All Posts from March 5, 2007

Market Watch

AMMONIA

U.S. Gulf/Tampa: First half March business was concluded last week at $370/mt DEL, up $10/mt from the last done business. In the meantime, sources reported that a 20,000 cargo was sold to PCS at $382/st DEL for delivery to Geismar April 5.

In the barge market, sources report that $355/st FOB was concluded for prompt tons.

Eastern Cornbelt: Winter weather continued to delay field activities, but fertilizer dealers remained focused on the ever changing markets. Ammonia pricing had reportedly firmed to $470-$480/st FOB regional terminals, with the upper end reflecting new dealer reference prices later in the week. Sources said Koch raised its ammonia prices last week to $480/st FOB in Illinois and $490/st FOB in Indiana.

Western Cornbelt: No fieldwork was reported in the region last week. Additional and rapid increases in fertilizer prices were prompting more uncertainty about the market and about in-season supplies. As one source put it, “How real are these numbers? And are we approaching a point of resistance? If we hold to these higher levels, will growers cut from 160 pounds of N to 140 pounds/acre?”

While answers to those questions were unavailable last week, the bullish markets were undeniable, if untested. Ammonia pricing was quoted at $450-$460/st FOB regional terminals, with reference levels in the $460-$465/st FOB range at midweek. Delivered ammonia in central Missouri had firmed to $450-$455/st.

California: The ammonia market had reportedly firmed to $475/st truck-DEL by March 1, with some suppliers releasing higher postings at earlier dates. Agrium’s truck-DEL anhydrous ammonia postings firmed on Feb. 23 to $475/st in central California and $480/st in northern California, a $45/st increase from the company’s previous postings in those locations.

Pacific Northwest: Ammonia pricing was up from last report, but the lack of new sales made for a difference of opinion as to how much. One source claimed the low end at $435-$445/st FOB Washington terminals, while another quoted a firm $460/st FOB last week. On a delivered basis, one source talked of pricing as low as $445/st DEL in Idaho, but most quoted significantly higher numbers, including $475-$490/st in Montana, and up to $515/st rail- or truck-DEL in Washington and Oregon.

On Feb. 21, Agrium’s reference price for anhydrous ammonia increased to $495/st truck-DEL in Montana and northern Wyoming, and $510-$530/st DEL in Idaho, Oregon and Washington, with the upper end in northern Idaho and in Washington and Oregon east of the Cascades. Those levels represent a $35/st increase from Agrium’s Feb. 2 list prices in the region. Agrium also reposted aqua ammonia on Feb. 21 at $133/st FOB Central Ferry and Finley, Wash., a $9/st increase from the company’s Feb. 2 postings.

Western Canada: The anhydrous ammonia market had reportedly firmed to $765-$809/mt DEL in the region, with a March 9 increase expected to move the range up again to $773-$817/mt DEL.

Black Sea: Despite reports the price in Tampa is on the way up, Asian sources say the cost of the product out of Yuzhnyy is stable at $285-$290/mt FOB. Sources say the reason for increases in the delivered price is due to continued congestion through the Bosporus Straits in Turkey. Ammonia vessels are restricted to one ship at a time and only during daylight hours.

Working against producer efforts to push up the price is a report that the Yara facility in France is up and running.

Helping the producers, however, are reports that China will continue to be an ever-growing market for imported ammonia. Also helping firm prices are reports that problems at the Safco IV facility in Saudi Arabia have once again forced the temporary shutdown on the facility. The closure will keep the Mideast supply bordering on the short side and possibly forcing buyers to look to Yuzhnyy for relief.

Middle East: The latest fixtures into India are not helpful to attempts to push the price up. The latest deal was reportedly pegged at $357.50/mt CFR for an estimated netback of $325/mt FOB. Sources familiar with the market say other deals at higher levels have been done, leaving the price range at $325-$335/mt FOB.

Sources say marginal increases are expected in the delivered price of material from the region. Unlike the deals from Yuzhnyy, however, freight rate increases are not the reason. Asian sources say vessels are plentiful. Most of the major traders and producers have long-term fixtures to go with their contracts with end users. Few buyers need to scramble for a vessel.

Once again the Safco IV facility is down. Sources in Asia report the plant is down for “technical reasons” but no one could define the exact nature of the problem.

The company has reportedly told its customers the shut down will be brief – only a couple of days or so. Many in the industry, however much they want to believe that time frame, are less than optimistic the facility will be up and running quickly.

The Safco IV operation has been plagued with bad luck ever since it started test runs. The plant was to have been opened the middle of last year but technical problems kept creeping into the start-up procedures. Even once the plant was operating at full capacity it has come down in spurts of a couple of days each time to deal with what some in the industry called “fine tuning.”

