All Posts from July 30, 2007

Market Watch

AMMONIA

U.S. Gulf/Tampa: New Tampa numbers for August last week were reported at $295/mt DEL. By late Thursday, sources said most, if not all, players had recognized this new number. In the meantime, across the Gulf, there was pressure on the market at NOLA. While there were rumors of new deals as low as $260/st FOB, others called the market $265-$270/st FOB.

Eastern Cornbelt: Ammonia pricing has slipped somewhat from last report, with Illinois sources tagging the spot market in the $450-$455/st FOB range last week. The upper end of the regional market was quoted at the $470/st FOB mark out of some inland locations in Indiana and Ohio. One supplier was offering forward contract ammonia for August at $480-$490/st FOB regional terminals, with a $5/st increase for the September-November period.

Western Cornbelt: The anhydrous ammonia spot market was tagged at $440-$460/st FOB regional terminals to the dealer, with the low reported in Nebraska. An Iowa source quoted the common dealer price last week at the $455/st FOB level for spot tons. One supplier was referencing forward contract ammonia for August at $465/st FOB in Nebraska, $475/st in Iowa, and $480/st FOB Palmyra, Mo., with a $5/st increase for the September-November shipping period.

California: Sources reported some ammonia movement on corn. Anhydrous ammonia pricing remained at $435/st truck-DEL and $450/st rail-DEL in the state.

Pacific Northwest: Anhydrous ammonia pricing was quoted at $420/st FOB on the low end, with one supplier referencing the $440/st mark FOB Washington terminals for August. On a delivered basis, sources quoted the ammonia market at $435-$460/st in the region, depending on carrier and location.

Agrium reposted anhydrous ammonia on July 9 at $440/st rail-DEL in most of Washington, Oregon, and northern Idaho; $460/st truck-DEL in Oregon and Washington east of the Cascades, and in Idaho north of and including Idaho County; and $475/st truck-DEL in Montana and northern Wyoming. Also effective July 9, Agrium’s aqua ammonia postings moved to $115/st FOB Central Ferry and Finley, Wash.

Western Canada: The anhydrous ammonia market was quoted at $621-$666/mt DEL in the region, following a downward price adjustment on July 17.

Black Sea: Asian sources say the Yuzhnyy market has moved up slightly but is basically stable. Reportedly, the current selling price is pegged at $240/mt FOB, with producers asking $250/mt FOB. The strengthening of the market is supposedly due to the continued rolling shutdowns of plants for routine maintenance.

At the same time, however, prices into the United States show softer prices into Tampa – possibly because of sources other than Yuzhnyy – and demand from Europe is down. An Asian observer noted that without these factors, the price out of the Black Sea would have seen a dramatic run up.

Middle East: Shipments remain steady with contracted tons. Sources say the market remains in the low $260s/mt FOB. No major shutdowns are planned for the short term. Asian observers say supply and demand are nicely balanced.

Trying to nail down an exact price is difficult because so many tons are purchased based on formulas worked out well in advance of the actual shipment. Public tenders are rare, as are transparent individual deals with buyers.

Trying to work back to the netback from a delivered price is difficult because so many of the producers – or their agents – have special deals with shippers that using the current market rate for shipping causes wide price ranges for the same material.

For now, Asian sources say the best estimate for the price range is still $260-$265/mt FOB.

Indonesia: The Kaltim ammonia unit is down for routine maintenance, say sources in Asia. Reports that the plant was suffering from major production difficulties that caused an emergency shutdown are dismissed by a number of major Asian players. The plant went down July 23 and is expected to come back up around Aug. 20. For observers, this nearly month-long shutdown fits into a normal routine maintenance program.

Asia: Sources say this normally volatile market is quiet. Buyers are in better shape than they have been in recent summers, say observers.

Some producers in Japan are even said to have surplus material and are anxiously looking for buyers. Reportedly, the users who might step up to take advantage of this windfall of extra ammonia are begging off. One company said it already has its August needs covered by cheaper imported ammonia. Other companies that normally do not import are said to also be taking advantage of lower international prices and might be siphoning off some of the foreign tons.

One observer noted that if the pressure continues to build on the domestic producers – who have limited storage capacity – the domestic price could come down enough to entice buyers away from their international deals.

