All Posts from November 30, 2015

Sulfur

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

Tampa: Maintenance at the Shell Oil Co. and Motiva Enterprises LLC jointly-run Norco refinery in St. Charles, La., triggered a violent flaring event on Nov. 18, according to reports. The flaring occurred during a system restart on two units that had been offline for about a month for scheduled maintenance, and was visible to observers 25 miles away in New Orleans.

Flaring was expected to continue for several days until the restart is concluded, prompting the Louisiana Department of Environmental Quality to actively monitor air quality in the area, a source said.

The price of molten sulfur delivered to Tampa was $110/lt for the fourth quarter.

Due to the Thanksgiving holiday, domestic refinery utilization and daily crude input data were unavailable at press time.

U.S. Gulf: Prilled sulfur sold from the Gulf Coast was unchanged at $115-$120/mt FOB for the week. Some market players described a recent uptick in offer levels to Brazil, but believed transactions had yet to conclude at the higher price points.

Vancouver: Vancouver market players saw no change in the offshore spot market for the week, quoting last-done around $120/mt FOB.

Chinese spot was similarly unmoved at $145/mt CFR.

Alberta netbacks were reported in a range of (-)$12-$85/mt FOB, unchanged from the week before.

West Coast: Sources called the West Coast prill market steady in the $115-$120/mt FOB range. Molten sulfur contracts were $65-$115/lt FOB for the fourth quarter.

Tesoro Corp.’s Carson, Calif., refinery began an unplanned turnaround on or around Nov. 21, according to industry reports. Maintenance to rectify the issue remained underway as of Nov. 23. It was unknown which of the 251,000 barrel/d refinery’s units were affected.

ADNOC: The Abu Dhabi National Oil Co. offered November prilled sulfur cargoes at $125/mt FOB Ruwais.

Aramco: Saudi Aramco sulfur for December loading carried a $128/mt FOB Jubail price tag, $13/mt higher than the November price of $115/mt FOB.

Tasweeq: The Qatar price of formed sulfur for the month of November was $124/mt FOB Ras Laffan, $21/mt above October’s $103/mt FOB.

Tasweeq awarded an EPC contract to Qatar Kentz Corp. Ltd. for the construction of a water recycling plant at its Laffan Refinery 2 expansion project, according to reports. Laffan Refinery 2, slated for completion in fourth-quarter 2016, is projected to double Laffan 1 Refinery production to roughly 300,000 barrels/d.

Mexico: Pemex announced a planned $1.1 billion upgrade at its Tula Refinery in Central Mexico, reports indicated. The upgrade is expected raise production capacity by 7.5 percent, to 340,000 barrels/d. Mechanical completion of the project is slated for second quarter 2018.

K+S suspends some production – Alert

Breaking Industry News

K+S Group said that as of Dec. 1 production at the Hattorf (Hersfeld-Rotenburg district) and Unterbreizbach (Wartburg district) sites will have to be suspended for the time being. K+S says until the Kassel Regional Council acts on its request to inject saline wastewater into the ground, that the only disposal site for the Werra plant is the Werra River.
 
The Council is currently working on a transitional solution that would enable a continuation of injection in a few weeks after a detailed technical assessment has been completed.

In order to bridge the period before a decision is made by the Council on the transitional regulation of injection, plant management and employee representatives have agreed that around 1,750 affected employees will work off their work hour accounts and remaining vacation.

As things stand, K+S does not anticipate any impact on deliveries to customers except in isolated cases. K+S said the expected EBIT I for the K+S Group of EUR 780 million to EUR 830 million for 2015 will probably also not be affected by this.

Yara adds potash partner – Alert

Breaking Industry News

Liberty Metals & Mining Holdings LLC, a subsidiary of Boston-based Liberty Mutual Insurance (LMM) has acquired 25 percent of the shares in Yara Dallol BV (Yara Dallol) for $51.25 million. Yara’s share of the proceeds is $35.4 million.

On Feb. 13, Yara confirmed the feasibility of extracting potash in the Danakil depression in North-Eastern Ethiopia. Following this transaction Yara will hold 51.8 percent of the shares, LMM 25 percent and XLR Capital Ltd.  23.2 percent in Yara Dallol.

"The Dallol project will support Yara’s strategy for further development of premium fertilizer for high-value crops, and this transaction underlines the attractiveness of the project. We are pleased to join forces with a dedicated investor like LMM, and look forward to develop the project further with our partners," said Svein Tore Holsether, president and CEO of Yara.

The feasibility study confirmed reserves and the technical viability for an annual production of 600,000 mt sulfate of potash (SOP) over a 23-year period. Yara Dallol has additional resources to either expand annual production or increase the life of the project, as new market segments for SOP are developed.

Yara Dallol aims to begin mining activities by the end of 2018. The independent feasibility study estimated the capital expenditure of the project at $740 million and cash cost at $167/mt delivered (fob) Djibouti, among the lowest in the industry.