Asia: China looms as a major buyer of ammonia. Asian sources say as China strives to improve its DAP production, demand for ammonia will grow accordingly. Right now, however, the main import demand seems to be coming from Shanghai for industrial use.

Japanese producers are getting ready to take a series of rolling turnarounds beginning later this month. Sources say the shutdowns should be no more than a couple of weeks for each plant. In preparation for the closures, the producers and their customers built enough reserves to cover buyer needs.

Kaltim in Indonesia announced it is limiting its ammonia exports so it can put its emphasis on urea production.

The joint venture operations – KPI and KPA – are running at full capacity.

UREA

U.S. Gulf: Granular barge prices continued to move up last week with higher numbers being achieved throughout the week. The only good news for buyers was that the jumps had slowed down, not a $20/st jump in a week, more like $5-$10/st FOB hike. Granular was reported to have started the week at $360/st FOB. By midweek, several players were reporting $365-$368/st FOB and then on to $370/st FOB by Thursday.

On the import front, Transammonia was reported to have found a vessel from Egypt, but most players said any new cargoes would be hard to source due to production problems and good demand overseas.

Eastern Cornbelt: Granular urea prices continued to move up. The regional range was reported at $380-$405/st, with the low in Illinois on a spot basis and the upper numbers out of inland shipping points in Ohio. One source also reported recent spot quotes at $385/st FOB Cincinnati and $390/st FOB E. Liverpool, Ohio.

Western Cornbelt: Granular urea was tagged at $380-$390/st FOB, with reference pricing at the $400/st FOB mark at some locations. Delivered urea in central Iowa was also quoted at $400/st late in the week. Sources talked of recent prepay sales as high as $395/st FOB Minneapolis, Minn., while forward sales for March were reported at the $390/st level FOB Catoosa, Okla.

Granular urea postings from Agrium firmed on March 2 to $405/st FOB Shakopee, Minn., and North Dakota terminals at Alton, Carrington, Colfax, Marion and Scranton, and 410/st rail-DEL in Minnesota, the Dakotas and Wisconsin. Those levels were $20/st higher than the company’s Feb. 21 urea postings.

California: Granular urea pricing was also on the rice, with most sources tagging the market last week at $350-$360/st FOB and $370-$385/st DEL, depending on location. Agrium’s granular urea postings firmed again on Feb. 23 to $360/st FOB West Sacramento, Calif., $380/st truck-DEL in central California, and $385/st truck-DEL in northern California. Those listings represent a $35/st increase from the company’s Dec 1 reference prices for urea in California.

Pacific Northwest: Fertilizer sources were abuzz with talk of firming markets, tight supplies and sticker shock. “Some don’t believe it, but it’s as real as I’ve ever seen,” said one source, adding that additional increases are likely as suppliers try to protect their limited inventories. Tight supplies, particularly for urea, phosphate and UAN, were fueling concerns about in-season outages, with areas in eastern Montana and the Dakotas perhaps the most vulnerable. With planting currently underway in the southern U.S., there was growing concern that “the southern boys will suck up the N and P first.”

Granular urea was quoted at $375-$395/st FOB, and $390-$405/st DEL in the region in late February. Delivered urea in Idaho and Montana was quoted at $380/st on the low end, but another round of higher postings was scheduled for March 2.

Effective Feb. 21, Agrium’s granular urea postings increased to $395/st FOB Glade, Wash., Kennewick, Wash., Warden, Wash., and Wilson, Wash.; $382-$387/st DEL in Montana and Wyoming, depending on location; $400/st DEL in southern Idaho, and Oregon’s Malheur County, and from the company’s warehouse and plant locations in Alberta and Oregon to points in Washington, northern Nevada, northern Idaho and Oregon excluding Malheur County; $405/st DEL in northern and central Utah; and $410/st DEL in southern Utah. Those postings represent a $20/st increase from Agrium’s Jan. 29 list prices in the region.

On March 2, those urea postings were slated to firm $20/st again, to $415/st FOB Glade, Wash., Kennewick, Wash., Warden, Wash., and Wilson, Wash.; $402-$407/st DEL in Montana and Wyoming, depending on location; $420/st DEL in southern Idaho, and Oregon’s Malheur County, and from the company’s warehouse and plant locations in Alberta and Oregon to points in Washington, northern Nevada, northern Idaho and Oregon excluding Malheur County; $425/st DEL in northern and central Utah; and $430/st DEL in southern Utah.

Western Canada: Agrium confirmed that its urea plant at Carseland, Alberta, was recently down for less than two weeks. The cause of the outage was not reported. The ammonia plant there did not go down, but the company said production rates were reduced somewhat during that period.

Citing the production problems at Carseland, along with brisk demand and shipping delays caused by the CN Railway strike, sources said the urea market in Western Canada has become extremely tight, and prices are continuing to firm. “A couple of folks I have spoken to with either production or warehouse facilities in the region are sold out or even oversold out into May at this point,” said one source. “Contract customers are being covered, albeit with numerous delays and maneuvering owing to the strike.”

