All Posts from August 30, 2010

Middle East: About the only non-contract business being talked about in the region is an offer from Iran at $370/mt FOB. The Arab producers are also talking about material just a bit higher. But, as one trader noted, talk is not the same as a deal.

Sources estimate that Iran may have one cargo available for late-September shipment. All other producers in the Arab Gulf region have full order books into October.

Unfortunately for those trying to move up the price, just about all the Arab producers are selling under contracts based on published prices. Without any spot deals to help set a new pricing level, sources say the producers are stuck selling their material in the $340s/mt FOB.

Earlier this year, as more Iranian ammonia became available, the price was lower than the Arab offers. Sources at the time said the need to process payments through middle men to avoid sanctions against using U.S. dollars to purchase Iranian products meant the Iranians had to offer discounts on the export price.

The discount gap has narrowed in the past few months. The $370/mt FOB Iran is said to be offering is being met with Arab producers calling for $370-$375/mt FOB.

Until a spot deal is struck in the region, $340-$345/mt FOB is still the going price.

India: FACT will close a 7,500 mt tender September 1.

Delivery is slated for September 18-22 in Cochin.

This tender could easily set the prices for contracts among Middle East suppliers and Indian buyers for some time. It could also signal a major jump in the posted price for Middle East ammonia. Producers have been arguing for some time that the posted price is at least $30/mt too low.

Asia: Demand from South Korean and Taiwanese industrial buyers is said to be getting stronger as the year winds down.

Sources say the strength of the market means the Indonesian and Malaysian plants will keep running at full capacity for as long as they can.

It also means that the suppliers of contract tons out of the Middle East will be under pressure from buyers to supply extra tons, with each shipment under the plus-or-minus 10 percent provision of the contract.

Strong Asian demand could also mean some high-priced spot cargoes could come out of the Arab Gulf soon.

UREA

U.S. Gulf: The granular market dropped last week into the $290s/st FOB, but bounced back to a firm $300/st FOB by the end of the week, according to sources. By late Thursday, sellers were again quoting $302-$303/st FOB. Some attributed the drop to profit takers, and others said some buying has slacked off as dealers in wheat country want to see product depleted before they commit to restocking product. How low product dropped was still a question mark, but most sources called the market $295-$300/st FOB.

Eastern Cornbelt: Sources quoted the granular urea market at $330-$350/st FOB, with the low out of river locations and the upper numbers inland.

Western Cornbelt: Granular urea was tagged at $330-$350/st FOB in the region, with the low out of river locations and the upper end out of inland shipping points to the dealer. A Nebraska dealer quoted delivered urea at the $370/st mark to his location from southern shipping points.

Northern Plains: Sources quoted the urea market at $330/st FOB the Twin Cities on the low end. North Dakota sources quoted the market at the $370/st DEL level last week. Agrium’s Aug. 13 urea postings included $365/st FOB Marion, S.D., and North Dakota terminals at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $370/st rail-DEL in Minnesota, Wisconsin, and the Dakotas. Those levels were up $20/st from Agrium’s July 23 list prices.

Northeast: Urea pricing in the Northeast was up from last report, with sources quoting a $340-$350/st FOB range in the region. The low end was quoted FOB Philadelphia to the dealer.

Eastern Canada: Granular urea was pegged at $450-$460/mt FOB in Ontario in late August. “The market has been up, down, sideways, and back,” said one source, describing the market volatility of recent weeks.

Indonesia: Pusri closed its prilled urea tender urea early last week and was disappointed. The Aug. 23 tender was originally called to sell 60-70,000 mt, with shipment from either the shallow draught Palembang facility or the deepwater port of Cigading. Palembang is limited to 5,000 mt vessels, while Cigading can handle 30,000 mt.

In the end, Pusri said it would sell 120,000 mt, and only from Palembang.

The winning bid from Swiss Singapore at $283/mt FOB was $10 less than the granular sales made by Kaltim just a few days earlier. Swiss Singapore bid on 60,000 mt in the hopes of shipping out of Cigading, said one trader. Once it was clear that only Palembang was an option, the trading house settled for 5,000 mt.

Tender results follow.

Reportedly, Pusri approached Trada and Fertcomm to match the Swiss Singapore price – to no avail. The company also, reportedly, asked Parna to take its cargo at the Swiss Singapore price and from Palembang. Again, no joy.

Sources report Pusri will call another tender to sell 115,000 mt this week. The favorite date mentioned is Sept. 1.

The lower price of the Pusri tender compared to the Kaltim one was explained by two points. The first was that Pusri was offering prills and Kaltim was offering granular. Granular usually gets a slight premium.