UREA

U.S. Gulf: New granular business was reported last week within the $300-$305/st FOB range. Several players reported numbers within this range, while others said that overall the market was quiet, with many waiting for the Southwestern Conference before pulling the trigger on further business. Granular urea appeared to be the only major nitrogen barge product with some softness last week as the other commodities remained stable.

Clarification: The U.S. Gulf granular barge price for the issue dated July 16 was $310-$318/st, not $312-$318/st FOB.

Eastern Cornbelt: Granular urea was unchanged at $350-$360/st FOB regional terminals to the dealer, but new sales were few.

Western Cornbelt: Granular urea continued to be quoted at $350-$360/st FOB, with the low out of spot river terminals and the upper numbers out of inland locations in Nebraska. Urea was pretty much a “non-issue” in the region in late July, according to one source. He said dealer interest will increase when fall movement empties bins of phosphates and potash and attention turns toward the spring 2008 nitrogen needs.

California: Granular urea was unchanged at $380-$400/st FOB and $390-$410/st DEL in the state.

Pacific Northwest: Granular urea was quoted at $390-$400/st DEL in most of the region, and roughly $370-$380/st DEL to points in Montana. Agrium’s granular urea postings firmed on July 9 to $370-$385/st DEL in Montana and Wyoming, depending on location; $395/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; $400/st DEL in Washington, Idaho, Oregon and northern Nevada from plants and/or warehouses in Alberta and Oregon; $410/st DEL in northern and central Utah; and $415/st DEL in southern Utah.

Western Canada: Granular urea pricing dropped in the region at mid-month, to $450-$475/mt DEL from the previous $475-$500/mt.

India: The Middle East was the big winner in the IPL tender that closed last week. All told, IPL bought about 400,000 mt from various sources, with at least 275,000 mt coming from the Middle East.

Results of the tender follow:

The Toepfer tons are expected to come from a combination of KAFCO/Bangladesh and China. Sources say the most likely source will be Bangladesh, because Toepfer has a long-term contract with KAFCO to export its granular material.

In past tenders, “Open” sourcing usually refers to Chinese tons.

Delivery for the contracted tons is slated to take place through August and September. Some in the industry expect to see some deliveries slide into early October if no major delays occur at the loading or unloading ports.

As the area moves through the rainy season, ports in Bangladesh could easily delay vessel loadings. At the same time, damage to inland transportation facilities due to rains in India could cause problems at the Indian ports.

Last year a combination of too many ships arriving close together and delays in distribution into the country caused some vessels to swing at anchor for weeks.

Sources in the Indian government and fertilizer industry are keen to prevent similar delays this year. Industry observers say that on paper the plans to move the incoming urea from this and previous tenders appear sound, but so did the plans last year.

So far, say sources, the urea that has already arrived has moved inland with few delays.

The industry is mixed about what will happen now. The trading houses are conflicted. Some say MMTC or IPL will have to re-enter the market sometime in late August, while others say enough material should be en route or contracted to cover demand for the rest of the year.

Any further buying, they say, would be later in the year and done only if the international price remains low and the funds are available to start building buffer stockpiles for the 2008 seasons.

Middle East: The awards issued in the IPL/India tender gave the area producers a healthy set of orders for the next couple of months. The cloud behind that silver lining, however, is that the producers had to agree to prices much lower than they were originally willing to accept.

Producers had been trying to hold the price close to $300/mt FOB. Pressure from buyers and basic market forces, however, pushed the price down.

Still, producers should not be complaining too much. Last year the price for their product was closer to $230/mt FOB. One trader said he was told by a producer during the MMTC tender that as long as the price remained above $200/mt FOB they were still making money.

Even with that thought in mind, the Middle East producers usually are the last to adjust their prices downward – and only in the face of massive stockpiles.

Sources say the fact that the most recent MMTC tender awarded nothing to the Middle East suppliers and that earlier tenders also took large quantities from either the Black Sea or China meant reserves were building rapidly in the region.

Reportedly, IPL representatives came through the region just before the tender was called trying to nail down some cargoes before the tender was called. Sources report the producers rejected the much-lower prices proposed by the IPL reps. Still, faced with a threat of cheaper Chinese and Black Sea tons once again taking a prominent role, the producers capitulated enough to secure the business.