Granular urea pricing was also up significantly. The regional market was tagged at $510-$535/mt DEL, with a $25/mt increase slated for March 9.

Black Sea: Netbacks from the ASSC/Iran tender point to a price at $300-$305/mt FOB but producers are now opening talks at $320/mt FOB. Reports are circulating that $320/mt FOB was done.

One Asian trader noted that the reason for the bullish nature of the producers’ offers is that trader-to-trader business keeps running up the price. By the middle of last week $315/mt FOB was firm and then was soon seen only in the rearview mirror.

Industry observers peg the market at $310-$320/mt FOB with the lower cost to end users and traders taking the higher level. Sources note that the lower end price is going fast as more and more material ends up in the hands of traders. One observer noted that the lower-priced material is most likely tons picked up while the market was still sub-$300/mt FOB.

Some observers point to the pending Indian and Pakistan business as the main reason the price is running up. Others say it is that expectation combined with demand from Latin America providing the boost to pricing. And others complain it is irrational exuberance to blame.

The bottom line is that the ceiling has been raised weekly for more than a month now and no one is ready to name the date when it will all come crashing down.

Buyers from the two major Indian buyers – IPL and MMTC – just finished separate visits to the producers in the area. Sources say the two were looking for favorable deals on handimax cargoes to be spread out over the year.

If a deal was struck, no one is talking.

Sources in Asia say the producers will have to compromise on their pricing if they want to do business with India. The current price spread between the Mideast and CIS producers is too close to make deals from this area competitive, especially in deals with India.

Reportedly, the main port of Mundra is closed to urea imports in favor of grains in order to prevent a repeat of the port congestion that made the last half of 2006 so difficult for everyone. The loss of this panamax capable port means the Indians will need to take smaller vessels to other ports.

Yuzhnyy sales on panamax vessels usually had a freight advantage that allowed for a higher netback. Now, because smaller vessels with the accompanying higher freight rates must be used, the Yuzhnyy guys may have to change their pricing ideas if they want to nail down business with India.

Sources are not sure Pakistan will offer any help to the Black Sea producers as well. The deal struck between Pakistan and Saudi Arabia for a major loan could result in about 150,000 mt of urea heading to Pakistan from Sabic. If that is the case, as many believe, then Pakistan might be willing to sit out this season of buying in favor of waiting later when prices might soften.

The only real shining hope for the producers here are reports that Iran will need more tons and may call another tender soon.

India: Buyers from MMTC and IPL wrapped up two weeks of separate travels in the CIS and Middle East.

Sources say that officially the trips were billed as fact-finding. However, while the buyers were indeed gathering facts, some speculate discussions also touched on the idea of long-term contracts at lower rates than currently being publicly promoted by producers and traders.

Eventually IPL and MMTC will have to come into the market, say sources. Not a few had expected to see the first rumblings of a tender late last week. Now the conventional wisdom is that the first tender may not be called until after March 15.

One source noted the appropriate government ministries involved in the importation, distribution need to come to a unified game plan on subsidies, and exact needs before the tenders can be called.

Indian government officials have reportedly told industry insiders that the government is looking for a way to make the whole subsidy process more efficient. One official was cited as saying the subsidies are a heavy financial drain on the national budget but are necessary to ensure enough fertilizer for the farmers.

At present, domestic producers and importing firms get the subsidies. The government is still paying off subsidies from last year. Increased input costs and higher international prices forced the government to pay subsidies almost three times the amount budgeted last year.

To get past increased subsidies to the companies, local media are reporting the government is starting a pilot program to provide subsidies to the farmers.

Finance Minister P. Chidambaram announced late last week that the government was looking into a way to help farmers directly. He said the fertilizer industry and the Department of Fertilizers are conducting studies on finding the best way to get maximum impact from subsidies to urea.

Some industry observers outside the country wonder how seriously the domestic producers will take any plan that will cut their subsidies.

“Some of these guys survive only because of the subsidies,” said one trader. He added any deal that provides subsidies to the farmers would also have to find some way to guarantee the producers enough money to stay afloat.

Karnaphull Fertilizer Co. Ltd. (Kafco), a Bangladeshi company, has offered to enter into a long term urea supply contract with India. The company produces 700,000 mt/y. Half of this is being exported. The current price level is US$280-$290/mt but it is known to vary depending on the time of the year. Apparently, Kafco’s export quantity is already committed until November 2007. Thereafter, the company is interested in striking a deal with India. DOF officials have been told to initiate a dialogue with the company.

Pakistan: The aid package/loan between Saudi Arabia and Pakistan may allow TCP to forego this season’s round of purchases. Sources estimate the loan would allow for about 150,000 mt. Sources say this, combined with the existing reserves, would be enough for the spring season.

