Rio de Janeiro — Vale has hired Canadian engineering company Hatch to conduct a new prefeasibility study on its halted Rio Colorado (GM Jan. 28, 2013) potash project in Argentina, aimed at scaling down the development, according to a Dec. 20 press release from the Mendoza provincial government. In September, the Brazilian mining major reached an agreement with the provincial authorities giving it six months to re-engineer the project. Rio Colorado was the only Vale potash asset not to be included in the portfolio of fertilizer assets that Mosaic has agreed to buy from the Brazilian mining major in the US$2.5 billion cash-and-stock deal announced on Dec. 19 (GM Dec 23, 2016). The project’s inclusion in the transaction is subject to Mosaic’s agreement following appropriate due diligence. The new study will assess the feasibility of reducing the original targeted production capacity to 1.4 million mt/y of potash in order to make it more economically viable, the government said. The original plans envisaged an initial 2.1 million mt/y capacity, with a second phase increasing that to 4.35 million mt/y. The new proposal could also abandon the plan to construct a 352 km-railway to transport the potash from the mine to the port of Bahia Blanca and use trucks instead, according to a Mining.com news report. “If, as the case may be, the results [of the study] do not live up to Mosaic’s expectations, the project would continue with Vale, which would then continue the search for a partner,” said Emilio Guiñazú, Mendoza provincial government undersecretary of Energy and Mining.
Donghan Township, Taiwan — Two were killed and five injured due to a leak at Fei Hung Fertilizer Co. Dec. 31, according to the Taipei Times. The two killed were part of a cleaning crew overwhelmed when they entered a storage tank that contained hydrogen sulfide. Speculation was that a ruptured pipe leaked the sulfide into the tank. Five workers were injured trying to save the two.
U.S. Gulf: While granular prompt barges retreated a bit from the top end of their year-end close of $232-$242/st FOB, they were in bounce-back mode last week. Trades were put at $235-$238/st FOB early in the year, but were reported at $241/st FOB by Thursday afternoon, with quotes at $242-$245/st FOB for the next round of business.
Prill prices were also up at $235-$240/st FOB, compared with the prior $230-$238/st FOB range.
Eastern Cornbelt: Granular urea pricing in the Eastern Cornbelt was up from December levels. Sources quoted the market at $270-$290/st FOB in the region, with the low for prompt tons FOB Cincinnati, Ohio, and Ottawa, Ill., and the upper end out of Indiana terminals for spring prepay offers. Prepay was also reportedly being offered at $275/st FOB Cincinnati and $280/st FOB Ottawa.
“Prepay demand has been average, with some uncertainty about cropping decisions by farmers in fringe areas,” said one market contact. “The shadow of the new urea production coming online in the U.S. … is possibly helping buyers remain on the sidelines longer.”
Western Cornbelt: The granular urea market was pegged at $267-$285/st FOB in the Western Cornbelt, depending on location and time of delivery. The St. Louis, Mo., market was quoted at $267-$270/st FOB for prompt tons and $275/st FOB for prepay, while Iowa sources quoted the river terminal market at $275/st FOB for prompt and $285/st FOB for river open.
Northern Plains: Granular urea pricing had reportedly firmed to $280-$290/st FOB the Twin Cities, and up to $315/st in the North Dakota market for either delivered tons or on an FOB terminal basis.
Great Lakes: The granular urea market was pegged in the $280-$310/st FOB range, up another $10-$15/st from last report, with the low in Wisconsin for prompt tons and the upper end out of spot Michigan terminals for spring prepay offers. Michigan sources also quoted urea sales out of Burns Harbor, Ind., at $290/st FOB for take and $300/st FOB for prepay.
Northeast: Granular urea pricing in the Northeast was pegged at $270-$280/st FOB, with the low at Baltimore, Md., and the upper end FOB East Liverpool, Ohio.
China: The removal of export duties on urea for 2017 could help the struggling domestic industry. Sources said removal of the RMB80/mt (US$11.50/mt) duty on urea could help exported urea remain competitive in the global markets.