IPL urea tender shows softer prices – Alert

Breaking Industry News

Prices in the Indian Potash Ltd. urea tender that closed Saturday, Nov. 28, showed a drop of $8/mt in prices from the previous STC tender. A majority of the offers were below $260/mt CFR, with the lowest offers at $254-$255/mt CFR for West Coast deliveries and $255-256/mt CFR for East Coast ports.

The prices reflect a netback in the mid-to-upper $240s/mt FOB for Chinese product. Chinese producers were arguing right up to the last minute they would not support any awards that reflected a netback below $250/mt FOB.

All told, 28 companies offered slightly more than 3 million mt in firm offers. An additional 240,000 mt was offered as optional tonnage. The Indian buyer should issue its counter bids based on delivery ports by Monday, Nov. 30. Details of the tender will be available in the Dec. 7, 2015 issue of Green Markets.

Canpotex eyes port decision in late 2016

News Briefs

Saskatoon — Canpotex Ltd. expects to make a final decision in late 2016 on where to expand West Coast port capabilities, according to a report in The Globe and Mail. Canpotex already has a lease and permits for a proposed C$775 million project at Prince Rupert, B.C. (GM Oct. 20, 2014). Other options include expansion at Vancouver or Portland, Ore. The Prince Rupert option receives traction because it would reportedly cut the shipping time to China by at least two days and allow the bypass of the already busy Vancouver port.

Sulfur outage impacting PhosAgro

News Briefs

Moscow — PhosAgro said Nov. 25 that it has been forced to suspend part of its mineral fertilizer production at the Balakovo branch of OJSC Apatit due to Gazprom Sulphur’s failure to fulfil its contractual obligations. It said the Balakovo plant, which mainly supplies to the Russian market, has been forced to initiate a gradual suspension of sulfuric acid production. PhosAgro said the lack of sulfur may cause a decrease in December production volumes of phosphate-based fertilizers (in MAP equivalent) by 72,000 mt. PhosAgro has informed the Russian government and regional authorities about the situation and is hoping for timely action to resolve the situation.

USDA forecasts 38 percent drop in farm income

News Briefs

Washington — The USDA on Nov. 24 forecast a 38 percent drop in 2015 farm income, to $55.9 billion, down from 2014’s estimate of $90.4 billion. The drop mainly reflected lower crop prices, as well as weaker dairy and hog markets. If realized, the 2015 forecast would be the lowest since 2002 and a drop of 55 percent from the recent high of $123.3 billion in 2013. It would be the largest single-year decline since 1983. Lower crop and livestock receipts are the main drivers of the decline in 2015, while cash production expenses are projected down by 2.3 percent. Crop receipts are expected to decrease by $18.2 billion (8.7 percent) in 2015, led by projected declines of $8.6 billion in corn receipts, $5.7 billion in soybean receipts, and $2.7 billion in wheat receipts, as prices for all three commodities declined. Livestock receipts are forecast to decrease by $25.4 billion (12 percent) in 2015. Government payments are projected to rise $1.0 billion (10.4 percent), to $10.8 billion in 2015. Of manufactured inputs, expenses that are fertilizer related (fertilizer, lime and soil conditioners) are expected to be off 8 percent, to $25.8 billion from 2014’s $28.1 billion. Pesticide drops to $15.1 billion from $15.8 billion and fuel/oil to $12.7 billion from $17.7 billion, while electricity moves up to $5.96 billion from $5.9 billion. Of farm-origin inputs, seed drops to $21.9 billion from $22.1 billion.

CPS to acquire Arkansas cooperative

News Briefs

Manila, Ark. — Crop Production Services (CPS), the Loveland, Colo.-based retail operation of Agrium Inc., is in the process of acquiring Home Oil Co., a farmer-owned cooperative with five locations in northeastern Arkansas. CPS stated only that it is "in the early stages of negotiations on this potential transaction," but Home Oil told Green Markets that its farmer members approved the proposed transaction in a Nov. 24 vote. Home Oil was established in 1946, and currently operates fertilizer, seed, fuel and oil, and farm implement and tire services from Arkansas locations at Manila, Frenchmans Bayou, Monette, Tyronza, and Paragould. Home Oil’s Lost Cane location in Manila is its newest, serving since 2013 as the company’s headquarters and the distribution hub for its other sites. The Lost Cane site has storage facilities for fertilizer, chemicals, and seed, as well as a full-service tire location. Home Oil’s fertilizer operation offers custom application and precision ag products and services for conventional fertilizers and micronutrients, including variable rate and blanket rate applications, grid sampling, and field mapping. The company’s propriety brands include 8-10-2 Boost-It Fertilizer, HyHeat herbicide, and VitaBor, a foliar spray for cotton, vegetables, and other crops. Home Oil’s fuel and oil business offers gasoline, diesel, propane, motor and hydraulic oil, grease, and Diesel Exhaust Fluid (DEF). Home Oil also sells tires and industrial engines. CPS markets fertilizer, seed, crop protection products, and agronomic services through a network of more than 800 locations throughout the U.S. and Canada. The company’s website touts a global retail footprint of more than 1,250 locations on three continents.