Local producers are especially keen on this idea. Sources say if TCP only takes the tons under the loan package, then it will need to come in for about 300,000 mt later this year. The TCP staff argues it makes more sense to stay in the market for steady purchases now and well into the next season. The gradual purchases, they say, will protect Pakistan from the price shock that could come from calling a large tender.

One trader noted the producers were in favor of the delay because the shortness in supplies would work to their benefit to keep prices up. He added that TCP’s mandate is to help keep prices down by maintaining a plentiful supply.

The final decision on what to do will most likely be made only after the government intervenes.

Middle East: Material remains tight. Producers are in no hurry to offer tons or make deals. Sources say the steady and strong demand from the U.S. for granular is providing a solid floor for that flavor of urea. Even once the U.S. demand slackens, sources say demand from Thailand and Australia along with commitments to Sri Lanka from earlier tenders will help sustain price levels.

Add to the mix the conventional wisdom that India will be coming in soon for major purchases.

Even if IPL and MMTC make a series of pre-tender deals as they have done in the past, demand from India will provide a strong basis for firm prices.

Sources report a trader is claiming $320-$325/mt FOB in a sale to Ethiopia. Asian traders are ready to accept that level as not only possible but realistic.

The price in the area has been edging up as Black Sea tons are captured by traders and as the industry awaits the Indian and Pakistan business.

One trader noted that the $325/mt FOB might be a bit premature for the general market it does show strong indications the pricing trend cannot be ignored.

For now industry observers put the market at $315-$325/mt FOB for granular and prilled urea.

China: For now the domestic market dominates the Chinese urea industry. Even though domestic demand is strong sources say the sudden appearance of a drought or major flooding – always a possibility – could suddenly turn the balanced urea market into one of excess supply.

Asian sources note that the world market price has moved so far up that even with the 30 percent export duty in place Chinese urea could compete favorably in some markets.

Chinese urea is expected to play a major role in increased demand for material from South Korea so it can provide North Korea with much-needed urea and NPK.

At the same time, China has its own fertilizer relief project for North Korea.

Sources say the amount of tons that will be committed to North Korean aid is enough that any small decrease in domestic demand will be easily covered in these deals.

Bangladesh: March 5 BCIC closes its first tender of the year. A subsequent tender closes March 12.The BCIC tenders are dismissed as political necessities, say sources. Even if BCIC awards quickly the earliest arrival time of the product will be just as the seasonal monsoons arrive. Industry observers agree Bangladesh needs the tons but the arrival times for the cargoes being called for this week and next will do little to help the farmers now.

NITROGEN SOLUTIONS

U.S. Gulf: Barge price ideas continued to move up last week, though firm word on new sales was hard to find. Most were putting new business in the high $220s to low $230s/st FOB.

PotashCorp confirmed last week that it has resumed UAN production at Geismar, at least for the month of March. The company said production could continue depending on market conditions. Some are speculating it will continue into April at least due to high prices and the fact that the company has bought a cargo of ammonia from Keytrade for delivery into Geismar April 5.

Eastern Cornbelt: Lack of new sales left the UAN market difficult to call, but new reference levels were quoted as high as $8.39-$8.43/unit FOB regional terminals.

Western Cornbelt: UAN-32 was quoted at $255-$265.60/st ($7.97-$8.30/unit) FOB regional terminals, with the low in Missouri and the upper end in Iowa, although no new sales were confirmed at the upper end. Dealer reference prices were as high as $270/st ($8.44/unit) FOB in the region last week.

California: UAN-32 was quoted at $255-$263/st ($7.97-$8.22/unit) FOB, with delivered solutions tagged at $275-$282/st ($8.59-$8.81/unit) in the state. Agrium’s UAN-32 postings moved on Feb. 26 to $263/st ($8.22/unit) FOB Sacramento, $280/st ($8.75/unit) truck-DEL in central California, and $285/st ($8.91/unit) truck-DEL in northern California.

Pacific Northwest: UAN-32 was quoted at $260-$265/st DEL ($8.13-$8.28/unit) on the low end from western producers. Sources said delivered solutions tons from eastern producers was higher, with spot quotes reported in the $275-$285/st ($8.59-$8.91/unit) range last week. Agrium’s Feb. 21 UAN-32 included $265/st ($8.28/unit) DEL in Washington, northern Idaho and Oregon excluding Malheur County.

Western Canada: UAN-28 pricing in the region had increased to $317-$332/mt DEL ($11.32-$11.86/unit). Reference pricing to dealers was slated to firm on March 9 to $347/mt ($12.39/unit) DEL.

