Sacramento—Yara held a ribbon cutting ceremony on March 21 at its West Sacramento Terminal, marking its transition to a fully integrated Yara site since the company’s purchase of the facility from Agrium in December 2015 for $27 million (GM Dec. 7, 2015). About 75 were on hand for the event, which coincided with National Ag Day and featured a lunch and tours of the facility.
Yara invested an additional $4.5 million to convert the former UAN production plant into an import terminal for UAN and urea, which it receives from the U.S. and overseas. The West Sacramento Terminal received its first dry bulk cargo of urea last October (GM Oct. 7, 2016). Liquid UAN service at the site has been in operation since March 2016.
More recent improvements include completely reskinning the 29,000 mt urea warehouse, utilizing energy-efficient translucent panels to allow natural light to enter. Yara said the dock is currently being redesigned to improve safety and efficiencies during dry vessel discharge operations.
“West Sacramento is an important part of our growth ambitions,” said Magnus Ankarstrand, president of Yara North America. “It is a large site with additional available capacity and our aim is to grow it, utilizing the flexibility of the free capacity to optimize our distribution pattern in California. Yara’s business from the West Sacramento terminal will impact half a million acres of crop production across 20 different large-acre crops, which in turn will generate $500 million of farm revenue this year.”
Among those in attendance was West Sacramento City Manager Martin Tuttle. “Yara’s investments in the West Sacramento Terminal add momentum to our city’s push to be a global food and ag hub,” Tuttle said. “Their team’s expertise and the products they provide to ag customers are highly regarded, and a huge source of pride to us.”
Sydney, Australia—WorleyParsons said March 21 that it has been awarded a contract by the Manaseer Group to provide project management consulting (PMC) services for a greenfield integrated potash and phosphate fertilizer complex in Jordan. WorleyParsons said it will supervise the selection and delivery of the engineering, procurement, and construction services from the design and procurement stages to the construction and commissioning stages over a three-year period.
Vale SA, Rio de Janeiro, said March 27 that Fabio Schvartsman has been named CEO, succeeding Murilo Ferreira. Schvartsman most recently was the chairman of Kalbin, Brazil’s largest paper producer, and has several years of experience with Duratex, the Ultra Group, Telemar Participações, and San Antonio Internacional. He holds a postgraduate degree in Production Engineering from the Polytechnic University of São Paolo (Poli / USP) and a postgraduate degree in Business Administration from Fundação Getúlio Vargas.
Washington—The USDA on March 31 released its Prospective Plantings report, which confirmed earlier predictions of a significant reduction in corn, rice, and wheat acreage, along with a record soybean crop and a big upswing in cotton acreage.
Corn planted area in 2017 is estimated at 90 million acres, down 4 percent – or 4 million acres – from last year, but 2 percent higher than in 2015. Compared with last year, USDA said planted acreage is expected to be down or unchanged in 38 of the 48 estimating states. USDA said corn acreage decreases of 400,000 acres or more are expected in Iowa, Minnesota, Missouri, and Texas compared with last year. “The reduction in planted acres is mainly due to the expectation of lower returns compared with other crops in 2017,” USDA said.
Soybean planted area for 2017 is estimated at a record high 89.5 million acres, up 7 percent from last year. Compared with last year, USDA said planted acreage intentions are up or unchanged in 27 of the 31 estimating states. Increases of 500,000 acres or more are anticipated in Iowa, Kansas, Minnesota, North Dakota, and Nebraska.
All wheat planted area for 2017 is estimated at 46.1 million acres, down 8 percent from 2016. USDA said this represents the lowest total wheat planted area for the U.S. since record-keeping began in 1919.
All cotton planted area for 2017 is estimated at 12.2 million acres, up 21 percent from last year. If realized, USDA said this will be the highest planted cotton acreage since 2012.
Area planted to rice in 2017 is expected to total 2.63 million acres, down 17 percent from 2016, with sizable acreage declines predicted in major rice producing states like Arkansas, Louisiana, Mississippi, Missouri, Texas, and California.
U.S. Gulf: Prompt NOLA granular barge prices dropped from the $190s/st earlier in the week to as low as $184/st on March 29, before rebounding back into the $190s/st FOB.