Industry observers note that the current price into the United States also indicates a price in the upper $270s/mt FOB. One source commented, however, that too often using the U.S. price does not provide a fair reflection of the final netback because of discounted freight rates that are often obtained for these deals.

Gone from consideration in the IPL tender is a premium for granular. Sources say willingness of large buyers such as IPL and MMTC to take either flavor of urea, combined with the increase in granular production, has just about eliminated the granular premium for most buyers. The only ones who may face arguments for a granular premium are those buyers who insist only on granular.

Black Sea: Producers are arguing the price should be higher, but seem to only be successful with traders taking top-off tons.

Traders who had won awards in previous Indian tenders with every intention of using Yuzhnyy material now seem to be shifting their orders to Chinese producers. Sources say a growing unwillingness of the producers to lower their prices to match the Chinese price threat is causing the shift east.

While there is a great deal of talk of $250/mt FOB material, sources say that talk is only coming from buyers hoping to see the market soften. Industry sources are hard-pressed to firmly identify any deal done under $260/mt FOB.

That does not mean that August orders might not show a softer price.

The order books appear to be in good shape until Aug. 15, say sources. After the second half of August and first half of September, orders appear to be as rare as hens’ teeth. Producers will have to come to grips with competitive Chinese prices now and the threat of even lower Chinese prices after October 1, said one source.

While no business can be firmly pegged under $260/mt FOB, no one seems willing to buy material above that level, either. The only exceptions seem to be top-off tons or prompt tons.

While traders remain firm in their conviction that the $260/mt FOB barrier has not yet been broken, some are talking about $255/mt FOB as a workable number by August 3.

Besides competition from China, the Yuzhnyy exporters are facing a challenge from Baltic exporters.

Usually there is a $5-$8/mt difference between the two sources. That difference has now dwindled to just a couple of bucks. Sources say Latin American buyers are playing the two against each other and holding off for ever-lower prices.

China: A soft domestic market is helping Chinese urea producers take more international business than originally planned. Sources report that traders who had offered tons in the MMTC tender last month with the intention of taking product from the Black Sea are now looking to Chinese suppliers.

The dropping price of Chinese prill – now pegged in the $260s/mt FOB – makes it more desirable for a sale to India than Yuzhnyy material at the same price. The freight advantage between China and India’s west coast makes the switch away from the Black Sea a no-brainer, said one source.

Granular urea remains at a premium out of China. Sources now put the price at $275/mt FOB. How much longer that can remain is unknown.

The popularity of Chinese urea has surprised many. Conventional wisdom earlier this year was that Chinese product would only be considered if there is a runaway price rise in the global market. The skepticism about Chinese offshore sales came because of the 30 percent export duty imposed by the central government to discourage international sales.

The soft domestic market – largely due to lower demand and increased production – has left the high duty moot. Sources wonder what will happen after Oct. 1, when the duty is halved to 15 percent. One of the more cynical observers opined that Beijing may just keep the duty at 30 percent and continue to reap the financial benefits for its coffers.

Bangladesh: BCIC closed another of its tenders last week. The company asked for 50,000 mt each of prilled and granular urea.

As expected, Chinese urea dominated the tender. Prices reflected a clear difference in pricing between granular and prilled urea out of China.

While Bangladesh needs the urea called for, sources say they are not sure if any deliveries will be made based on this tender.

Observers note that BCIC has a sorry record of accomplishment in awarding tenders in a timely manner. Companies are still waiting for decisions on the tenders held earlier this year.

Results follow.

NITROGEN SOLUTIONS

Eastern Cornbelt: UAN-32 remained at $295-$305/st ($9.22-$9.53/unit) regional terminals to the dealer, but supplies remained very tight. There were rumors of rail-DEL sales into the region for as low as $288/st ($9.00/unit), but recent business at that level was not confirmed. Forward contract tons for August-December continued to be referenced in the $297.80-$312.20/st ($9.31-$9.76/unit) FOB range from one regional supplier.

Western Cornbelt: Sources said UAN and potash remained the hot topics in the region due to high prices and limited availability. The UAN-32 market was generally quoted in the $290-$300/st ($9.06-$9.38/unit) range FOB regional river terminals for spot tons, where available. Some sources reported offers as low as $280/st ($8.75/unit) for very limited fill quantities in recent weeks, but sales at those lower numbers were not confirmed. One supplier was offering forward contract UAN-32 for August through December at $310.60/st ($9.71/unit) FOB Pine Bend, Minn.