AMMONIUM NITRATE

U.S. Gulf: AN continued to be the quiet nitrogen, with not much heard in the way of new pricing. Sources said many buyers had already filled, noting that some lower quality imports had already hit the market about a month ago, perhaps quelling any current demand. For the most part, sources continued to call the market in the $240s/st FOB, with sellers quoting $250/st FOB for the next round of sales.

Western Cornbelt: Ammonium nitrate was tagged at $290-$300/st FOB in the region, up $5/st from last week. The Catoosa/Inola market in Oklahoma was reported in the $275-$280/st FOB range.

California: CAN-17 remained at $210-$220/st FOB in the region. AN-20, a product that sources said has seen increased use in coastal areas on vegetable crops as a replacement for ammonium nitrate, was quoted at $220/st DEL as of March 1.

Pacific Northwest: Ammonium nitrate was pegged at $327-$335/st DEL in the region, also up from last report. No change was reported to the CAN-17 market.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was pegged at 200-$205/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate was quoted firmly at $200-$205/st FOB in the region. Effective March 9, Agrium’s ammonium sulfate postings will firm to $215/st DEL in Nebraska, the Dakotas, Minnesota and Wisconsin, up $10/st from the company’s Feb. 12 reference levels.

Effective March 5, granular ammonium sulfate postings from American Plant Food Corp. are slated to firm to $210/st FOB Littlefield, Texas, $200/st FOB Mermentau, La., $190/st FOB Galena Park, Texas, and $180/st FOB Freeport, Texas. Coarse sulfate postings from the company will move on that date to $200/st FOB Littlefield, $180/st FOB Galena Park and $170/st FOB Freeport, while standard will go to $190/st FOB Littlefield and $160/st FOB Freeport.

California: Ammonium sulfate was quoted at $175-$190/st FOB, with the upper end reflecting new reference levels as of March 1. No current delivered pricing was reported last week.

Pacific Northwest: Ammonium sulfate was quoted at a solid $200-$205/st DEL in the region last week. Agrium’s Feb. 12 ammonium sulfate postings included $200/st FOB warehouse and $205/st DEL in Washington, Idaho, Oregon, Montana and Wyoming, up $10/st from the company’s Feb. 2 reference levels and $20/st higher than the Jan. 25 postings. Another increase is on the books for March 9, with postings moving on that date to $210/st FOB warehouse and $215/st DEL in Washington, Oregon, Idaho, Montana and Wyoming.

Western Canada: Granular ammonium sulfate was up $20/st from last report at $312-$317/mt DEL. As of March 9, sources said the regional market would move to $323-$328/mt DEL.

PHOSPHATE

Central Florida: Burying a bunch of bones and waiting out the geological evolutionary process might be a faster way of getting phosphate than trying to place an order in Central Florida. It’s a long, long wait. All three of the state’s producers were out of product, both DAP and MAP, and the delay until more is available was running one-to-three months. With the prognosis that inventory conditions will not improve for at least the next three months, buyers have been lining up with offers to buy in advance into August. However, producers missed a chunk of the big profits during the past month or so, and are unwilling to price that far into the future. A month ago, the Central Florida DAP index was $245-$255/st FOB, and was a new record. Today, that would be a steal, about $85/st FOB below the current top price. Back then, record high index prices were falling faster than pins in a professional bowling tournament. Does this sound familiar? “The current price already exceeds the extremely optimistic projections of only a month ago and no end was in sight. Demand remained high and supply continued to be low.” That was published here a month ago. Well, that situation didn’t change. Last week, no one was sure how much more growth was left in the market. A source seemed a little nervous about buying at high prices far into the future. “The price could come down, and then you’re (in trouble),” he commented.

Much of the Southeast is serviced by trucks, which are more likely to get loaded, and was in pretty good shape. However, much of the area has also been very wet of late, with the exception of Florida, so field activity has been slow. In the northern areas of the Midwest, many dealers were said to have allowed phosphate supplies to virtually run out before winter, in the belief prices would go down. A bad bet. When they begin to enter the market in the next few weeks, inventories will be scant and prices will be more than $100/st FOB higher. That will probably result in another spike in the market, but how much would only be a wild guess. In another month or so, the market should begin to level off, but any decrease in price will probably be months down the road, if at all. Don’t forget, the export market will gladly consume anything available. Phosphate in not just tight in North America, it’s tight everywhere. Inventories will have to build before prices come down, and that doesn’t seem to be in the plans.

The Federal Railroad Administration discovered defects in approximately 170 railcars owned by CSX Transportation, according to the Florida Times-Union, the daily newspaper at Jacksonville. Apparently, union workers called the situation to the attention of the government, because they believed an outside contractor hired to do the inspections was not qualified. The problems included braking systems and safety equipment, but should require only minor repairs. Thousands of railcars pass through the Jacksonville area every day, and the situation was not expected to cause delays in phosphate shipments, other than the normal.

