Published by Profercy Phosphates SC Editor Tom Jago E [email protected] T +34 952 833 906 www.profercy.com
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Profercy
hosphates &NPKs
P 7 March 2013
GLOBAL PHOSPHATES POSITION DAP, MAP
From the 14 February Report: Phosphates markets look to have turned the Americas: Tampa high-end corner in Europe and in several South American markets. steps up to $510s pt fob as US export “opportunity” tonnes available at that time in the low/mid $460spt Australia buys more late DAP. fob Tampa are now well below today’s market at $495-510pt fob for PhosChem Brazil bids intense at $515-520pt spot business to Mexico and a Trammo/MissPhos lot to Australia. The big fob as sellers pull up sharply to change into March is parallel demand from spot buyers in Brazil, Argentina, $530pt cfr. NOLA up from recent East & West Europe, African (Kenya & Ethiopia), plus hints of US domestic dip, back into high $460s pst fob. spring interest. As per our earlier calls, all of these markets had been deferring, aiming at 11th hour buying to pre-empt Indian contracts. For many, the last Europe, Middle East, Africa: minute is now. News of various DAP producer delegations in India have NW Europe DAP into upper surfaced; from Russia last week; and Morocco and the US this week. Internal $550s pt fca; Offers at $575-580pt meetings within OCP jv group companies, and at Mosaic India, normally bring cfr Atlantic, $560-565spt cfr Med. courtesy contact on the domestic DAP S&D, maybe not prices yet. For all other Kenya DAP award pending.
spot buyers, Indian DAP import volumes more significant than the price. Asia: India import talks poised; One-minute briefing Formal subsidy notice awaited; Sabic sells minor new cargo to US export DAP values rise; TA sells Australia at $510pt fob Pascagoula Thailand; Bids in Vietnam. PhosChem sells $495pt fob minor lot to Mexico; Offers rise to low $505s US domestic DAP picks up to $465470 pst fob barge; Swaps flat forward Speciality NPKs: MKP stable; NOLA MAP at $455pst fob sees tentative re-export interest as Tampa firms tech MAP soft; Urea phosphate Brazil in talks on big OCP DAP/MAP volumes up to 200kt; Offers $530 cfr picks up again in Europe As local Brazil import interest builds, OCP unveils local Brazil presence Several traders pursue next Mexico avails into April; Fertinal holds out NEWS
India budget gets luke-warm reception at macro level; Rupee weakens OCP, Brazil: OCP is launching Delhi rumours suggest higher-than-expected DAP subsidy; Rs12,350pt a new business model in Brazil, Saudi, Jordan still seen ready with a baseload at +/-$500pt cfr India establishing its first direct Sabic inclined to defer on Ethiopia talks; pending India subsidy news presence in the internal market European DAP prices make further moderate gains; NPK offers rise via OCP Fertilizantes Ltda, basis New USDA report 8 Mar; Dec ‘13 corn/wheat spread still a huge $1.80/bu its own inland logistics platform $ pt fob DAP $pt fob Tampa: Similar bottom-out 2013 vs 2012 from storage centers in ports and Tampa Both 2012 & '13 reversals ended 8-month bear markets agriculture heartland.