California: The UAN-32 market was steady at $300-$310/st ($9.38-$9.69/unit) FOB and $320-$330/st ($10.00-$10.31/unit) DEL in the state.

Sources reported some fertigation activities last week on corn and other crops. Water remains a key issue for the state due to less-than-normal spring and winter precipitation, and sources talked of some growers paying as much as $600 per acre foot for irrigation water in late July. “If we don’t have an above-normal fall and winter, it’ll be real, real critical,” said one source. “You can’t pay $500-$600 per acre foot of water and plan to buy very much.”

Pacific Northwest: UAN-32 remained at $300-$310/st ($9.38-$9.69/unit) DEL in the region, and was in very tight supply. Several suppliers had already or were planning to repost to the $315/st ($9.84/unit) DEL level in the near term. Effective Aug. 1, Agrium’s UAN-32 postings will move to $315/st ($9.84/unit) DEL in Washington, Oregon, and northern Idaho, and $345/st ($10.78/unit) DEL Montana and northern Wyoming. UAN-28 postings in Montana and northern Wyoming will move on that date to $302/st ($10.79/unit).

Western Canada: UAN-28 was pegged at $289-$304/mt ($10.32-$10.86/unit) DEL in the region, down from $295-$311/mt ($10.54-$11.11/unit) DEL at last report.

AMMONIUM NITRATE

U.S. Gulf: Barges were reported to be a little stronger at $260-$265/st FOB. Less product was reported to be available as Terra has put an emphasis on UAN, so fewer barges are on the market. At Yazoo City, Terra was focused on UAN production rates for July and will be increasing AN rates in August to meet demand. This is a historical trend in the past few years.

Western Cornbelt: Ammonium nitrate remained at a nominal $315-$325/st FOB in the region for the last sales.

California: No market for ammonium nitrate was reported in the state. CAN-17 pricing remained at $220-$225/st FOB.

Pacific Northwest: Ammonium nitrate was a nominal $327-$335/st DEL in the region. CAN-17 was steady at $222-$227/st FOB and $232/st rail-DEL.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate supplies remained very tight. The market continued to be quoted in a very broad range at $205-$240/st FOB, although how much fill material was available at the low end, and where, remained unclear. “There is essentially nothing available right now,” said one source.

Western Cornbelt: Granular ammonium sulfate remained in very tight supply, with some reasoning that demand will increase as more suppliers exit the ammonium nitrate market. While sources in mid-July said ammonium sulfate fill tons could be had on a very limited spot basis for as low as $205/st FOB, most last week were quoting much higher numbers, including confirmed sales at the $240/st FOB mark in Iowa.

California: Granular ammonium sulfate was quoted at $210-$230/st FOB, depending on location, with continued reports of tight supply.

Pacific Northwest: Granular ammonium sulfate was pegged at $215-$225/st DEL in the region, with supplies described as tight.

Western Canada: Granular ammonium sulfate pricing was quoted at $295-$305/mt DEL in the region, but a $10/mt increase is slated for Aug. 7.

PHOSPHATES

Central Florida: Traders said their phones were silent last week, and attributed the quiet to the upcoming Southwestern Conference at San Antonio. However, Mosaic was making prompt sales out of Central Florida at its asking price of $385/st FOB, although most were made to nearby customers. CF’s list price was $382/st FOB for October, but it rarely makes sales to those at the dealer level, which makes its price more attractive to resellers. Inventories remained low due to the strong demand from both the domestic and export markets.

CF’s processing plant at Plant City was shut down for a week last week after it lost a power transformer, but it may have restarted by the beginning of this week.

The DAP price range was unchanged last week at $375-$385/st FOB. Mosaic’s asking price was $385/st FOB for DAP and $381/st FOB for MAP. CF was listing a price of $375/st FOB for prompt, $378/st FOB for September, and $382/st FOB for October. PotashCorp’s Central Florida reference price remained at $385/st FOB. In Texas, Agrifos was asking $410-$415/st FOB for truck sales and $410/st FOB for railcars.