None of the Central Florida producers had any phosphate for prompt delivery last week and won’t for many more weeks. Trains being loaded last week were under existing contracts, old orders, maybe a few preferred customers or for the producers’ own warehouses. The Central Florida index price range last week was $335-$340/st FOB. PotashCorp’s Central Florida reference price was $330/st FOB. In Texas, Agrifos’ prices for DAP or MAP were $385/st FOB, but only trucks were available. Mosaic’s asking price late last week was $345/st FOB, while CF’s was asking $340/st FOB through March 2 but, of course, neither had anything to sell.

U.S. Gulf: Really bad weather in the Midwest last week slowed the market just a bit, but NOLA DAP barge prices continued to rise, nevertheless. Just not as fast. However, it was not likely a sign that the surge in phosphate prices was coming to an end, more like taking a breather. Depending on the weather, the northern areas of the Midwest will be getting ready for the season in the next few weeks, and dealers there will be entering the market. Some operators with warehouses in that region were hoping the wet and cold would continue for another week or two, so they would have enough time to get product into place. Many dealers in that area did not buy much phosphate last year, and were not included in projections of their suppliers, so provisions were not made to include them. With inventories already extremely tight, getting product to them will probably require paying more, which should kick the market up once again. One source predicted it could go as high as $400/st FOB, but that same source thought the market might hit a high of $260/st FOB a couple of months ago. Under the current conditions, predicting the market now is about as accurate as guessing the winner of the Super Bowl in 2010. The only thing that could take the wind out of the sails of the phosphate market would be a collapse of grain prices, which is the driving force.

Although the rate of growth of phosphate prices for NOLA DAP barges slowed last week, warehouse prices started moving up. On the Arkansas River, warehouses were charging dealers $385-$390/st FOB, and St. Louis’ dealers were asking to pay $390-$395/st FOB. Warehouse prices will continue to rise during the next several weeks, as the spring season kicks in gear.

While weather was the most commonly given reason for the slowdown in transactions last week, another could be the 2007 Commodity Classic going on at Tampa, which drew many in the corn, soybean and wheat growing industries. That might have been a good place for fertilizer traders to be hanging out last week.

The NOLA DAP barge price range last week was $370-$372/st FOB based on confirmed sales, compared to $355-$365/st FOB the previous report. That was still $15/st FOB higher than the bottom of the previous range and $7/st FOB above its top. The $2/st FOB difference from bottom to top was the most narrow in weeks.

Eastern Cornbelt: The dramatic rise in phosphate pricing, coupled with extremely tight supply, continued to astound dealers. Several sources reported outages at some Midwest warehouses. Where prices were being quoted, sources reported a range of $380-$405/st FOB for DAP, and $385-$401/st FOB for MAP. The upper end of both ranges was quoted FOB Maumee, Ohio.

No current prices were reported for TSP in the region. 10-34-0, where available was at $305-$310/st FOB last week.

Western Cornbelt: Phosphate pricing continued to climb, with supply outages reported at some regional warehouses. DAP was quoted at $385-$395/st FOB in the region. MAP was $385-$400/st FOB, with the upper end reported in Missouri to the dealer. Delivered DAP in central Iowa was pegged at the $405/st mark at midweek. No current pricing was available for TSP. 10-34-0 was reported at $300-$310/st FOB in the region.

California: Phosphate pricing in the state has been on the march since early February, with numerous pricing increases announced since last report. Sources last week tagged the MAP market at a firm $395-$400/st FOB or rail-DEL in the state, with DAP quoted at $402-$407/st FOB or DEL. 10-34-0 firmed to $266-272 FOB on March 1, and 16-20-0 was quoted at $280-$290/st FOB or rail-DEL.

Agrium’s ammonium phosphate postings in California and Arizona, effective Feb. 23, included MAP at $420/st FOB warehouse or rail-DEL, and 16-20-0 at $325/st FOB warehouse or rail-DEL. Those levels were up $20-$25/st from the company’s Feb. 15 postings, $40-$45/st from Feb. 12 postings and $60-$65/st from Feb. 2 reference prices.

Super-phosphoric was up another nickel/unit as of March 1. The market was quoted at $5.70-$5.80/unit DEL in the state, with the low after discounts. Merchant grade acid moved to $5.70/unit DEL on March 1, from the prior $5.65/unit. Agrium’s March postings for phosphoric acid include railDEL super-phosphoric acid at $580/st and merchant grade at $570/st in California, Arizona, Nevada and Utah.

Sources reported little field activity, and some concern about buyer resistance to spring pricing. One source, noting the importance—and the struggles—of the dairy and cattle industries to the California agricultural economy, said fertilizer prices are rapidly coming to the point where growers may say, “Whoa, wait a minute here.” He said rate cutbacks are likely this spring, due either to buyer’s reducing rates or to products being in tight supply and unavailable and crucial times.