Second, shipments from Palembang – because they are limited to 5,000 mt – are usually destined for smaller, regional buyers. These buyers were not interested in doing any business at levels similar to the Kaltim price.

Sources speculated that Swiss Singapore put in the price it did in the hopes of shipping from Cigading. The price would have been right to cover a deal into India.

With the restriction to only Palembang, Swiss Singapore took the bare minimum necessary.

Black Sea: After being shut out of the latest Indian tender because the prices were too high, sources say the Yuzhnyy price is coming down.

Whereas just a few weeks ago producers were only entertaining bids at $295-$300/mt FOB, sources now say the market is in the low $280s/mt FOB – with further losses expected. Bids are now coming in the low $270s/mt FOB.

While nothing has been done below $280/mt FOB, sources say there are few places willing to pay a high price in a declining market. Every potential major buyer is now reportedly in good enough shape to hold off signing a deal until the price comes down further.

A lot of the talk last week was trying to figure out what happened to all the material reportedly purchased by Fedcominvest prior to the last Indian tender.

One trader noted that he was hard-pressed to hear of any actual deals. Everything about the Fedcomm business, he said, was rumor-based. Other traders and industry watchers agreed that no one ever named a specific purchase in the period running up to the Indian tender.

Even if Fedcomm did buy cargoes, sources said the price at the time would still have been too high for the Indians to consider. These cargoes – if they existed – would most likely be offered to European and South American buyers.

Sources in Asia adhere to the idea that the tons were indeed purchased and are being sent to points west of the Black Sea.

For now, sources peg the market at $280-$285/mt FOB.

Middle East: Egypt seems to be the major mover of the regional market with spot sales. Last week MOPCO reportedly sold a cargo at $300-$315/mt FOB. At the same time, sources say Egyptian producers said bids now need to start at $335/mt FOB.

The Arab Gulf producers were more than happy to follow suit.

Even though the Arab producers did not sell any cargoes into India in the last tender, sources say that lack of business did not faze the producers.

Orders out of Egypt for Europe are making that country’s producers happy.

Arab Gulf producers are satisfied with their contracts to the United States, Europe, and Australia.

Iran, which did get an award from India, is said to be the only producing country with some extra cargo. But, say sources, not a lot.

Tender awards from Indian buyers have pretty well filled the order books from Iran into September.

Sources began reporting late last week that some of those awards may not get filled.

Reportedly, at least one Iranian producer declared a force majeure on at least one cargo awarded under an Indian tender.

With no non-contract tons sold other than the reported Egyptian cargoes and the Transglobe award from IPL/India, sources say the market is hovering at $305-$315/mt FOB for prills and granular urea.

China: Sources report that contracts have been signed and vessels nominated for all 520,000 mt purchased by IPL/India from China.

Getting the contracts and nominations done as soon as possible was a top priority, say sources. Unless everything was booked and apparently ready to go, any cargo shipped after Sept. 15 would have been subject to a 110 percent export duty.

Now that all the documents and vessels are lined up, the tons will be treated under the current 7 percent duty. Shipment may even take place after Sept. 15.

Many in the industry are expecting to see some delays in shipment.

Besides the seasonal problems related to storms and heavy rains delaying loading, sources say a number of ports should expect to be overly crowded as phosphate and urea exports via for dock space.

One trader said the congestion would occur even if only phosphates and urea were being handled at the ports. He added, however, these same ports are always busy handling vessels with other commodities, from iron ore to grain.

Sources say, however, that the Chinese port operations have been steadily improving. While some delays are expected because of vessel congestion or bad weather, sources expect to see loadings move more smoothly than in the past.

The large exports, combined with strong domestic demand, are helping hold the price stable in the country.

Sources peg the market as low as $275/mt FOB for prilled and as high as $285/mt FOB for granular.

Pakistan: Regional sources report that while most of the government is focused on providing relief to the nearly 1 million people displaced by the current floods, some agronomists have begun to take stock of the agricultural input needs.

Initial reports say that the flooding washed away the fertilizer that was applied just before the floods occurred. At the same time, however, sources say the floods are likely to leave fertile topsoil on the affected lands.

In the end, said one trader, TCP will have to import more urea to satisfy farmers’ demands once the fields are again useful.

TCP is reportedly already talking with domestic regional distributors to assess how much fertilizer will be needed.

The government is considering a plan to give urea for the upcoming season “free of cost” to the farmers who are affected by the floods. The government will start its assessment as soon as the water has receded from submerged areas. Market sources say the government might also approach the government of Saudi Arabia to supply urea as aid, or on deferred payment basis or at concessional rates. The Saudi government provided urea through Sabic when an earthquake hit Pakistan in 2005.