U.S. Gulf: About the only area in the Gulf market that would normally be somewhat busy at this time of year was along the Arkansas River, but last week it remained closed to barge traffic. Barges were stacking up at Rosedale, and last week approximately 120-125 were being fleeted, waited for the river to reopen. That may be awhile. Lake levels in Oklahoma remained at critically high levels, and the Corps of Engineers had no choice but to continue releasing water from the dams to keep the lakes from overflowing.

Most terminals on the Arkansas were in relatively good shape in terms of inventories, but that will not last long. By the middle of August farmers will have to begin planting wheat, and there was no certainty the river would be usable by then. The Corps was scheduled to close the river around the end of August for its annual lock maintenance work, but may postpone that to help relieve the heavy barge build-up.

One of the Mosaic’s loading cranes at Faustina was damaged by a storm last week, but loading was switched to the other warehouse there and did not affect operations. How long it will take to repair was unclear, but Mosaic has already been bringing product across the Gulf to meet demand and could simply increase those shipments, if necessary.

The NOLA DAP barge price range last week was unchanged at $398-$403/st FOB. Mosaic’s asking price last week was $405/st FOB for prompt sales, but quantities were limited.

Eastern Cornbelt: DAP and MAP were steady at $425-$435/st FOB regional warehouses, with the low out of spot river locations and the higher numbers inland. Forward contact DAP for August was referenced at $432/st FOB Peoria, Ill., and $435/st FOB Cincinnati, Ohio, from one supplier, with a $3/st increase for the September-December period. 10-34-0 remained at $335-$350/st FOB for the last sales.

Western Cornbelt: DAP and MAP remained at $425-$435/st FOB regional warehouses. Several sources speculated that some dealers are holding off on fall commitments, indicating the possibility of slight rate reductions due to higher input costs. Others reasoned that dealers are reluctant to pay high interest costs until fall movement kicks in, opting instead to buy in-season.

Most sources tagged the 10-34-0 market at $345-$350/st FOB last week. Fill tons were being offered earlier at the $325/st FOB level on a spot basis, but several said those numbers are now off the table.

California: Super phosphoric acid pricing remained firm at $7.00/unit DEL in the state, with merchant grade at $6.90-$7.00/unit DEL. A nickel/unit increase for both products is slated for August, and again in September.

Sources said MAP was a solid $445-$450/st FOB or DEL in California, with DAP roughly $5-$7/st higher. 16-20-0 remained at $295-$300/st FOB or DEL. The 10-34-0 market was quoted at $310-$320/st FOB in the state, but sources said a slight increase is likely in August due to higher phosphoric acid prices.

Pacific Northwest: Phosphoric acid pricing remained firm at the $7.00/unit DEL level for both super phosphoric acid and merchant grade acid in the region. A nickel/unit increase is scheduled for August, and again in September.

DAP pricing was firm as well at $442-$452/st FOB or DEL in the region, with the low in Montana. Sources said a $5/st increase was scheduled for mid-August, followed by a $10/st increase in mid-September. The same was true of MAP; sources tagged the market at $435-$445/st DEL in the region last week, depending on location, with increases slated for Aug. 16 and again on Sept. 16.

New MAP postings from Agrium, effective Aug. 16, include $440/st DEL in Montana, $445/st DEL in southern Idaho and Utah, and $450/st DEL in Washington, Oregon, and northern Idaho. A $10/st increase is scheduled for all locations on Sept. 16. The company’s MAP postings FOB the warehouse in Washington, northern Idaho, and Oregon will move to $445/st on Aug. 16 and $455/st on Sept. 16.

16-20-0 was tagged at a firm $300-$305/st DEL in the region, with a $2-$3/st increase scheduled for Aug. 16. Sources said the market will firm to $308-$313/st DEL on Sept. 16.

10-34-0 remained at $315-$325/st FOB in the region, with several sources saying it would likely firm to the upper end of that range Aug. 1.

Western Canada: MAP remained at $530-$565/mt DEL, with a $10/mt increase scheduled for Aug. 7.

U.S. Export: The sharp rise in ocean freight rates and the sagging U.S. housing market has put PhosChem in a competitive bind. Rates have been going up around the world, but the increases in the Gulf of Mexico have been the highest.