Pacific Northwest: MAP pricing was quoted at $395-$410/st DEL in the region at midweek, with the low end in Montana and Idaho. Those numbers were fluid, to say the least. One source said suppliers were basically pricing phosphates “at time of shipment only,” meaning any quote received today will likely be old news by the time the product was ready to ship out.

DAP was $7/st higher than MAP. 10-34-0 was quoted at $272-$280/st FOB, with the upper end reflecting reference levels that went into effect from some suppliers at midweek.

16-20-0 was in tight supply, with the regional market quoted at $280-$290/st DEL and $285-$290/st FOB. There were reports of some suppliers pricing themselves out of the market due to tapped out inventories, and others falling at least two weeks behind on shipments.

Agrium has been releasing back-to-back ammonium phosphate pricing hikes in the region since early February. Postings effective Feb. 23 included MAP at $405/st DEL in Montana and Wyoming, and $410/st DEL in southern Idaho, Utah, Nevada and Oregon’s Malheur County. MAP postings in Washington, northern Idaho and Oregon excluding Malheur County moved on Feb. 23 to $410/st FOB and $415/st DEL. Those levels were up $25/st from the company’s Feb. 15 postings, $45/st from the Feb. 12 reference levels, and $65/st higher than Agrium’s Feb. 2 MAP postings in the region.

Agrium’s 16-20-0 postings have followed a similar course, moving on Feb. 23 to $325/st DEL in Montana, Wyoming, Idaho, Oregon, Washington, Nevada, Utah, and Oregon’s Malheur County; and $325/st FOB and $330/st DEL in Washington, northern Idaho and Oregon excluding Malheur County. Like MAP, Agrium’s 16-30-0 prices were up roughly $25/st from Feb. 15 postings, $45/st from Feb. 12 levels and $65/st from Feb. 2 reference prices.

As of March 1, phosphoric acid pricing in the region firmed to $5.70-$5.80/unit DEL for SPA and $5.70/unit DEL for MGA. Agrium’s March pricing for rail-DEL phosphoric acid included SPA at $580/st and MGA at $570/st in Washington, Oregon, Idaho, Montana and Wyoming.

Western Canada: MAP pricing was up dramatically from last report. Sources last week pegged the market at $500-$535/mt DEL, but a $30/mt increase was scheduled for March 2, followed by another $10/mt increase on March 9.

U.S. Export: Like a marathon runner trying to kick up the pace, last week the export DAP market took a major stride. The first sale of the week, 8,000 mt into Mexico, was done at $370/mt FOB, or $10/mt higher than the previous week. The second sale of 6,000 mt into Central America brought a bump of $15/mt FOB, a price of $385/mt FOB. That’s $25/mt up. For buyers, the problem was that phosphate prices in North America were not alone at the top. It’s pretty much the same everywhere and so are inventories, which were right down at the bottom.

Pakistan issued a tender seeking 80,000 mt for earliest shipment, but that may be hard for any single producer to do. PhosChem, which considers that country one of its regulars, would like to respond, but may not be able to do so, because of a lack of supply.

As has become the case in North America, buyers no longer believe the price is going to come down, at least not before they need it. With world inventories at the bottom and demand strong, prices will continue to rise, but how much is questionable.

The export DAP price range last week was $370-$385/mt FOB, but will be higher for the next sale. The previous week, the range was $360/mt FOB.

POTASH

Eastern Cornbelt: Potash was quoted at $214-$224/st FOB regional warehouses, depending on grade and location, with the upper end reported by Ohio sources as the new warehouse price effective March 1. One source said orders could still be placed at the old number through Feb. 28, with the shipping period extending out to the middle or end of May, depending on the supplier.

Western Cornbelt: Potash pricing was steady at $208-$220/st FOB in the region, depending on grade. An Iowa source reported red granular potash at the $217/st rail-DEL mark at midweek.

California: Potash remained at $239-$245/st FOB in the state, depending on grade. Potassium nitrate pricing was unchanged at $485/st FOB for bulk and $540/st FOB for 50-pound bags.

Sulfate of potash (SOP) pricing had firmed to $346-$358/st FOB in the state. Postings from Great Salt Lakes Minerals increased $10/st on all SOP specialty fertilizer products on March 1.

Pacific Northwest: Potash was quoted at $235-$247/st FOB and $239-$250/st DEL in the region.

Western Canada: The potash market remained at $250-$265/mt FOB plant sites or warehouses for red premium potash. Agrium reportedly has a $10/mt increase scheduled for March 9.

