow less complicated billing.

Before negotiations began the world price was closer to $200/mt FOB, but began to slide during the past month.

Meanwhile, refinery production continued to increase, which put additional sulfur into the supply chain. Marathon was beginning to ramp up production at the Garyville refinery expansion, which will double sulfur production by adding another 150,000/lt, although that will take some time.

Martin loaded 40,000 mt of prill sulfur at its Beaumont plant last week, which dropped inventories to a historical low. Less sulfur was going into the facility due to strong domestic demand.

MARKET NOTES

India: The Southern Petrochemicals Industries Corp.’s (SPIC) urea plant at Tuticorin in southern Tamil Nadu is set to restart production May 1. The plant had remained shut down since March 2007 for want of feedstock (naphtha) and working capital. “We are awaiting the IOC approval now for supply of naphtha. Once that comes, we will be in a position to get things on the track in time to start operations on May 1,” a person privy to the development said.

SPIC had reportedly agreed to make an initial payment of Rs 0.8 billion and to create an escrow account to facilitate a regular stream of payments to the IOC, to which the fertilizer major owed over Rs 3 billion at last count. The operations at the plant came to a standstill in March 2007, as dues to the IOC had run up to Rs 3.7 billion and the latter had stopped naphtha supplies.

Russia: The companies of the Acron Group have set a price cap for their mineral fertilizer sales to Russian farmers for the second half of 2010. The price cap for all types of fertilizers will remain at the first half level. NPK 16:16:16 will be RUB 10,200 per mt. The price cap for ammonium nitrate will be RUB 5,570 per mt, and urea will be RUB 8,470 per mt. These prices are VAT exclusive for bulk cargo, FCA production facility. Acron emphasizes that it has not raised its domestic prices on compound fertilizers for two consecutive years.

India: Madras Fertilizers Ltd. (MFL) is in the process of stabilizing its complex fertilizers production line to manufacture the product for Indian Potash Ltd. (IPL) on a job work basis. According to company officials, MFL has entered into an agreement with IPL to make 20-20-0-13 (N-P-K-S) complex fertilizer for the company. The product will be branded for IPL, which will import the raw materials at its own cost and pay the conversion cost to MFL. Production is expected to stabilize at about 20,000 mt over the next month. This would mean an annual production of about 200,000 mt of complex fertilizers. It is now producing about 7,000 mt per month.

Officials said that this is a crucial development for MFL. This will help the company generate cash flow and get its complex fertilizer production facility into full flow in stages. As of now, only one of its three lines for complex production has gone onstream. The company hopes to get the second train in operation over the next five-to-six months, and the third train a couple of months later.