Prill trades were hard to find and sources were generally bearish, citing granular’s decline. At best, some still called the market $210-$220/st FOB. Yara is bringing in a vessel with 11,000 mt of Libyan product, which should give better guidance to the market going forward.
Eastern Cornbelt: Urea pricing volatility, driven by weakness in the NOLA barge market, continued to impact the Eastern Cornbelt terminal markets in late March. “It seems like these markets are very unstable at the moment, waiting on a trend to develop on purchasing intentions,” said one regional source. “I know I have more urea to buy, but I’m cautiously waiting to see whether something positive can develop with the market.”
Sources reported prompt urea pricing down to $225-$235/st FOB out of spot river locations in the Eastern Cornbelt, down significantly from last report, with the lower end quoted in the Cincinnati, Ohio, market. The upper end of the regional market was pegged at the $245/st FOB level at inland locations. Dealer pricing out of some inland points remained as high as $265/st FOB in late March, but sources reported no new business at that level.
Western Cornbelt: A falling urea market continued to dominate conversation in the region. Sources quoted urea pricing out of the St. Louis, Mo., market down to $220-$225/st FOB in late March. While reference pricing remained as high as $260/st FOB in Iowa on a spot basis, suppliers were reportedly “matching up as needed.” One contact pegged the high end of the regional range at the $240-$250/st FOB level during the last days of March.
The Catoosa, Okla., urea market had dropped as well, with sources quoting the market at $225-$230/st FOB for the week.
Demand and availability continued to be cited as key factors for the market. “Demand is getting closer with the weather looking to improve,” said one contact, who added that “barge availability looks good against the current demand.” He noted as well that new domestic urea production continues to make progress, but will “probably not be ready” for the spring push.
“The market still remains about the timing and magnitude of demand,” he said. “This still remains a very quiet market until it starts.”
Northern Plains: A softening urea market was the big story in the Northern Plains in late March. Urea pricing in the Twin Cities had reportedly fallen to $222-$230/st FOB, down $20-$30/st from early-March levels.
In North Dakota, sources pegged the urea market at $265-$280/st DEL, with the upper end of that range also quoted on an FOB basis out of Carrington. Sources reported minimal buying at that level, however. “Retailers figure that the price will go lower if they are out that low already,” said one regional contact.
Great Lakes: The granular urea market in the Great Lakes was down dramatically from last report, with one regional source saying the product “has gotten scandalously cheap and is dragging UAN-28 down with it.”
Warehouse urea pricing in the Michigan market was quoted at $265-$280/st FOB in late March, down a full $45-$55/st from February pricing levels. Wisconsin sources pegged the low end of the regional market at the $235-$245/st FOB level.
Northeast: Sources reported weakening prices for urea in the Northeast. The low end of the regional range was quoted at $260-$270/st FOB Fairless, Penn., down some $15-$20/st from last report, with the upper end tagged at $282/st FOB Baltimore, Md.
India: It looks as if IPL will take about 300,000 mt out of a tender that offered about 2.5 million tons. The limited take appeared to prompt an immediate call by MMTC for another tender.
The MMTC tender closes April 6, with a ship-by date of May 19.
IPL counterbid offers in its tender that hit as high as $246/mt CFR at $221.50/mt CFR for West Coast ports and $233.50/mt CFR for East Coast ports. The amounts are based on the lowest offer, which came from Fertil, plus freight costs of $9.50/mt to West Coast ports and $11.50/mt for the East Coast. Fertil and Sabic offered tons at $212/mt FOB and $215/mt FOB, respectively, leaving IPL and the industry to calculate the delivered price.
The average price offered to the West Coast was $236.39/mt CFR, with the average to the East Coast at $237.99/mt CFR. In the end, 250,000 mt is slated to be delivered to West Coast ports, with the remaining 50,000 mt going to an East Coast port.
The ratio of shipments between the two coasts is higher than the tender called for, which was 60 percent for the West Coast. However, sources said the issue facing the Indian buyer is not the East-West ratio, but rather the small quantity purchased.