How much the lack of an export duty will impact exports is still up in the air. January and February sales are dominated by domestic demand. Sources said the combination of this strong demand and limited production has already provided strong support to pricing.
Sources reported that the current offered price for granular is $260-$265/mt FOB, with prills offered in the upper-$250s/mt FOB. One trader said buyers looking for January tons are paying that level. However, another source said some international traders took January positions at $245/mt FOB back in mid-December. At the time, that price seemed high – today, not so much.
Production was down for a good part of 2016. The central government has been leaning on less efficient and costly urea plants to shut down in favor of newer and less polluting facilities. The increase in the price of coal hastened the closures of the older plants.
In addition to increases in operating costs that are forcing plants to close, the recent move by the government to punish older, more polluting plants for not meeting emission standards has forced the issue with many plant operators.
Pakistan: The Ministry of Commerce gave its grudging approval to a plan to export 300,000 mt of urea by the end of March 2017.
When the idea was first raised last October, the implied intent was that TCP would handle the sale. One trader at the time said it made sense, because TCP is the sole importer of urea. The wording of the ministry statement, however, implies that the sale could be handled by the private sector.
The ministry said the sale could take place only after another review of the urea stockpile situation, and after companies had registered their intent to export the urea and to whom with the Trade Development Authority of Pakistan. Tonnage would then be made available on a first-come, first-served basis.
Additional tons might be made available following another review after March 31, 2017. The Pakistan urea producers said the estimated stockpiles and anticipated production dedicated to the upcoming application season will be sufficient to allow upwards of 800,000 mt to be exported this year. The producers based their estimates on having enough natural gas allocated to allow for full production.
The surplus came about as demand softened in the last half of the year and as producers received all the natural gas they said they needed to run at full capacity. Earlier in 2016, the government withheld natural gas supplies from industries to ensure a plentiful supply of gas for household use. As gas supplies improved, industries received higher allotments.
The rising prices in the international urea market will make the sale attractive to Pakistani bean counters. Sources speculated that tonnage from the sales could be used to back offers into the expected Indian tender.
India: Industry watchers remain convinced that a tender, most likely from IPL, will be called in the next week or so.
One trader noted that the government is in the middle of analyzing the consumption figures from 2016. Once done, guidance will be provided to the designated buyer as to how many tons should be purchased to close out the current season and to lay down reserves for the next.
The withdrawal of the 500 and 1,000 rupee notes by the government caused a major hiccup in consumption. Sources said large areas of the country saw urea purchases drop because farmers no longer had the currency to buy needed inputs, and local distributors refused to provide credit. Eventually, some distributors did offer credit to their long-time customers, and the government stepped in to help guarantee credit-based purchases for others.
The market appears to have stabilized, but there are still pockets of economic dislocation until the new currency situation works its way through the system.
International traders said their partners in India report there is no sense that more urea is needed immediately. As 2016 waned, sources were estimating only 300,000 mt might be needed in a January 2017 tender. Some argued that purchases could be as high as 800,000 mt, but only if the international price comes down from its current levels.
Middle East: Arab producers remain confident of their sales and their pricing ideas in the $250s/mt FOB. Nailing down a spot deal has been difficult because most of the Arab sales are formula-based. However, prices in the upper-$250s/mt FOB would be about right, because the price from Arab producers in the Gulf has been matching the price in China.
Sources reported that Iran is poised to take a lead role in the tender expected from India this month. If India only takes 300,000 mt, sources said Iran could easily dominate the tender. The main competition for the tender could come from Pakistan. Oman might also offer a cargo.
Egypt has been enjoying a steady and strong price for its product. Sources put the current price in the mid-$260s/mt FOB.
Sources reported that Egyptian product is being sent to any place that will pay. In the past few weeks, pricing of product and freight has allowed Egyptian product to be competitive in the Americas, Africa, and northern Europe. These options are in addition to Egypt’s traditional markets in southern Europe.
Black Sea: Sources report prices in the low-$220s/mt FOB out of Yuzhnyy. Material flowing out of the Black Sea port is limited because of limited production in the area.