NITROGEN SOLUTIONS

U.S. Gulf: Product is still hard to find, as is a good gauge of the market. Most are putting the market at $220-$225/st FOB ($6.88-$7.03/unit), with others expecting it to soon go to $230-$235/st FOB.

Eastern Cornbelt: UAN-32 was quoted at $255-$265/st ($7.97-$8.28/unit) FOB regional terminals for prompt tons, with rail-delivered UAN quoted as high as $275/st ($8.59/unit) in the Ohio market. Spring UAN tons were reportedly being quoted as high as $280-$285/st ($8.75-($8.91/unit) in the region in late August.

Western Cornbelt: UAN-32 pricing had reportedly firmed to $255-$265/st ($7.97-$8.28/unit) FOB in the region for limited tons. An Iowa source put the dealer market firmly at the $260.80/st ($8.15/unit) FOB level in his trade area, while spring UAN tons were reportedly being offered at the $285/st ($8.91/unit) FOB level, give or take.

Northern Plains: UAN-28 pricing had reportedly firmed to $265/st ($9.46/unit) DEL to North Dakota from Canada. Minnesota sources pegged the market as high as $250/st ($8.93/unit) FOB for spring tons. The low end of the UAN-32 range in Minnesota was tagged at the $265/st ($8.28/unit) FOB level from cash tons on a spot basis.

Northeast: The only spot quote reported for UAN-30 last week was $207/st ($6.90/unit) FOB Baltimore for very limited tons. Most sources said there simply wasn’t any UAN available on the East Coast in late August, and some speculated that the market could firm to $210-$220/st ($7.00-$7.33/unit) FOB when terminals are restocked.

Out of tanks in upstate New York, UAN-32 reference prices had reportedly firmed to $272/st ($8.50/unit) FOB. One source quoted rail-delivered UAN-32 in the mid-to-upper $280s/st ($8.90-$9.00/unit) in New England.

Eastern Canada: The only price quote reported for UAN was a fill program at $232/mt ($8.29/unit) FOB for UAN-28 and $265/mt ($8.28/unit) FOB for UAN-32 in Ontario on a spot basis, for orders placed early in the week and shipped by the end of October. Another regional supplier expected to have a UAN fill program out by the end of August, but no pricing was available last week.

AMMONIUM NITRATE

U.S. Gulf: Barges are put in the $252-$255/st FOB range.

Western Cornbelt: Ammonium nitrate remained at $290-$305/st FOB in the region, with the low in Iowa and the upper end in Missouri. A Nebraska source quoted delivered nitrate in the $300-$315/st range from southern shipping points in late August.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was steady at $190/st FOB and $200/st rail-DEL in the region.

Western Cornbelt: Granular ammonium sulfate was unchanged at $190/st FOB and $200/st DEL in the region.

Northern Plains: Ammonium sulfate remained at $220/st FOB and $225/st DEL in the region. One supplier briefly offered granular ammonium sulfate at the $190/st FOB and $200/st DEL level in the region at mid-month, but that program was reportedly off the table last week.

Northeast: Granular ammonium sulfate was pegged at $170/st FOB and $190/st DEL in the region.

Eastern Canada: Granular ammonium sulfate was quoted at $270-$290/mt FOB in the region.

Western Canada: Agrium said last week that it will suspend production of granular ammonium sulfate at its Redwater, Alberta, facility for an indefinite period of time beginning in early September. Future production plans will be dependent on market factors. Agrium capacity at the site is 300,000 mt/y.

PHOSPHATES

Central Florida: Finding DAP available for prompt spot sales was almost impossible last week, and those who have it won’t make any deals.

“One guy asked me for 20 railcars,” a trader said. “There’s no way I could put together 20 cars. There just isn’t that much.”

Mosaic and CF have nothing available for September and October, according to sources. Those who do have inventories for sale bought it earlier and are in no hurry to exhaust what they have for anything less than a premium. The game now appeared to involve efforts to secure forward positions and lock-in prices, in the strong belief prices will rise even more – possibly to around $500/st FOB. That material could be used to rail to the north river areas after the Mississippi River closes, normally around the middle of October.

Heavy rain across Central Florida last week has not hampered either mining or phosphate processing. Actually, producers were running plants at even faster rates so they can evaporate more of the water going into their gypsum stacks from the heavy rains.

The Central Florida DAP price range took a big jump upward from the previous week’s $445-$450/st FOB, to $465-$473/st FOB based on recent sales and availability. That meant the differential between Central Florida and the NOLA DAP barge market was nearly gone. Neither Mosaic nor CF had anything available for prompt delivery. PCS was making sales at “competitive prices.” Agrifos was asking from $475/st FOB to $480/st FOB for DAP truck sales, while railcars were about $5/st FOB less.