As the tender closed, sources expected IPL to buy at least 700,000 mt, but the apparent refusal of Iran to back any deals at the counterbid price left only a handful of suppliers willing to deal. Sources said coming into the tender that Chinese product would be offered, but only at higher levels that would not be to the Indians’ liking. In the end, only one cargo from China was awarded, and that was offered by Dreymoor.
The lack of Iranian backing cost the Indians about 240,000 mt, sources said. No one could give a solid reason why the Iranians stayed out. One trader speculated that the Iranians were most likely tired of being perceived as the low-price leaders.
The tally of the offers follows:
Offering Company
Quantity
US$/mt FOB
Discharge Port
Fertil
90,000
212.00
West Coast
SABIC
25,000
215.00
West Coast
Offering Company
Quantity (mt)
US$/mt CFR
Discharge Port
Firm
Optional
Koch
45,000
232.10
Krishnapatnam
60,000
227.75
Mundra
CHS
44,000
227.97
Mundra
55,000
232.37
Krishnapatnam
Keytrade
100,000
50,000
228.79
Mundra-Kandla
TransAgri
195,000
234.50
Mundra
238.00
Kandla
237.00
Pipavav
232.50
Rozy
Ameropa
42,000
232.73
Mundra
30,000
239.71
Gopalpur
Allied Harvest
63,000
233.50
Krishnapatnam-Gangavaram-Karaikal
234.50
Kakinada
Comzest
60,000
233.30
Rozy
45,000
233.67
New Mangalore
45,000
233.76
Pipavav
30,000
237.90
Kandla
60,000
239.70
Gangavaram
60,000
237.90
Kakinada
Dreymoor
150,000
234.34
Gangavaram
234.69
Krishnapatnam-Kakinada
234.69
Hazira
235.49
Mundra
235.89
Pipavav
235.99
Rozy
236.04
Kandla
Sinochem YUC
60,000
234.56
Krishnapatnam
Amber
130,000
234.75
Krishnapatnam-Gangavaram-Kakinada-Karaikal
235.25
Mundra-Kandla
Transglobe
120,000
235.00
Mundra
240.00
Pipavav
New Horizon
45,000
236.00
Mundra
Continental
60,000
237.45
Gangavaram-Krishnapatnam-Kakinada-Karaikal
236.45
Mundra-Kandla
Dragon
60,000
60,000
236.97
Gangavaram
238.95
Mundra
238.80
Kandla
Swiss Singapore
60,000
60,000
237.90
Pipavav-Krishnapatnam
60,000
239.70
Vizag
60,000
237.90
Gangavaram
Aries
63,000
237.99
Gangavaram
63,000
239.99
Rozy
50,000
238.69
Vizag
Fertisul
65,000
238.90
Gangavaram
239.90
Krishnapatnam-Karaikal
240.66
Kakinada-Pipavav
240.90
Mundra-Tuna
241.90
Hazira
Gavilon
100,000
238.90
Krishnapatnam-Gangavaram
80,000
237.90
Mundra-Pipavav
Fertrade
60,000
239.95
Krishnapatnam
Agri Comm
62,500
240.00
Krishnapatnam
241.00
Mundra
Indagro
60,000
244.00
Krishnapatnam-Karaikal
MidGulf
60,000
245.00
Krishnapatnam-Kakinada-Gangavaram
246.00
Kandla
The awards issued as of press time are as follows:
Offering Company
Source
Awarded Quantity
Discharge Port
Fertil
UAE
90,000
West Coast
Sabic
Saudi Arabia
25,000
West Coast
Keytrade
Oman
50,000
West Coast
MidGulf
Kuwait
40,000
West Coast
CHS
Oman
45,000
West Coast
Dreymoor
China
50,000
East Coast
Sources reported a rumor that Koch was also issued an award for 45,000 mt, but the deal could not be confirmed by press time.
The Dreymoor tons are reportedly part of a prepay deal that Dreymoor has with a producer in China. One source said Dreymoor had the tons and had to find a place for them. The netback to China is about $210/mt FOB, well below the current market price.
Middle East: Fertil led the way to lower prices with their offer of $212/mt FOB in the IPL/India tender. Other Arab producers fell in line. The only producers to not follow suit in the area were the Iranians.