Sellers are also finding aggressive competition from traders carrying Egyptian product into once-traditional CIS markets.
Reports are that Ukraine is poised to impose duties on Russian-made urea by the end of next month. The duties are expected to range from about 4 percent to nearly 32 percent.
Indonesia: The government has not yet set the export quotas for 2017. Sources said there appears to be no big rush to set the quotas and arrange for export contracts. Reportedly, producers are still working to ship out sales based on last year’s allocations.
Traders noted that until the new allocations are set and the government holds an auction to set who will handle the exports, no new prices are being discussed.
Cairo—Indian trading and consultancy firm Sun Group is looking to set up a phosphate fertilizer plant in Egypt, according to Indian media reports, citing a statement by Egypt’s Minister of Trade and Industry Tarek Kabil. The plant, to be established in cooperation with Egypt’s Phosphate Misr Co. and other local companies, will contribute to increasing Egyptian phosphate production and boost local market share of exports to global markets, Kabil said in the statement. Phosphate Misr operates one of Egypt’s largest phosphate rock mines, the Abu Tartour mine, 650 km south of Cairo. The proposed $40 million project would be located in the El-Seba’eia area of Aswan, but few other details are known. According to the minister’s statement, the parties hope to sign a memorandum of understanding (MOU) for the project soon to enable work to start this year. The Sun Group’s flagship company, Dubai-based Sun International, handles around 2.5 million mt/y of products, mainly finished fertilizers and fertilizer raw materials, according to its website, and regularly sources phosphate rock from Phosphate Misr. Phosphate Misr in August last year signed an MOU with a consortium of Chinese companies to build a phosphoric acid plant utilizing Abu Tartour phosphate rock. According to local media reports, citing Phosphate Misr Chairman Khaled El-Ghazali, the output would be used to produce phosphate cement.
U.S. Gulf: Heavy fog plagued the Gulf shipping region last week. A cold front pushing across the country was expected to improve conditions on Jan. 5-6.
Shippers noted waiting times at Industrial Lock in the 10-15 hour range. Delays at Calcasieu Lock were called 3-5 hours, and Port Allen Lock transit times approached nine hours for the week.
Navigation remained limited to overnight hours at the West Canal’s Galveston Railroad Bridge (Miles 357-358). Dredging and debris removal are underway from 7:00 a.m. to 7:00 p.m. on a 12-days on, two-days off schedule through Jan. 15. Boats can pass without restriction on both non-work days and during overnight hours.
The Corps announced daylight-hour closures at the Brazos River Floodgates on Jan. 2-31 while repairs are made to both the east and west guide walls. Sources estimated delays at seven hours or more on Jan. 4.
Lower Mississippi River: Stack Island dike work continued to slow transits in the Lake Providence area. Originally scheduled through mid-February, some sources predicted the project would run late. Boats were requested to run at the slowest safe speed through the area while work is underway.
Upper Mississippi River: Icy conditions improved on the Upper Mississippi last week, leading to increased transit widths and navigable depth.
Lock 21 guide wall repairs underway through Feb. 28 triggered daily closures from 6:00 a.m. to 5:00 p.m. Vessels were free to pass during non-work hours, subject to a 70-foot width restriction. Tow haulage equipment is unavailable during the project, necessitating the use of industry self-help for entering and exiting the lock. Longer tows were required to stage barges and make multiple passes.
Upstream and downstream tow haulage system maintenance at Lock 22 will precipitate length and width restrictions on Jan. 2-24. Tentative main chamber closures are scheduled for Jan. 17-25 at both Lock 27 and Mel Price Lock. The Mel Price auxiliary chamber is expected to remain open during the shutdown.
Thebes-area rock removal is tentatively planned to begin in mid-to-late January, when Cape Girardeau, Mo., levels slip below the 15-foot mark. The gauge read 19.62 feet and rising on Jan. 4, with National Weather Service forecasts predicting a 20.0-foot crest on Jan. 5-6. Current projections put the gauge at 13.5 feet on Jan. 18. Shippers warned of daylight-hour navigation restrictions and slowdowns in the area once work begins.