U.S.Gulf: Vacations took their toll last week, and business slowed to a crawl along the river. Several sources pointed out that very little was available to sell and that, too, cut into activity.

Although only a few barges were actually available, a sale was made. Prices remained relatively bullish despite the slowdown, with the lowest cost deals at the beginning of the week. Offers to sell were running at $478/st FOB. However, a source who will have one barge each of DAP and MAP for sale in September planned to seek $485/st FOB for DAP and $510/st FOB for the MAP.

TSP from a vessel due from Europe had sold between $390/st FOB and $415/st FOB, but the seller planned to raise the price for the next sale to $425/st FOB. Two or more barges may still be available.

Meanwhile, the Central Florida market, which is normally $10-$15/st FOB lower than the Gulf’s river market, was nearing parity last week – $465-$473/st FOB. That could easily mean prices on the river will follow.

The corn crop was just beginning to be harvested in much of the Eastern Cornbelt last week, and corn prices were still very good. After a fall earlier in the week, corn rebounded midweek and was running at $4.24/bushel for December 2010, which farmers can use to make ready for their next crop. Corn for December 2011 was around $4.35/bushel.

Terminal prices were running close to or just over $500/st FOB in most areas. However, it appeared likely terminal prices will rise during the next month or two, because inventories held by dealers were skimpy overall and farmers will need product for the fall after the harvest is over.

Sources said that dealers were still holding out on getting replacement for the depleted phosphate bins, but farmers will start hitting them for supplies beginning in the next few weeks. The corn crop is ready early this year, so farmers should be able to put down fertilizer before the snow hits. Other crops were also doing well. Soybeans were over $10.00/bushel, and wheat was nearly $7/bushel.

Based on actual sales last week, the NOLA DAP barge range increased slightly, from $462-$472/st FOB to $470-$475/st FOB. Sources expect prices to rise into late September or October, and perhaps longer.

Eastern Cornbelt: DAP was quoted in a broad range at $495-$525/st FOB in the region, with the low out of spot river locations in Illinois and Ohio and the upper numbers inland. MAP was $10-$15/st higher than DAP. As of Aug. 26, one supplier moved its DAP reference prices to $495/st FOB Peoria, Ill., and $500/st FOB Cincinnati, Ohio.

10-34-0 was quoted at $365-$385/st FOB in the region, with the upper end reported in the Ohio market.

Western Cornbelt: DAP was quoted at $495-$515/st FOB regional warehouses, with the low on the river and the upper numbers inland. One Iowa source tagged the dealer market firmly at the $500/st FOB level in his location, while a Nebraska dealer said he was offered brokered DAP tons at that figure on a DEL basis yet last week.

MAP was $10-$15/st higher than DAP; the upper end was pegged at the $530/st FOB level in western Iowa. One supplier reposted DAP on Aug. 26 at $495/st FOB St. Louis, Mo., and $500/st FOB Inola, Okla., with MAP moving to $515/st FOB Inola.

10-34-0 was tagged at $365-$375/st FOB in the region.

Northern Plains: Sources pegged the DAP market at $495-$515/st FOB, with MAP $15-$20/st higher, where available. A North Dakota source quoted delivered MAP in the $525-$550/st range last week, with limited availability. Effective Aug. 26, one supplier moved its reference prices FOB Pine Bend, Minn., up to $500/st for DAP and $515/st for MAP.

10-34-0 pricing had firmed dramatically as well, fueled by firming phosphoric acid and ammonia prices. Minnesota sources tagged the dealer market firmly at the $380/st FOB level last week, while delivered tons from Canada were pegged as high as $430/st in North Dakota.

Northeast: The MAP market was pegged in a broad range at $505-$545/st FOB in the Northeast region, depending on location, with delivered MAP reported at the $530/st level in southern Pennsylvania. DAP was roughly $10-$20/st lower than MAP, where available.

10-34-0 was quoted at the $365/st FOB mark out of tanks in upstate New York, with an increase reportedly slated for early September.

Eastern Canada: Sources quoted the MAP market at $640-$650/mt FOB in Ontario – if you can find any. Those numbers were up a full $55-$90/mt from last report. No prices were reported for DAP or TSP in the region.

U.S.Export: The export market remains tight, and must now face competition from the U.S. domestic markets as well.

PhosChem made a single sale into Central America at $502/mt FOB on a 7,000 mt deal. That was well below the $520/mt FOB OCP was getting in Europe.