Sources reported that Iranian producers had about 240,000 mt on the table through a handful of traders. In the end, sources said the Iranians refused to accept the counterbid of $221.50/mt from India for West Coast deliveries.
The new Arab Gulf price came as netbacks to the region from sales to Brazil were being pegged at $206/mt FOB. At the same time, Thai buyers are bidding at prices equivalent to $200/mt FOB. While no specific sales at these levels can be confirmed, sources said the combination of the rumors and the falling paper market for the region created a slight panic among Arab producers.
One source said the Arab producers knew China would not be a player because of the strong domestic season in that country. They also had excess tons looking for a home. By selling at $212/mt FOB, the producers could sell off many of those tons at a price level closer to their liking rather than that of the paper market. Now, said one trader, when other buyers come to the producers for new product, the producers can say they are sold out and can only make tons available at a higher price.
Iranian producers are facing increased pressure from the U.S. Sources said the Trump administration has approached the Indians to re-evaluate joint venture projects under discussion. International traders said the Indians have also understood the U.S. entreaties to include cutting back on Iranian imports.
Helwan in Egypt sold 9,000 mt to Ameropa for $219-$220/mt FOB. Sources said the deal came just a week after Abu Qir turned down bids at $232/mt FOB.
The dramatic decline in price comes on the heels of the Arab Gulf producers aggressively going after Indian tender business.
China: The domestic market continues to keep prices strong. Prilled urea remains at a $10/mt premium to granular, with prices reported in the low-$230s/mt FOB.
Sources said the producers saw no value in backing traders in the IPL tender once the counterbids came out for an estimated netback just above $200/mt FOB.
Washington—President Trump on March 28 signed an executive order (EO) to initiate a review of the Obama administration’s Clean Power Plan (CPP), which restricts greenhouse gas emissions at coal-fired power plants. The EO also lifts a three-year moratorium on new coal leases on federal lands that the Obama administration had imposed in January 2016.
In addition, the EO calls for the review of a Bureau of Land Management hydraulic fracturing rule, and also a review of efforts to reduce the emission of methane in oil and natural gas production to determine if these measures reflect the president’s policy priorities. Trump had warned on his first day in office (GM Jan. 27, p. 1) that he planned to eliminate the CPP in favor of his own “America First Energy Plan,” saying that his administration was “committed to clean coal technology, and to reviving America’s coal industry, which has been hurting for too long.”
The EO was condemned by environmental groups, some of which promised to challenge the measure in court. Several businesses offered praise, however, including Basin Electric, the North Dakota-based power cooperative that is the parent company of Dakota Gasification, which produces anhydrous ammonia and ammonium sulfate at its Great Plains Synfuels Plant in Beulah, N.D.
“President Trump’s announcement today is a positive step forward in our efforts to seek time and flexibility when it comes to developing a carbon management plan, hopefully, in the context of a national energy policy,” said Paul Sukut, Basin Electric CEO. Dakota Gasification’s plant has North America’s largest carbon capture and sequestration project, capturing more than 30 million tons of carbon dioxide. “Our most recent project to add urea production to the Synfuels Plant continues that tradition by capturing CO2 to make urea and for sale as a food grade product,” Sukut said. “It’s important to note that the CPP, as proposed, did not allow Basin Electric credit for our current investments in natural gas generation or renewables, nor our carbon sequestration efforts through Dakota Gas.”
U.S. Gulf: Shippers noted persistent fog in the Gulf region last week, with holding periods reported at 3-6 hours daily. Cumulative delays were estimated at a day or more for vessels transiting the region.
Industrial Lock waits ran in a wide 4-18 hour range for the week, while Algiers Lock waits were called up to five hours. Port Allen Lock described 3-7 hour delays, and shippers noted a nine-boat queue at Calcasieu Lock on March 29, with waits reported in a 9-12 hour range.
Dredging continued between Freeport Harbor and Upper Matagorda Bay in the West Canal (Miles 395-400), where operations were running 24 hours daily with no announced completion date. Tows were asked to contact the dredge prior to arrival to arrange passage. A fog caution warning remained in effect at Brazos Lock.