SULFUR

Tampa: With many refineries still on turnaround or curtailed for various reasons, phosphate producers were said to be pushing their suppliers for additional supplies. Suppliers said the amounts being sought were within the terms of the contracts with phosphate producers, but not necessarily from the same refineries. Meanwhile, the world market has taken a healthy upturn, as international supplies have dwindled, in part because of problems in Vancouver. Priller operators were hoping to find some extra sulfur to convert and sell on the world market at a nice profit, but have found it hard to come by.

Referring to the shortage of sulfur from Gulf Coast refineries last week, one source noted that, “It’s a small industry. When one source hiccups, they all hiccup.” In order to phosphate producers to keep churning out product, their sulfur supply must be secure.

Negotiations for second quarter contracts had not begun as of last week, buy may soon, at least sooner than normal. Considering the current supply situation, it appeared unlikely prices will go down, said several players. Instead, they may go up a little but not a lot. Refineries will be finishing their turnarounds by the end of the month, and sulfur supplies will be adequate. Any additional sulfur production will go to prillers and the international market.

Vancouver: A hard winter had reduced the amount of sulfur moving from Alberta to the port, even before the CN rail strike. An agreement to end the strike has been reached but workers in the West were said to be antagonistic to the deal, and were slow to return to work. Voting on the contract will not be until later this month, and may be rejected. If so, the problem will mount, and so will blocked sulfur in Alberta. Spot prices in Vancouver were on the rise last week.

MARKET NOTES

France: Yara has entered into an agreement with Gazprom for the delivery of natural gas to its plant in Le Havre, France. The agreement is significant for Yara as it opens up for more flexible and competitive natural gas supply and pricing in Europe. “The deal with Gazprom represents Yara’s first direct purchase of Russian gas. It enables us to source gas more competitively and flexibly in Europe,” said Hallgeir Storvik, Yara head of supply and trade.

Yara consumes roughly three billion cubic meters of natural gas per year in its fertilizer plants in the Netherlands, France and Italy, and is one of Europe’s largest industrial consumers of natural gas. Most of the gas is used as feedstock for ammonia production.

Yara will reopen its plant in Le Havre, France, with production expected to start in early March. The Le Havre plant makes ammonia and urea with annual capacities of 400,000 mt and 350,000 mt, respectively. Yara owns 47.85 percent of the urea plant through a joint venture with Grande Paroisse, a subsidiary of the Total group. Production was halted in July 2006.

Austria: Agrolinz Melamine International reports that the explosion that killed two at its plant in December was caused by a corrosive reaction in a tank containing slightly alkaline water. This lead to the formation of hydrogen which together with atmospheric oxygen formed an explosive mixture. AMI’s plant will be rebuilt and upgraded with a permanent nitrogen rinse so that a future formation of an explosive mixture will not occur.

AMI suffered more bad news in mid-February, when heat and smoke took an NPK plant out of commission. No one was injured, though the plant is expected to be down for eight weeks. AMI declared force majeure on the product as a result.

Chile: Atacama Minerals Corp., Vancouver, reports that as a result of its on-going drill program at Aguas Blancas iodine/sulfate/nitrate mine in northern Chile, total proven and probable reserves has increased to a total of 24.6 million mt, an increase of approximately 4 million mt, or 20 percent, from the previous estimate made in June, 2005. Since that time, approximately 2.1 million mt of ore has been extracted and processed and with the successful step-out exploration drilling, there has been essentially no net change to the overall resource base.

Canada: PhosCan Chemical Corp., Toronto, reports that it has entered into an agreement with Wellington West Capital Markets Inc. to complete a private placement financing of 4,575,000 common shares at a price of $0.35 per common share for gross proceeds of $1,601,250. Closing of the offering was to be on or about March 1. The proceeds will be used for business development, working capital and general corporate purposes. PhosCan is engaged in the advancement of the Martison Phosphate Project located near Hearst, Ont. The project entails the development of a phosphoric acid plant, utilizing the Martison phosphate deposit and sulfuric acid from the Ontario base-metal smelters.

India: Rashtriya Chemicals & Fertilizers Ltd. (RCF) Mumbai, plans to set up an 850 mt/d DAP plant at Kapasan in Rajasthan with an investment of Rs. 4 billion approx (US$ 88.88 million). An Memorandum of Understanding has been signed with Rajasthan State Mines and Minerals to undertake a detailed feasibility study. A joint venture company is being promoted to implement the project.

Raghunath Fertilizers Pvt Ltd., Kolkata, has commissioned a new NPK granulation plant at Darjeeling in West Bengal. The facility has installed capacity of 10 mt/h.

Sai Fertilizers Pvt Ltd., Kolkata, plans to set up a 250 mt/d sulfuric acid plant at Kharagpur in West Midnapur in West Bengal with an investment of Rs. 250 million. SS Engineering, New Delhi has been appointed as the consultant and Chandrapur works, Haryana as the equipment supplier. The company expects to begin project work shortly and commission the plant in 2008.