All Posts from April 7, 2014

ICL CEO sees Rotem Amfert closure in 5 years; strike continues as parties talk

News

Israel Chemicals Ltd. (ICL) CEO Stefan Borgas has instructed the management of Rotem Amfert to prepare for the closure of the Rotem Amfert plant over the next five years. His instruction was given following a statement by Israel’s Health Minister Yael German that she was opposed to even a pilot plant for testing phosphate mining at the Sde Barir field near the town of Arad in southern Israel. The health minister said that after reading reports and comments by public health officials she concluded that even a pilot project would be wrong as it would give no assurances regarding full-scale mining operations.

German said she came to her decision after lengthy consultations with a U.S. environmental health expert hired by the ministry to make recommendations on whether to permit a pilot phosphate mining project near Arad. In his report Professor Jonathan Samet of the University of Southern California determined that a pilot would pose only a minimal increase in premature mortality among Arad residents. However, the report noted that a pilot would not provide sufficient results regarding the impact of full scale mining operations and whether this would harm the health of those exposed to airborne particles. German added that full-scale mining would expose the residents of the region to risks that do not meet the standards accepted in the U.S. and Europe.

The issue is now up to Interior Minister Gideon Saar to decide whether to recommend whether to proceed with a pilot plant. The Health Ministry does not have veto power over a final decision that could decide to give the go ahead. The Interior Ministry’s Planning Division is likely to rule on the controversial issue in the next few weeks.

ICL has warned in the past that without the Sde Barir field the company would have to close down its phosphate and fertilizer operations in Israel for lack of rock supplies, which are expected to be exhausted in 8 to 10 years. Borgas has instructed Rotem Amfert’s management to cease taking on any new workers, purchase of equipment and a halt to renovations of buildings and equipment. The shutdown of Rotem Amfert would entail the firing of 1,200 workers. Borgas said ICL would invest $500 to $600 million in a new mine at Sde Barir if the government approved mining operations there.

Meanwhile, the strike by Rotem Amfert workers over a planned reorganization plan and the firing of 127 workers by ICL is continuing. Contacts between the union and management resumed April 1. However, the latest instruction by Borgas is likely to further complicate the labor situation at the subsidiary, as well as at ICL.

Phosphates

Central Florida, Eastern Cornbelt, Great Lakes, India, Market Watch, Northeast, Northern Plains, Phosphate Rock, U.S. Exports, U.S. Gulf, U.S. Imports, Western Cornbelt

Central Florida: The Southeast received 1-2 inches of rain last week, but most was restricted to drought-free areas of Florida, Georgia, and South Carolina. While planting in the Northeast had yet to commence in any appreciable form, spring planting in Florida and the Southeast was said to be on target.

Rail troubles were still prevalent with delays of up to two weeks reported, but many sources said the congestion had improved somewhat.

Phosphate sales ground to a halt in Central Florida following the slow market week in NOLA, but Mosaic’s posted phosphate prices rose to $460/st FOB for DAP and $480/st FOB for MAP.

The Central Florida DAP market firmed to $460-$465/st FOB, but few new transactions were reported. MAP was estimated to run $10-$15/st FOB over DAP.

U.S. Gulf: Transactions on the barge market slowed considerably for the week. Sources said ongoing difficulties in obtaining guaranteed loading dates from producers were hampering the market. “Why pay a premium for prompt shipment when load dates will be pushed back at least a couple of days?” reasoned one source.

Despite the lull, confirmed trades occurred in a range of $495-$500/st FOB for prompt loading, and MAP transactions were placed in a range of $503-$510/st FOB.

Rumors abounded that DAP barges were being offered by Interoceanic on behalf of Mississippi Phosphates.

Offers for first-half April loading were quoted at $500-$505/st FOB, and a Koch vessel rumored to be a couple weeks out was said to be offered at $485/st FOB, though other sources said the shipment had been canceled in transit.

Once the spring season finally begins and sales peak, the next leg of the annual phosphate cycle will involve determining how producers price product in order to entice suppliers to make large purchases for the next application season. Most years, traders don’t want to be stuck with a long position after April 15, a source said, but this year’s late spring will likely push that maxim back to sometime in May.

Terminal sales were mixed, as some operators reported a drop-off for the week. DAP prices were quoted in a range of $495-$510/st FOB at lower Mississippi River terminals, and $515-$525/st FOB upriver.