700 PRICING 650 600 DAP: US export top hits $4510pt fob; bids at $500-505 fob 550 500 MAP: Brazil bids in $520s pt cfr a. for big April shipment demand 450 b. 400 PROFERCY 350 PHOSPHATES & NPKs
300 Editor: Tom Jago
250 Tel: + 34 952 83 39 06 200 Cell: + 34 665 832 954
[email protected] www.profercy.com
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 1
US exports: Trammo has sold a fresh 30,000t MissPhos DAP cargo for end March shipment to Australia, netting $510pt fob Pascagoula. This is US Balance (DAP/MAP) Trammo’s second DAP sale in Q1 for this market, benefitting from last Exports March year’s DAFF certification of the MissPhos facilities. PhosChem Brazil 85 Further fresh PhosChem business to EC Mexico is heard up $10pt from Australia 45 last week, to $495pt fob Tampa, this for 6,000t DAP shipping April. C America 6 Mexico 6 February program: Total US exports of DAP/MAP look to have Argentina, Urug 25 topped 400,000t in February (vs 360kt in Jan & 300kt in Dec). Contract/Sys* 105 PhosChem/Mosaic completed 20,000t DAP & K-Mag for Puerto *Various Japan, Canada, Latin Am Cabello, Venezuela against the mid-December IPSL import tender via CF KT/C Amer, Mex 12 Nitron. This was followed by 25,000t DAP in two lots ex Tampa for MissPhos TA/C America 8 Ecuador, against earlier spot business. TA/Australia 30
Domestic sales March program: PhosChem/Mosaic have a strong start to March exports from Tampa, with two DAP/MAP/MES handymax All producers - projected 525 combinations to Paranagua, Brazil, completing this week on the MV Total 847 AP Slano and MV Akili. These will be followed by Indagro’s 45,000t Est. Output Kt DAP vessel to Thailand is due to complete on the MV Vishva Ekta Carry from Jan programme +13 later this week. Mosaic 510
PCS 115 Swaps: March Tampa swaps have risen sharply with bids/offers CF 140 now at $505-515pt fob; overtaking April at $500-510pt fob. MissPhos 40
Tampa DAP/MAP Export Line Up – Feb (kt) Total 818 STX Azalea 20 Peru PhosChem 2 Stock build/draw (end Mar) -29 Thor Dynamic 15 Chile (+ K2O) PhosChem 3 Atlantic Arrow 20 Japan PhosChem 3 Saudi Balance (DAP) New Glory 33 Australia PhosChem 4 Sales – Jan Ocean Neptune 28 Uruguay CF/KT, Nitron 7 Sabic Ethiopia 100 Coreleader OL 20 New Zeal & Auz PhosChem 8 India 35 UBC Balboa 18 Mexico PhosChem 11 Thailand 23 Balsa 81 4 Colombia PhosChem 12 Spring Breeze 20 Colombia PhosChem 13 Sales – Feb Bansui 20 Australia (+ MES) PhosChem/Mosaic 15 Ma’aden China 60 India (last ‘12 contr.) 30 Medi Osaka 25 Brazil PhosChem 16 CS Crystal 28 Uruguay CF/Keytrade 18 Sabic India (last ‘12 contr.) 40 Tundra 30 Argentina (Neco.) Nitron/Phoschem, CF 19 Sales – Mar Manizales 7 Honduras PhosChem 20 Ma’aden Ethiopia 50 Satigny 6 Mexico (Altam.) PhosChem 22 Sabic Ethiopia 50 Sunlight Lilly 12 C America (+K2O) PhosChem 23 Thailand 15
Lennard 14 Mexico (Altam.) Keytrade/CF 24 Kenya (tbc) 25 Xiaoyi C 4 Ecuador PhosChem 25 Total 428 Promise 3 22 Ecuador PhosChem 25 Est. Output Bluebill 28 Argentina (Neco.) PhosChem 27 Dec/Jan carryover 115 Total 374 Jan 150 3 export lots due in Feb from TA/MissPhos Pascagoula, incl 30,000t to Australia; 6,000t DAP from PotashCorp ex Morehead City. US total seen exceeding 400kt in Feb. Feb 2wk turnaround 70 Mar 170
Tampa DAP/MAP Export Line Up – March (kt) Total avails 505 AP Slano 35 Brazil (+MES) PhosChem, Mosaic 2 Stock build/draw (end Mar) +*77
Akili 30 Brazil (+ MES) PhosChem, Mosaic 3 Vishva Ekta 45 Thailand Indagro, PhosChem 3 * MPC projected carry at end March has Sheila McDevitt 25 NOLA (pt cargo) Mosaic 4 scope for fresh business to Ethiopia, East Africa and potentially India. Both Ma’aden & Total 135 Sabic are comfortable waiting in this position