The Corps announced a Harvey Lock closure planned from Aug. 1 through Sept. 30. Bayou Boeuf is tentatively scheduled to undergo a similar shutdown starting in August. No dates have been announced, however, and sources said the work could be pushed back to 2018.
Mississippi River: Lock 14 will undergo a 36-hour closure starting March 30, shippers said. The shutdown will allow for the replacement of the lock’s No. 4 miter gate. The Lock 15 auxiliary chamber will be offline April 4 through Aug. 3.
The Corps reported five-hour processing times at the Mississippi River’s Lock 12 on March 29, and intermittent Lock 15 waits were reported as high as 24 hours for the week. Locks 21, 22, and 25 experienced delays in the 2-4 hour range, while Lock 24 transits were reported at 2-6 hours. Mel Price Lock passage stretched to four hours, and shippers put Lock 27 navigation in the 3-7 hour range on March 29.
The Missouri River is scheduled to open for the 2017 navigation season on April 1.
Illinois River: Dresden Island Lock reported 2-4 hour waits for the week. The Peoria and LaGrange Locks kept dams lowered for the week, allowing vessels to pass without locking.
Peoria lock is due for a pair of 36-hour shutdowns over the May 17-30 period for miter gate installation. Starved Rock upper guide wall maintenance will necessitate 10-hour daily closures from June 1 to July 7. Starved Rock transit will be subject to an 80-foot width limit while the work is underway. LaGrange Lock will experience nighttime-only navigation between June 1 and Aug. 29, with an 80-foot width restriction in place.
Ohio River: The auxiliary chamber at Markland Lock is offline through April 26, sources said, prompting minimal delays. The Meldahl Lock main chamber is scheduled to close May 1 through Sept. 29, leading shipping operators to warn of substantial transit delays.
Montgomery Lock returned to normal operation last week after emergency repairs concluded on March 26. Ironton-Russell Bridge demolition will close Miles 326-328 to navigation on May 17, May 29, and June 15.
Emsworth Lock delays were quoted at 3-7 hours on March 29. The Corps is planning a main chamber shutdown for Emsworth from June 26 through Sept 25. The chamber will close to navigation daily from 8:00 a.m. to 12:00 a.m., with main chamber passage permitted overnight with an 80-foot width restriction. The auxiliary chamber will remain open, but shippers are predicting “excessive delays.”
On the Monongahela River, a planned Braddock Lock closure was pushed back to the morning of March 30 to alleviate a potential bottleneck resulting from the reopening of Montgomery Lock on March 26. The Braddock Lock and Dam main chamber will remain down through April 28, forcing traffic through the auxiliary chamber, with substantial waits expected.
The Monongahela’s Lock 4 will see repairs May 14 through June 20, closing the lock to weekday transit, triggering “excessive” delays in the process. The auxiliary chamber will be open for weekend navigation, subject to a 35-foot width restriction, with lockings limited to a single barge per turn.
The Tennessee River’s Kentucky Lock is shuttered through April 10 for repairs and maintenance, after which intermittent closures are scheduled through April 30. Daytime transit is unavailable at Barkley Lock through April 10, and sporadic navigation closures are expected at Wilson Lock between April 17 and June 8.
Lock 6 on the Allegheny River is closed until further notice due to a hydraulic leak and mechanical failure. Cumberland River channel dredging (Miles 102-104), responsible for mild barge delays stretching back to Jan. 9, is scheduled to conclude on March 31.
The Fertilizer Institute (TFI) on March 23 issued a statement urging the U.S. Senate to confirm Sonny Perdue as the next USDA Secretary. The nomination of Perdue, a former two-term Republican governor of Georgia, was approved on March 30 by the Senate Agriculture Committee, and now heads to the full Senate for a final confirmation vote.
“American agriculture needs a strong voice at the helm of USDA, and Sonny Perdue is right for the job,” said TFI President Chris Jahn. “His knowledge of the unique opportunities and obstacles facing agribusiness will be a tremendous asset to the entire agriculture community. Georgia produces billions of dollars of food and other agricultural crops each year, and Gov. Perdue’s experience leading the state and his own agribusinesses ensure that he would come to the USDA job with a deep understanding of the role agriculture plays in supporting healthy ecosystems and a robust economy.”