River transit continued to be irregular as barge pickup waits were put at 5-7 days, with even longer delays possible if the carrier did not own its own tow vessels. Mid-river barges were being shuttled to storage locations at St. Louis and Cairo, Ill., in advance of the seasonal opening of the upper river, though a significant snow forecast for Minneapolis over the weekend dampened hopes that the opening was imminent. Sources reported that commercial transit had yet to proceed north of Dubuque, Iowa, as of April 3.

On the upper Mississippi, repairs to the main chamber of the Melvin Price Lock were expected to cause delays of 3-6 hours through August, and the rock pinnacle removal project at Thebes, Ill., was suspended indefinitely due to high water levels.

The U.S. Coast Guard reported that 95 percent of the navigational buoys on the Illinois River were lost due to ice. A project to replace the buoys was underway.

Passage through the Newt Graham Lock on the Arkansas River will be completely stopped for repairs from May 12-20, and the Ozark-Taylor Lock will also be closed during daylight hours for the same period. Both closures will affect the Inola/Catoosa area in Oklahoma.

In the New Orleans area, high river traffic at Industrial Lock was responsible for delays of up to 20 hours.

The 4:00 p.m. look at the futures market on April 3 found corn and soybean prices considerably higher, while wheat was down.

May 2014 corn contracts were $5.00/bushel, up from $4.29/bushel for the previous reporting period. Corn for July 2014 was posted at $5.0525/bushel, higher

Ammonium Sulfate

Ammonium Sulfate, Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, Western Cornbelt

Eastern Cornbelt: The granular ammonium sulfate market in the Eastern Cornbelt was up from last report. Sources tagged the regional range at $285-$305/st FOB last week, up $5-$15/st, with the low reported in Illinois and Indiana and the upper end FOB inland terminals in Ohio.

Ammonium thiosulfate pricing was up some $5-$10/st as well, with sources quoting the regional market at $340-$350/st FOB.

Western Cornbelt: Granular ammonium sulfate remained at $270-$280/st FOB in the Western Cornbelt.

Ammonium thiosulfate was steady as well at $310-$355/st FOB, with the low in Iowa and the upper end in Missouri.

Northern Plains: The granular ammonium sulfate market was quoted at $270-$280/st FOB and $290-$300/st DEL in the Northern Plains for limited tons, with some regional suppliers and locations reportedly sold out in early April.

No current spot prices were reported for ammonium thiosulfate in the region. “Tons are very tight,” said one contact.

Great Lakes: The granular ammonium sulfate market was reported in a broad range in the Great Lakes region. Wisconsin sources quoted the low end at $285/st FOB, while Michigan contacts tagged the spot market at $305/st FOB Maumee and $310/st FOB Webberville.

Ammonium thiosulfate pricing had firmed to $350-$380/st FOB in the region, up $15/st from last report.

Northeast: Granular ammonium sulfate pricing was reported at $285-$290/st FOB and $290-$295/st DEL in the Northeast.

Ammonium Nitrate

Ammonium Nitrate, Market Watch, U.S. Gulf, Western Cornbelt

U.S. Gulf: No new trades were reported last week, leaving the last done range at $360-$365/st FOB. Generally, sources said product is in very short supply, with less imported product available.

Import figures match source assessments. July-February imports were off 50 percent, to 341,041 st from the year-ago 678,169 st. February was a little better, off only 30 percent at 84,502 st from the year-ago 121,228 st.

Western Cornbelt: The ammonium nitrate market was tagged at a firm $395/st FOB in the Western Cornbelt.

Nitrogen Solutions

Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: UAN barges remained quiet and continued to be called $285-$290/st ($8.91-$9.06/unit) FOB, with little activity. Buyers continued to clamor for a number closer to $280/st, while sellers eyed $295/st.

East Coast imports were reported to be weaker at $305/mt CFR.

July-February imports were off 17 percent, to 1.89 million st from the year-ago 2.28 million st. February was playing catch-up and was up 17 percent, however, to 337,767 st from the year-ago 288,580 st.

Eastern Cornbelt: UAN-28 was reported in a broad range in the Eastern Cornbelt last week. The low end was quoted at $290/st ($10.36/unit) FOB Cincinnati, while the upper end was reported at $310/st ($11.07/unit) FOB Burns Harbor.

Illinois sources quoted the prompt UAN-32 market at the $350/st ($10.94/unit) FOB level, give or take.