45,000t export DAP due in March from TA/MissPhos Pascagoula
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 2
US domestic: Reports surfaced late this week of NOLA DAP business marginally higher inland and at NOLA. Last done is now heard back up OCP Balance (DAP/MAP) Kt into the mid/high $460s pst fob barge for March. Some sellers are now Sales Mar heard withdrawing up to $470pst for late March. Koch USA (M/D) 50 Helm USA (M + TSP) 25 Cross-gulf: Mosaic is shipping a large Tampa/NOLA part-cargo of Traders West Europe 75 about 25,000t DAP on the MV Sheila McDevitt. As MAP imports OCP East Europe 20 build (pricing below), DAP has been tighter through Feb at NOLA Brazil (M/D) 110
Imports: Russian and Moroccan MAP prices are heard marginally Kenya (D) 25
higher to $460pst fob; and Mexican into the low/mid $460s pst fob. Domestic (D) 40
Inland activity and pipeline movement continues slow in typical Total sales 345 mid-winter weather conditions. Est. Output DAP/MAP
Feb/Mar carry 10 Tampa, NOLA DAP bottom-out coincidence 2012 vs '13 OCP* 325
Tampa & NOLA switch places to set market floor - metric equiv basis OCP/Bunge jv+ 30 675 Total avails 365 Stock build/draw (end Mar) +20 625 * Assumes OCP ramps up to regular rates of 80% load at Jorf by end March. All maintenance is now complete, so all the plants 575 should be in shape for maximized output from April and throughout Q2.
525 + Assumes OCP/Bunge Jorf jv operations at Mar '12: Feb '13: approx. 50/50 MAP/DAP & TSP, also back $495 fob $460st fob at capacity after some Jan/Feb maintenance NOLA Tampa 475 Dec'11: GCT Balance (DAP) Kt $425st fob Feb '13: $460 fob Sales – May, June ‘12 Tampa Backlog Q1- all sales to August 256 DAP $ pt metric fob Tampa & metric equiv fob NOLA fob equiv metric & Tampa fob metric pt $ DAP 425 Sales – Sept, Oct GCT Italy 15 DAP fob Tampa DAP fob NOLA (metric equiv) France, Spain 20
Sales – Nov Morocco, Brazil: Talks are in progress face-to-face early this week over GCT Italy 15 Moroccan MAP, DAP and TSP to Brazil, loading from mid March and Agrium Spain 6 likely into April depending on volumes finally settled. BADC Bangladesh* 25
Volumes: Buying interest is heard in play for about 200,000t Sales – Dec DAP/MAP and over 70,000t TSP across regular contract receivers BADC Bangladesh* 25 and seasonal spot buyers. These will be the first big Brazilian import GCT Italy, Spain (30) 20 Domestic 10 volumes for the 2013 season. Sales – Jan, Feb Pricing: While there is no official comment as yet from OCP, the GCT Europe, Local 30 initial MAP target has been heard locally at $530pt cfr according to Indagro Uruguay 25 volume/disport. The MAP-to-TSP premium has typically moved in Total sales 447 a range $80-100pt in recent seasons. Est. Output May, June 55 Argentina: Several importers are in the market for an estimated 40- July, Aug 100 50,000t DAP/MAP for April shipment. Russian offers are not yet in play Sep, Oct 110 (as Phosagro makes traders wait). There is no Saudi spot material Nov, Dec 110 shown for this window. Top bids on Moroccan and US DAP are now heard at $520 pt cfr April/May arrivals. Jan, Feb DAP & MAP runs 75 Total 450 Last done: Achieved prices for DAP and MAP are still flat at the Stock build/draw (end Feb) +17 now-consolidated level of $515pt cfr for trader longs out of Russia March GCT production at Gabes projected and South Africa. Numerous firm bids from buyers coming late to at 50-60,000t DAP market in the range $510-515pt cfr are making little headway.