Tampa: Market speculation regarding a potential second-quarter contract price of molten sulfur delivered to Tampa continued to vary widely.
Some observers expressed continued optimism that firmer international markets would justify an increase at Tampa. Exports from the U.S. Gulf and Vancouver, priced in the mid-$80s/mt, should equal an increase from the first-quarter’s $75/lt contract, they argued.
Others, however, argued that the threat of tepid demand and softer pricing at China and potentially Vancouver was grounds for a potential decrease, and a growing number of observers predicted a rollover. All cautioned that Q2 talks remained in their infancy. Negotiations are expected to ramp up in the week ahead.
Refining capacity utilization increased last week, according to data released by the U.S. Energy Information Administration (EIA). U.S. refiners collectively operated at 89.3 percent capacity for the week ending March 24, a 1.9 percent increase from the prior week’s 87.4 percent and also ahead of the 88.5 percent five-year average. The rate, which trailed the year-ago 90.4 percent, represented the first consecutive weekly period of increased utilization so far in 2017.
Daily crude inputs also grew, the EIA indicated, reporting an average of 16.226 million barrels/d, some 425,000 barrels/d ahead of the previous week’s 15.801 million barrels/d average.
Vancouver: Sources called the Vancouver spot market unchanged at $83-$87/mt FOB for the week.
The Chinese import market continued to soften, sources said. Last-done sales were quoted in a $97-$101/mt CFR range, a decline from $100-$105/mt CFR at last report.
Alberta sulfur producer netbacks held steady at (-)$55-$20/mt FOB. The wide range was attributed to high logistics costs and lower returns on contract tons headed into the U.S. market, contrasted against solid material offered internationally by way of the Vancouver market.
Unifor Local 594 workers remained without a new employment contract at the Regina, Sask., Co-op Refinery on March 30, sources said. A mandatory cooling-off period will expire at 12:00 a.m. on March 31, after which workers are free to strike and the refinery is permitted to begin layoffs.
Sources speculated that a strike was imminent. The refinery intends to continue production in the event of a walkout, cutting capacity if necessary to maintain worker safety, contacts said. The refinery installed approximately 50 trailers in early March, presumably to house temporary workers in anticipation of a potential strike.
West Coast: Second-quarter West Coast molten contracts began to settle last week, rolling over from the first quarter’s $55-$77/lt FOB level. Observers called prills $80-$83/mt FOB, unchanged from the week before.
PBF Energy Inc. will not be forced to phase out the use of hydrofluoric acid at its refinery in Torrance, Calif., local news outlets reported. The Torrance City Council bucked expectations in voting 5-2 against disallowing the refinery’s use of the controversial chemical.
Hydrofluoric acid has been blamed for a number of safety issues at the refinery, including a 2015 explosion that hobbled production for more than a year.
QPSPP: Qatar Petroleum announced April formed sulfur offers at $83/mt FOB Ras Laffan, a $9/mt reduction from the March price of $92/mt FOB.
U.S. Gulf: Market watchers described recent business in the U.S. import market at $40-$45/mt CFR, unchanged from the prior report. New business was expected to creep toward the upper end of the range, with some claiming the $40/mt CFR tons were now unavailable.
Brazil imports, last heard in the $45-$50/mt CFR range, were also projected to firm. Northwest European smelter rates were seen nudging higher to $5-$15/mt FOB on expectations of tightening supply.
In the domestic market, sources quoted Gulf-delivered tons in the $85-$95/t range, flat from the week before. Midwest business was called $80-$90/t DEL, while West Coast tons, roundly predicted to face short-term supply pressure as soon as April, remained at $100-$110/t DEL for the week.
Peru: Peruvian Zinc smelter Votorantim has temporarily shuttered operations at its Cajamarquilla smelter due to flooding and mudslides, Reuters reported. The conditions were blamed for upsetting rail transport and cutting the availability of running water at the 340,000 mt/y plant, rendering continued operations at the facility impossible.
Peru is a key supplier of sulfuric acid to the Chilean market.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