Western Cornbelt: UAN-32 pricing in the Western Cornbelt was steady at $345-$355/st ($10.78-$11.09/unit) FOB regional terminals in early April.
Some sources speculated that UAN demand may be up this year if preplant ammonia rates are ultimately impacted by weather delays or spot supply outages.

Northern Plains: UAN-28 pricing in the Northern Plains was quoted at $310-$320/st ($11.07-$11.43/unit) FOB Minnesota terminals on the low end. North Dakota sources tagged delivered UAN-28 at $365/st ($13.04/unit) for Canadian tons to limited destinations.

Great Lakes: UAN was reported in a tight range at $11.00-$11.11/unit FOB terminals in the Great Lakes region. Wisconsin sources pegged the UAN-32 market at the $354/st ($11.06/unit) FOB level for prompt pull, while Michigan contacts quoted UAN-28 at $308/st ($11.00/unit) FOB Toledo, Ohio, and $311/st ($11.11/unit) FOB Webberville.

Northeast: The Baltimore, Md., UAN-30 market remained at $300/st ($10.00/unit) FOB in early April, while pricing for UAN-32 out of terminals in upstate New York was pegged at the $355/st ($11.09/unit) FOB level. Sources quoted the UAN-28 market last week at $319.20/st ($11.40/unit) FOB East Liverpool, Ohio.

Urea

Bangladesh, Black Sea, China, Eastern Cornbelt, Great Lakes, India, Indonesia, Market Watch, Middle East, Northeast, Northern Plains, Pakistan, Southeast Asia, Thailand, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf: Very prompt barges continued to garner a premium last week, with the upper end of the range called $410-$415/st FOB. Further out a week or two and they were called $390-$405/st FOB, depending on load date. Late April into May were called $360-$380/st FOB, depending on timing.

Prills were quiet at $390-$395/st FOB.

Urea imports were off 26 percent for the July-February period, to 4.25 million st from the year-ago 5.73 million st. February showed some improvement, off only 13 percent, to 611,160 st from 705,735 st.

Eastern Cornbelt: The granular urea market was quoted at $450-$470/st FOB in the Eastern Cornbelt, with the low reported out of the Cincinnati, Ohio, market and the upper end FOB Burns Harbor, Ind.

Western Cornbelt: The granular urea market remained at $455-$465/st FOB in the Western Cornbelt.

Northern Plains: Minnesota sources quoted the granular urea market at the $450/st mark FOB the Twin Cities. North Dakota contacts, citing ongoing delays for railcars, pegged delivered urea in a broad range at $525-$555/st for tons trucked from Illinois shipping points.

Great Lakes: Granular urea pricing covered a broad range in the Great Lakes region, with the low reported at $455/st FOB in the Wisconsin market and the upper end at $495/st FOB Webberville, Mich.

Michigan sources pegged the dealer price out of the Maumee, Ohio, market at $480/st FOB last week.

Northeast: Parts of New England were hit with snow and ice during the final days of March. Central New York, northern Pennsylvania, and central Maryland also saw a wintry mix of precipitation early in the week, with several inches of rain reported in eastern Pennsylvania.

The Northeast last week saw very little in the way of spring fieldwork as a result, and the spot markets were mostly unchanged from last report.

Granular urea pricing was reported in the $450-$465/st FOB range in the Northeast, with the low in Pennsylvania and the upper end FOB East Liverpool, Ohio.

Thailand: The Thais seem to be the noisiest players on the field right now. Sources say Thai buyers are looking for a price around $335-$340/mt CFR or lower from their Arab suppliers. They argue that their price fits in nicely with the ever-softening global urea market.

The producers, predictably, disagree. Sources say the Arab Gulf producers are looking at $335-$340/mt FOB, not the estimated netback of the Thai bids of $310-$315/mt FOB.

The Thais looking to buy at this time seem to be a handful of importers hoping to be poised to move once the rains seriously start in Thailand.

Sources say the demand in Thailand right now is limited. Subsidy checks from the previous year’s rice crop have not yet been sent, giving farmers little financial support to buy for this season. Likewise, the delay in the rains means less demand for urea.

The idea of buying tons now, said one trader, is to move the product into warehouses to be ready the instant the rains come. Sources add that there appears to be some movement in the government to get the rice subsidy checks out in time to allow the farmers to buy urea.