Illinois River: Ice flows continued to slow Illinois River navigation, but shippers noted substantial improvement from pre-holiday levels.
Ice couplings were required at the Dresden Island, Starved Rock, LaGrange, and Peoria Locks, although Marseilles Lock restrictions were lifted for the week. Forecasters warned of freezing conditions in the next 5-7 days. Marseilles Lock delays were called up to seven hours.
Dive operations at the Chicago area’s Demonstration Barrier are expected to slow transits on Jan. 9-20.
Ohio River: Transit through New Cumberland Lock returned to normal last week after a hydraulic leak forced lock operators to manually open and close gates in the lead-up to the holidays.
Healthy river levels allowed for wickets to be lowered at Locks 52 and 53, leaving vessels free to transit without locking. The auxiliary chamber at R.C. Byrd Lock is offline through Jan. 30 for repairs.
Erosion control installation at Mile 244 on the Tennessee River will be conducted during daylight hours, Monday through Friday, though April 14. Minimal delays are anticipated.
Dredging may slow barge transit at Miles 102-104 on the Cumberland River starting Jan. 9, shippers noted. The work is expected to run through late March.
Allegheny River transit remained stopped at Lock 6 (Mile 36.3) due to a hydraulic leak and associated mechanical failure. No timeline has yet been announced for the lock’s reopening.
On the Monongahela River, boats were routed through the Braddock Lock and Dam land chamber. The lock’s river chamber has been shuttered indefinitely due to equipment failure.
The boards of directors of three Minnesota cooperatives – Central Farm Service (CFS) in Owatonna and Truman, River Region Cooperative (RRC) in Sleepy Eye, and South Central Grain and Energy (SCGE) in Fairfax – announced on Dec. 21 that they will bring a merger proposal to members for a vote in February.
“Agriculture continues to dramatically change,” said Eric Schrader, board chairman of CFS. “The global collapse of prices, volatility of markets, increased regulatory mandates, and overall increase in operating expenses have created an opportunity for three strong cooperatives to create a stronger supply partner for our members.”
If approved, the combined organization would have annual sales of more than $1 billion and span a large geographic area stretching across central and southern Minnesota down to northern Iowa. The co-ops entered into a merger study in September 2016, which identified potential savings of $3-5 million through synergies in purchasing power, logistics, back office administration, and growth.
“This merger will create new opportunities in services and innovations for our members, while providing advanced opportunities for our employee base,” said Bruce Kuelbs, board president of RRC. “This merger allows us to control the change we want to see in our organization, rather than having to react to changes out of our control,” added Larry Dean, board president pf SCGE.
A number of informational meetings for members are planned at different locations from Jan. 30 to Feb. 3, with voting packets going out on Feb. 3. Membership voting will close on Feb. 20, and the votes will be tallied at a special meeting on Feb. 21. If approved, the merged company will operate under the CFS name and be headquartered in Mankato, and will have a potential effective date on or before Aug. 1, 2017.
Todd Ludwig, current CEO of CFS, has been tapped to lead the merged company as CEO, with RCC General Manager Kevin Subart and SCGE General Manager David Peters serving in leadership positions. The board of directors of the combined organization will be based on the amount of equity of each cooperative, and will consist of 12 CFS members, three RRC members, and three SCGE members.
According to an FAQ provided by the co-ops, the consolidated company will be able to leverage its size to receive better prices and services in agronomy, feed, and energy products; improve logistics across an expanded geography by taking advantage of arbitrage opportunities and better fleet utilization, as well as access to all major railroads; negotiate better interest rates and insurance premiums while eliminating duplicate costs in systems and processes; and offer new merchandising, precision agriculture, and grain pricing programs to members. Also included on the list of objectives is the construction of an agronomy plant north of the Minnesota River to expand the business’s northern territory.
The co-ops also highlighted new employment opportunities with the merger, noting that more than 100 employees – or 20 percent – of the consolidated company’s workforce will be over the age of 60. “One of the reasons the boards explored this merger was to create a company for employees that would be a ‘destination employer’ in our geography” that offers more benefits at a better rate, the companies said.