U.S Nitrogen eyes end-of-year production

News Briefs

Mosheim, Tenn. — U.S. Nitrogen LLC (USN), a unit of Austin Powder Co., Cleveland, Ohio, told Green Markets Nov. 24 that its new $220 million liquid ammonium nitrate facility here is currently moving through testing on the process plant and related infrastructure in the startup phase. USN plans to begin production in a phased approach at the end of the year. USN also responded to a Nov. 23 appearance by Save the Nolichucky Inc. (STN) President Donahue Bible before a three-member panel of a Greene County Grand Jury. The group has alleged conflict of interest and bribery in the case of local citizen J.W. Douthat, who sold property to USN. Douthat served as chairman of the Old Knox County Utility District, which was initially to supply water to USN, as well as on the Greene County Industrial Board, which voted to approve a controversial 12-mile pipeline to the Nolichucky River that USN used instead of buying water via Old Knox. STN alleges Douthat sold the land to USN for $1 million, over $400,000 more than the appraised value. USN’s position, according to the Greeneville Sun, however, was that the Douthat site was farther from the river than three other preferred sites, and it was selected mainly because it was not in close proximity to endangered mussels or archaeology sites. STN was before the Grand Jury because local District Attorney Dan Armstrong found no criminal violation with regard to the land transactions and opted against taking the case to the Grand Jury. USN told Green Markets that it has not had any improper or illegal relationships or transactions with Douthat. While the Grand Jury activity remains confidential, indications are that panel may not send the case on to the full panel for further action, as Bible told a local blogger after his presentation that he was “disappointed.” So far, USN and/or its supporters have won or settled lawsuits brought to halt the project (GM March 30, p. 13, GM June 9, 2014).

Ammonia

Ammonia, Asia, Black Sea, Eastern Cornbelt, India, Middle East, South Central, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: Nothing new was reported in the NOLA or Tampa markets.

December NYMEX natural gas closed Nov. 24 at $2.200/mmBtu, down from Nov. 19’s close of $2.276/mmBtu.

Eastern Cornbelt: New prompt sales were few in the Eastern Cornbelt, and sources continued to report pressure on spot pricing. Anhydrous ammonia was quoted at $535-$540/st FOB in the Eastern Cornbelt for prompt tons, down another $5-$10/st from last report, with the low in Illinois and the high reported out of Indiana terminals.

Western Cornbelt: Sources continued to report very quiet fertilizer activity in the Western Cornbelt. “Falling prices have not inspired any buying in our area,” said one regional contact last week. “In fact, it’s just the opposite, with everyone willing to wait and see what happens next.”

“No one wants to be the first to quote those prices, or the last,” he continued. “We may see a little activity after Thanksgiving on prepay, but not just yet.”

Ammonia was reported at $505-$510/st FOB in Nebraska, with Iowa terminals quoted at $515-$525/st FOB from west to east. Those levels were down some $5-$15/st from last report, depending on location. Delivered ammonia was pegged at $520-$530/st in Missouri from southern production points, down roughly $20/st.

Southern Plains: The anhydrous ammonia market was reported at $440-$450/st FOB out of production points in the Southern Plains region, down $10-$20/st from last report, with the upper end of the regional range pegged at $470-$480/st FOB Kansas pipeline terminals. Sources in some Kansas locations reported ammonia “running pretty good” ahead of incoming wet weather.

South Central: Sources continued to report weakening markets for most fertilizer commodities last week, including ammonia, urea, UAN, phosphates, and potash. “There doesn’t seem to be any commodity that isn’t soft, and thus not much interest,” said one contact. “We are still kicking the can down the road, and eventually this pent-up demand will surface and we’ll be back in business.”

The anhydrous ammonia market was quoted at $500-$535/st FOB in the region, down some $15-$30/st from last report, with the low confirmed at Memphis, Tenn., and the upper end for fall tons at Henderson, Ky. Sources noted no business, however, with Memphis predominantly a spring market and Henderson’s fall season winding down.

Black Sea: Sources said purchases by Koch and Trammo were the only thing that kept the Yuzhnyy market alive this summer. Now, however, buying demand is down and sellers reportedly are having a hard time finding buyers.

The last bit of business people could point to were Trammo buys from NF and OPZ. One trader said the realistic range for the area is $330-$340/mt FOB, with an emphasis on the lower-priced side.

Normally a market slowly approaching the $320s/mt FOB would worry producers. This time, however, industry sources point to lower break-even points for the Ukrainian producers thanks to the recent natural gas deal with Russia. Now, the break-even point is focused somewhere around $300/mt FOB, said one source, with a range of $280-$310/mt FOB.

It may be a while before plants have to shut down because they will lose money, one source said, but unless something dramatic happens in the marketplace, that point will be hit in the next three to six months. If some producers do have to shut down, one trader said few in the industry would be upset. A reduction in available ammonia could help stabilize the market, he said.

Middle East: Sales out of the Arab Gulf remain some of the least transparen

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