In the end, said one trader, Thailand will not be a price setter, but will remain a price confirming nation. The softness of the global urea market has many speculating that eventually the Arab Gulf suppliers will meet the Thai price.

Indonesia: Sources report that the Indonesian warehouses are getting too full.

An auction closed Friday, April 4, for 30,000 mt of granular material from Kaltim. Sources say no optional tons were offered in the auction documents, but one trader noted that if bids are aggressive and exceed expectations, additional material c

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, Great Lakes, India, Market Watch, Middle East, Northern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: The Tampa market was quiet last week, but new barge business at NOLA was reported at $540/st FOB.

July-February ammonia imports were down 21 percent, according to the U.S. Department of Commerce, to 3.68 million st from the year-ago 4.66 million st.

May NYMEX closed April 3 at $4.470/mmBtu, down from March 27’s $4.538/mmBtu.

Eastern Cornbelt: Warm spring weather settled over the Eastern Cornbelt during the final days of March and the start of April, spurring some fertilizer applications for preplant corn and wheat topdressing in the region.

Severe storms were likely across central and southern Illinois and parts of Indiana and Ohio as the week progressed, however. Forecasts called for strong winds, rain, hail, and the possibility of tornadoes in some locations on April 3.

Sources continued to talk of potential logistics challenges due to rail delays, but, as one source noted, it all depends on weather conditions and when the season breaks. The incoming precipitation wasn’t rattling too many people last week; one source said planting activity in his area generally doesn’t begin until April 20.

Anhydrous ammonia pricing continued to firm in the region last week. Sources quoted the low end of the regional range at $650-$665/st FOB in the Illinois market, depending on location, with the upper end pegged at $680/st FOB Huntington, Ind.

Western Cornbelt: Winter Storm Yona was expected to bring more snow to northern Iowa and central and northeastern Nebraska late in the week, but the heaviest accumulation was predicted for the Northern Plains and Great Lakes regions.

Missouri was also getting its share of inclement weather in early April. A state of emergency was declared on April 4 for several locations in the state due to a severe weather system that brought heavy rain, hail, high winds, flooding, and at least one reported tornado. Local reports said up to 5 inches of rain swamped some parts of the state.

On the fertilizer front, sources reported very tight ammonia inventories in the Nebraska market, and rapidly firming ammonia prices.

A pinhole leak reportedly resulted in a temporary shutdown of the Magellan ammonia pipeline last week, forcing Kansas retailers to pull from Nebraska terminals to meet heavy preplant demand. As a result, several Nebraska ammonia terminals went on allocation, with sources reporting that suppliers were taking two or three price increases per day.

Spot prices out of Nebraska terminals had reportedly jumped to $590-$610/st FOB before suppliers ultimately pulled prices and stopped accepting orders until further notice.

Rapid ammonia price increases were also observed in the Iowa market, where sources said spot prices last week included $620/st FOB Sergeant Bluff, $635/st FOB Fort Dodge, and $675/st FOB Marshalltown and Washington.

Northern Plains: Another winter storm was taking aim at the Northern Plains region as the week advanced. Snowfall totals were expected to range from 5-8 inches across central Minnesota by April 4, with 3-5 inches likely in South Dakota. In parts of northern Minnesota, 8-12 inches of snow was possible by the weekend.

A North Dakota source said his location received 11 inches of snow early in the week, with more in the forecast. “It is cold and nasty,” he reported at midweek.

No fieldwork was taking place in the region last week, but sources reported tight fertilizer supplies, firming markets, and significant logistics problems just the same. One source said there was very little MAP, ammonium sulfate , or ammonium thiosulfate to be found, while rail shipments of urea continued to experience lengthy delays. Limited truck availability was also impacting shipments of potash. “What a mess, and we haven

LSB settles with activist shareholders

Breaking Industry News

LSB Industries Inc., Oklahoma City, said April 3 that it is adding three new board members to its 10-member board, including two former Terra Industries Inc. executives. In recent months, activist shareholders have called on LSB to add new independent directors with fertilizer and climate control experience to the board.

New board nominees include Daniel Greenwell, William Murdy and Richard Sanders Jr. Sanders, 57, served as Terra vice president of manufacturing from 2003 until it was acquired by CF Industries Holding Inc. in 2010. Greenwell, 51, was Terra’s corporate controller and senior vice president and CFO from 2005 until the CF acquisition in 2010.