CFS was formed less than a year ago by the merger of Watonwan Farm Service Co. in Truman and Central Valley Cooperative in Owatonna (GM Jan. 1, 2016). The company provides grain, agronomy, feed, and energy products and services from 28 locations stretching from Randolph, Minn., down to northern Iowa.
SCGE operates agronomy, grain, feed, propane, and refined fuels businesses from nine Minnesota locations at Buffalo Lake, Cosmos, Darwin, Eden Valley, Fairfax, Gibbon, Hector, and Stewart. The co-op’s agronomy facilities in Buffalo Lake, Cosmos, Fairfax, and Gibbon offer dry and liquid fertilizers, ammonia, crop protection products, seed, and precision ag services.
RRC is a full-service co-op offering grain, energy, agronomy, and feed products and services from multiple locations in Sleepy Eye.
Montreal — SNC-Lavalin reports that it has been awarded a contract by Bagfas Bandirma Gubre Fabrikalari AS (Bagfas) for the revamp of an existing calcium ammonium nitrate plant located on the south coast of the Marmara Sea, Turkey. The scope of work includes engineering, procurement, supervision, and commissioning services to achieve the plant’s capacity performance of 2,000 mt/d for CAN and 1,550 mt/d for stabilized ammonium nitrate. The services also incorporate review and improvement of processes and operations, including engineering of processes, equipment, control, and automation. SNC-Lavalin will execute the project at the site and through its offices in Brussels, Belgium. At the end of the contract, which is estimated to last approximately eight-and-a-half months, the plant is expected to reach its design production capacity, estimated at 660,000 mt/y of granular CAN.
U.S. Gulf: Sulfuric acid imported by vessel into the Gulf of Mexico was expected to fall in the $40-$45/mt CFR range, sources said.
The price ideas were based on recent sales into Brazil, including a 16,000 mt tender awarded in the “high-$40s/mt CFR” to a European exporter. Sources called the Brazil acid market in a $45-$50/mt CFR range, up from $40-$50/mt CFR at last report. Cargoes to Chile were $55-$60/mt CFR, up from $50-$60/mt CFR noted previously.
Offers from smelters in Northwest Europe firmed to a range of $5-$15/mt FOB, up from $5-$10/mt FOB, reflecting what sources described as limited supply.
Domestic market players quoted West Coast deliveries in the $105-$110/mt DEL range, flat from pre-holiday levels, while tons offered into the U.S. Gulf region carried $85-$90/mt DEL pricing. Midwest material was quoted at $80-$85/mt DEL.
Tampa: Negotiations for the first-quarter contract price of molten sulfur delivered to Tampa kicked off last week. Expectations for the contract varied, but most speculated that a $5-$10/lt increase from the fourth quarter’s $69.55/lt DEL was likely.
Those calling for a larger increase pointed to sizeable upticks in international market pricing since the start of the fourth quarter, including Chinese import prices firming to the tune of $10-$15/mt CFR.
Weaker January offers from two Middle Eastern suppliers may have dinged that argument, some believed, as producers in that region appeared to disagree on the market’s direction.
Some also questioned the domestic fundamentals landscape. “If anything, we have lots of sulfur floating around,” said one market player. “The U.S. market appears a little oversupplied at present.”
Unplanned boiler repairs at the 335,000 barrel/d Philadelphia Energy Solutions refinery forced a 90,000 barrel/d fluid catalytic cracking unit to reduce production last week, Reuters reported. The full extent of the curtailment was not immediately known. Repairs to the damaged unit were expected to take “a while.”
Refinery utilization was higher last week, according to the U.S. Energy Information Administration (EIA). Refining capacity swelled to 92.0 percent for the week ending Dec. 30, a 1.0 percent increase from the prior week’s 91.0 percent, but trailing both the year-ago 92.6 percent and the 92.4 percent five-year average.
Average daily crude inputs also rose, notching 16.689 million barrels/d, an increase of 132,000 barrels/d from 16.557 million barrels/d recorded on Dec. 23.