With less need for steel and other building materials, fewer vessels were delivering into the Gulf, which pushed up the price. In a move to keep its customers happy, PhosChem agreed to make sales of 80,000 mt of DAP and MAP into Argentina at between $425 and $427/mt FOB, which made it competitive with other phosphate producers in the world. PhosChem was still asking $440/mt FOB, but made the adjustment to keep a presence in that market. Considering current prices and profits, PhosChem’s members will not be hurt.

The Fertilizer Institute recently issued its export report for June. It showed that India was by far the biggest buyer that month, at 242,547 mt. Mexico was a distant second at 29,594 mt, followed by Peru at 28,800 mt. Total DAP exports for June were 371,668 mt, a decrease of 19.8 percent over the same month last year. For the calendar year-to-date, China received the most, 291,695 mt, with Mexico at 259,305 mt and India close behind at 242,547 mt,. Total exports for that period amounted to 1,916,260 mt, a decrease of 30.4 percent compared to the previous year.

Canada received the most MAP in June at 34,154 mt, while Brazil was second at 29,282 mt. For the month, total MAP exports were 130,186, or 25.5 percent more than June 2006. For the calendar year-to-date, Canada was still on top at 402,996 mt, with Brazil next at 163.567 mt, and Australia third at 159,891 mt. Total MAP exports so far this year were 1,150,840 mt, which represented an increase of 13.1 percent over 2006.

Last week the export DAP price range spread to $425-$440/mt FOB, rather than the flat $440/mt FOB the previous few weeks.

Pakistan: Fauji has issued a tender for import of 40,000-80,000 mt of DAP at Karachi Port/Port Qasim on a C&F basis for shipment in August/October 2007. Offers were to be submitted by July 31 and be valid through Aug. 7.

POTASH

Eastern Cornbelt: Potash supplies remained very tight. The regional warehouse market was quoted at $245-$250/st FOB for limited spot tons, depending on grade and location.

Western Cornbelt: Potash supplies were tight and prices continued to firm. Sources tagged the regional market at $245-$252/st FOB warehouses, depending on grade, with most spot quotes for granular potash now at the $249/st FOB mark or higher. Sources said producers had customers onstrict allocation, depending on who you are and what you’ve ordered in the past.

California: Potash continued to be quoted at a firm $255- $265/st FOB in the state, depending on grade. Potassium nitrate pricing firmed $20/st on July 11 to $500/st FOB for bulk and $560/st FOB for bags. Sulfate of potash (SOP) pricing was unchanged at $368-$378/st FOB in the state.

Pacific Northwest: Potash remained in extremely tight supply, with reports from several sources that regional dealers were scrambling to get tons for the fall in the face of reduced shipments from producers. Rail-delivered potash was pegged at a firm $274-$282/st in the region, with the low for 60 percent and the high for 62 percent muriate. On an FOB basis the market was pegged at $265-$272/st, depending on grade. Sources said a $20/st increase is scheduled for Oct. 1.

Western Canada: Potash pricing continued to firm. Sources tagged the regional market at $280-$295/mt FOB regional plant sites or warehouses, up another $10/mt from last report.

SULFUR

Tampa: Although historically sulfur contract prices have been settled on the Friday before the Southwestern Conference, that appeared unlikely this time around. Sulfur producers were all over the board on what prices they were seeking, and phosphate companies had come to terms with only some of them. Mosaic settled with one at $17/lt up from the previous quarter, and PCS settled with several at $20/lt higher. In the meantime, accountants were in a quandary.

One sulfur source pointed out that the current high prices for sulfur stemmed from the Chinese, but they were moving out of their peak period “and prices could go down as fast as they went up.” While Tampa prices will rise significantly for the third quarter, phosphate producers will still be paying a lot less than the rest of the world, which has seen prices spike to over $100/mt FOB.

For the most part, refineries were producing close to their normal levels last week, and the only ones curtailed or shut down were Valero’s Texas City plant, which should be back to normal by the end of this week, and Coffeyville, which will be several months.

Prill vessels were due to leave this week from both the Gulf and the West Coast.

West Coast: Contract prices for the West Coast will likely increase at least $40/t for the next period, and that could cause problems for some domestic users in California. High prices for export were pushing up the value.

Vancouver: Prices for sulfur out of Vancouver were running in the $105-$110/mt range on new semester contracts. Not all contracts had been settled, but will likely be in that range when they are.