LSB to end exclusive deal with Orica

News, News Briefs

Oklahoma City — LSB Industries Inc. said April 4 that on March 31, 2014, its subsidiary, El Dorado Chemical Co. (EDCC), sent the required one-year prior notice to Orica International Pte Ltd. that EDCC will not renew the exclusive ammonium nitrate supply agreement, dated Jan. 1, 2010, as amended after the initial term ending April 9, 2015. “As a result of the exclusivity provision in our current agreement with Orica, we cannot sell ammonium nitrate produced at our El Dorado, Arkansas, facility into the explosives market,” said Jack Golsen, LSB chairman. “Our strategy was to proactively notice Orica of our intention to let our agreement expire, and beginning in the second quarter of 2015, it is our intention to commence sales of ammonium nitrate to the explosives market. This is a market in which we have historically participated and have significant experience. Orica represented approximately 6 percent of LSB’s consolidated net sales for 2013.” CF Industries Holdings Inc. recently announced that it has entered into long-term AN supply agreements with Orica and Nelson Brothers LLC, under which CF will supply 700,000-800,000 st of product on an annual basis for at least 10 years starting in 2017 (GM Feb. 17, p. 1).

Potash

Eastern Cornbelt, Great Lakes, India, Market Watch, Northeast, Northern Plains, Potash Muriate, U.S. Gulf, Western Cornbelt

U.S. Gulf: Potash continued to strengthen last week, with the last done numbers called $340-$348/st FOB. Sources, however, argued that second-half April numbers are weaker, back to the $335/st FOB level.

U.S. imports were up 4 percent for July-February, to 6.51 million st from the year-ago 6.3 million st. February was up 1 percent, to 775,642 st from the year-ago 767,642 st.

Eastern Cornbelt: Potash was reported at $370-$377/st FOB regional warehouse in the Eastern Cornbelt, depending on grade and location. The Cincinnati market was pegged at $370-$373/st FOB for red granular tons, with the Burns Harbor market quoted at the $375/st FOB level.

Western Cornbelt: Potash remained in tight supply. Spot pricing was pegged at $360-$370/st FOB regional warehouses for red granular tons, with white granular quoted at the $377/st FOB level on a spot basis.

Northern Plains: Minnesota sources tagged the granular potash market at $370-$377/st FOB regional warehouses. Delivered potash in North Dakota was reported in the $360-$380/st range from Saskatchewan, but only “if you can get trucks,” said one contact.

The potash market FOB Saskatchewan mines remained in the $330-$340/st range to U.S. customers, depending on grade.

Great Lakes: Red granular potash was quoted firmly in the $370-$375/st FOB range out of regional warehouses last week. White granular potash was reportedly unavailable in the region in early April.

“Potash is really tight because of the rail delays out of Canada,” said one Michigan source. “White is impossible to find, and we are hearing that DAP is very tight too. I think we will definitely have situations where people can’t get the fertilizer they want this spring.”

Northeast: The potash market remained at $370/st FOB Baltimore and East Liverpool for red granular tons, and $377/st FOB for white.

India: Uralkali has concluded a contract with Indian Potash Ltd. (IPL) for potash deliveries between April 2014 and March 2015. The contract’s delivery price has been set at US$322/mt CFR. Uralkali’s volumes under the contract will total 800,000 mt.

“Today’s agreement is a mutually beneficial one. India is a strategic market for Uralkali, and IPL is our long-term partner,” said Oleg Petrov, Uralkali director of sales and marketing. “We hope that the contract will help stimulate potash application rates in India, and support the country’s agriculture at the time of continued population growth and rising food demand. We expect that the conclusion of the Indian contract will boost the global potash market growth.”

The price is down $105/mt from the year-ago $427/mt CFR, which Belarusian Potash Co. (Uralkali and Belaruskali) concluded. At the time, BPC inked a deal for 1 million mt.

While the price is much lower than what India has paid in recent years, it is still higher than China’s contract of $305/mt CFR, which was achieved early this year. China traditionally pays a lower price than India.

Sources last week were awaiting word as to whether other large sellers would be signing on to some Indian tonnage.

The Indian government is reportedly ready to maintain a set price to the farmers of Rs16,000/mt (US$265/mt). The lower price of the imported potash is expected to offset the reduction in subsidy payments the Indian government wants to hand out during this fiscal year.

All told, IPL expected to import a total of 2.1 million mt this year. Additional imports will end up taking Indian potash imports past the 3.3 million mt imported last year.

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