U.S. Gulf: Last-done on the Gulf export market remained at $70-$71/mt FOB last week. Sources previously expected pricing to rise by $10/mt FOB or more in the next round of business, but the market’s refusal to budge left many struggling to explain its relative weakness.
“Still confounded as to the reason the Gulf Coast price is so low relative to the rest of the world,” said one source. “(Producers) could be paying extra in freight and still do better (selling) to Asia,” another trader argued.
Vancouver: Sources described limited firming in the Vancouver export market. While most called pricing in the high-$80s/mt FOB, scattered sales were reported in the “low-$90s/mt FOB” for the week, leaving the market in a $87-$92/mt FOB range, up from $85-$89/mt FOB quoted for late December.
Chinese spot imports continued to be called $101-$107/mt CFR, although some observers believed the market was headed lower in the near term. Already weak phosphate production could wane further should international pricing fail to recover, sources argued, making sustained highs in China an uncertainty.
Others disagreed, however, arguing that the apparent willingness of end users to pay full price was a positive sign for the market’s health. “The increased prices are ‘real’ and don’t just appear to be trader speculation, as widely reported,” said one observer.
Alberta sulfur producers reported ongoing (-)$55-$20/mt FOB netbacks, unchanged from fourth-quarter levels. Molten sulfur sold at contract rates into the U.S. comprised the bottom of the range, with solid tons offered from Vancouver netting producers up to $20/mt FOB under “ideal conditions,” said one source.
A planned 50,000 barrel/d Sturgeon refinery currently under construction north of Edmonton, Alba., could eventually triple original production estimates to 150,000 barrels/d, subject to regulatory approval, according to numerous reports. The $8.5 billion facility is on track to begin production in late 2017.
West Coast: The Phillips 66 refinery at Rodeo, Calif., suffered a multi-unit shutdown on Dec. 28, local news outlets reported. The stoppage was triggered by flaring and a steam release from a hydrogen facility located adjacent to the refinery, and resulted in two hydrocracking units going offline. The 140,000 barrel/d refinery was expected to restart the hydrocrackers on Dec. 29-30.
Solid sulfur offered from the West Coast was priced at $80-$85/mt FOB, unchanged from the previous report. Fourth-quarter molten contracts fell in the $50-$75/lt FOB range.
Aramco: Saudi Aramco lowered January pricing to $90/mt FOB Jubail, a $2/mt cut from December’s $92/mt FOB.
ADNOC: The Abu Dhabi National Oil Co. bucked a trend of January price cuts in the Middle East, announcing a $4/mt increase to $92/mt FOB Ruwais. ADNOC’s December offer stood at $88/mt FOB.
Qatar: Qatar state petroleum marketer Tasweeq officially changed its name on Dec. 19, rebranding as Qatar Petroleum for the Sale of Petroleum Products Company Ltd. (QPSPP). The change stems from a merger with parent company Qatar Petroleum in October 2016.
QPSPP announced January loading at $88/mt FOB Ras Laffan, $4/mt below the December price of $92/mt FOB.
Baltimore, Md., and Waconia, Minn. — Engineering and equipment providers A.J. Sackett and Sons and Waconia Manufacturing aligned their sales forces and product lines, effective Jan. 1, 2017. They will now be known as Sackett-Waconia. Sackett, founded in 1897, has been an investor and partner in Waconia, founded in 1959, since 1995. Together, the two say they have sold equipment in 65 countries and all 50 states, and have 180 years of experience. “The combination of Sackett-Waconia is not only the right thing to do; it’s the smart thing to do for our customers, our employees, and our industry,” said Larry Taylor, Sackett-Waconia CEO. “Together we offer strong engineering capabilities and expanded product lines, while capitalizing on our customer focus, integrity, and desire to be the best at what we do.” Sackett-Waconia employs 200 people between their four U.S. locations in Baltimore, Md., Waconia and Norwood Young America, Minn., and Wilson, N.C., plus a fifth location in Araxá, Brazil. The company says the combination will also streamline engineering, product design, and customer service, and support efficient equipment fabrication.
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.