Little will be available from the major producers for export or anything else, at least well into or through October. Like it or not, prices will be going up, because the Central Florida market was beginning to run ahead.

Based on the most recent sale, the export DAP range was a flat $502/mt FOB. Sources expect prices to continue to rise.

China: The large sale to India, combined with strong domestic demand, has moved the Chinese DAP price to nearly $500/mt FOB. One trader said the Chinese are using the U.S. export price as their target. The export duty on DAP will jump to 110 percent for one month beginning Sept. 15. During that time, say sources, domestic buyers will be building their reserves.

The amount of exported DAP caught some distributors by surprise. Just a few months ago DAP was in massive surplus. Now, after major sales to India and stronger domestic demand, supplies of DAP are tight.

POTASH

Eastern Cornbelt: Sources continued to quote the potash market at $390-$410/st FOB, with the upper end reflecting new producer postings and the low reported for spot warehouse tons from secondary suppliers. Rail-delivered potash was referenced at the $420/st level in the region.

Western Cornbelt: Potash was pegged at $390-$410/st FOB, with the low on a spot basis from secondary suppliers and the upper end reflecting producer postings for new orders.

Northern Plains: North Dakota sources said delivered potash was still available in the $400-$410/st range, and Minnesota sources said potash tons could still be bought through secondary distributors at the $390/st FOB level in the Twin Cities. Producer postings were up from last report, however. Potash pricing FOB Saskatchewan mines had firmed to $365-$377/st for new orders, depending on grade.

For the Aug. 18 through Sept. 30 order and shipping period, Agrium firmed its 60 percent red premium potash postings to $420/st rail-DEL in Minnesota and the Dakotas, and $410/st FOB Shakopee, Minn., and Colfax and Grand Forks, N.D. Agrium also firmed its potash postings FOB Vade, Sask., to $370/st for standard and $375/st for premium potash for the same Aug. 18 through Sept. 30 period.

Northeast: Sources said potash tons could still be ordered from secondary suppliers at the $400/st FOB level in the region last week, but producer postings had firmed. One source pegged delivered potash in the $420-$430/st range for Canadian granular tons.

For the Aug. 18 through Sept. 30 order and shipping period, Agrium firmed its 60 percent red premium potash postings to $425/st rail-DEL in Delaware, Maryland, Pennsylvania, West Virginia, New York, New Jersey, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, and Maine.

Eastern Canada: Potash out of the warehouse had reportedly firmed to $475-$485/mt FOB in Ontario, with the low for red and the upper end for white granular product. K-Mag remained at $335-$345/mt FOB in Ontario. The sulfate of potash (SOP) market was tagged at a solid $645/mt FOB in Ontario.

SULFUR

Tampa: Refinery rates decreased by 2.3 percent, from 90 percent to 87.7 percent for the week ending Aug. 20, according to the U.S. Department of Energy.

A source said supply and demand were in balance, at least in the U.S., although the international market was still moving up based on moves by speculators, who were pushing up the price for sulfur destined for China and India.

Last issue, it was stated that sulfur would become more abundant after Mosaic shutters its South Fort Meade plant, and Agrifos will shut down Houston operations sometime during or at the end of first-quarter 2011. That is only partially true – Agrifos will be making sulfuric acid when it ends phosphate production, so sulfur use should not change.

Pakistan: Oil & Gas Development Co. (OGDC) has issued a tender to sell 8,000 mt of sulfur at a minimum base price of Rs10,725 (US$126.18) in 14 lots. The last date for receiving bids is Sept. 6.

MARKET NOTES

Bangladesh: The country’s fertilizer industry welcomed an Iranian proposal to supply natural gas through a $7.5 billion cross-border Iran-Pakistan-India gas pipeline to meet its mounting requirements in industries and power plants. “We would be very happy to be a part of the proposed multi-country gas pipeline,” state-owned oil and gas corporation Petrobangla Chairman Dr. Hossain Monsur told the local media.

The difficulty in gas pipelines is the U.S. sanctions against Iran, as international banks are reluctant to finance the project. Iran, however, has declared that it would take the gas pipeline to its border. It would then be up to Pakistan and India to build their pipelines within their jurisdictions.

Oman: The joint venture of Oman and India – Oman India Fertilizer Co. (Omifco) – plans to increase production capacity by 30 percent by modernizing its plant in Sur in Oman, with an envisioned investment of $350 million. Currently, Omifco has two plants with 2,530 mt/d of urea and two plants of 1,750 mt/d each of ammonia. For the existing project, the company has a 100 percent buyback pact with India that started in 2005 and is to continue for 15 years.