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 3
North Africa, South Europe: Sensing higher DAP demand from traders for late March/April shipments, and pressure from long-term Russia Balance (Kt DAP, MAP) Indian importers to allocate phosacid volumes from April, GCT is Phosagro sales Feb delaying its release of target prices on fresh prompt and forward DAP. Trammo USA (D/MAP)c 50 Brazil (MAP) 30
OCP is at $540pt fob, with a European programme now exceeding 90,000t Gavilon USA (D/MAP)c 35 DAP/MAP, and likely to carry into April. Helm NW Europe (DAP) 30 Phosagro Local Russia (MAP) 25 Russia: Trader longs for March shipment offers have since risen to Eurochem sales (all MAP Feb) $525pt cfr Argentina, Brazil balance MAP positions. Neither Phosagro, Ameropa S America 15 Eurochem nor Uralchem are heard ready offer firm against trader Germany 10 enquiries for April. All remain out to end March, and currently working Africa, SE Asia 10 through April allocations to East and West Europe, Brazil, other South Russia 45
America and Thailand between regular trader buyers. East Europe 25
Uralchem sales South Africa: A May shipment cargo is still heard available from Uralchem Est local, East Eur 40 Foskor, but with pricing as yet pending. The last offers for April positions Total sales 315 were said in the high $520s pt cfr Brazil/Argentina Estimated Output
Phosagro+ Ammophos DAP 70 Saudi Arabia: Spot offers are indicative in the mid $490s pt fob RAK. No Ammophos MAP 55 new business is heard from either Sabic or Ma’aden. Both await Balakovo MAP 40 developments in Kenya, Ethiopia, and the finalization of subsidy Balakovo DAP 0 economics in India. Eurochem Belorechnsk MAP 40 Fosforit MAP 40 Ethiopia: There has been no movement on the recent government Uralchem Voskressensk 40 contract approach for 300,000t more of Saudi DAP to ship in Q2. Dec/Jan export carry inc. TA/US* 45 Total avails 330 Kenya: Suppliers are still waiting for award news on the last MoA Stock build/draw (end Feb) +15 tender for 25,000t DAP (plus MAP & NPKs). This was competitively offered by MidGulf ex Saudi Arabia at $573pt cfrlo Mombasa, reflecting +Phosagro approx 55/45 granulation split: 16 grades of NP, NPKs vs. DAP/MAP near $490pt fob Saudi.
US DAP Tampa, NOLA vs Corn, Soybeans Tampa, NOLA converge (a); Beans firm; Corn off; USDA figs tomorrow Lithuania Balance (DAP) Kt Mid-term trend sees phosphates still lagging crop values (b.) Sales Dec Dec 850 2.000 Eurochem USA (combo MAP) 15 Ameropa Benelux, Germany 31 800 France 4 1.800
Eurochem Poland, Baltic local 5 750 SE Asia (container) 3
1.600 Sales Jan, Feb Jan 700 Ameropa France 15 Benelux, Germany 38
650 1.400 UK, Ireland 10
b. Eurochem East Europe 20 600 cents/bu Soybeans SE Asia (container) 5 1.200 Total 146 550 Est. Output
DAP $/onnet & CBOT Corn cents/bu Corn CBOT & $/onnet DAP 1.000 Nov/Dec carry 0 500 Dec, Jan 150 a. 800 Feb 50 450 Total avails 150 Stock build/draw (end Feb) +4 400 600
Soybeans DAP fob Tampa DAP fob NOLA (metric equiv) Corn
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 4
India: Speculative price tests from the private sector are still heard in play conditional on various subsidy scenarios from April. The very latest expectations are for the DAP subsidy from Delhi late this week are an Fertinal Balance (DAP/MAP) Kt interestingly higher-than-expected Rs12,350pt (vs Rs11,850pt heard early in Sales – Oct, Nov ‘12 the week) and the local retail price at Rs23,500pt ($422pt, against earlier Fertinal Ecuador, Peru 15 calls at Rs23,000pt. Chile 20
Local, C America 20 It is thought DoF planners are initially going to be cautious on the retail price issue, keen to see initial 2013-14 demand build gradually until import Koch USA 30 volumes are eventually settled. If India is able to achieve contract imports Fertinal Australia 40 as has been expected at $500-505pt cfr, at least on April-June shipments of Sales – Dec & Q1 2013 DAP, there will be scope for additional retail price cuts. Ameropa US, NOLA (M) 20 Fertinal Australia (M) 260 Local, C America 55 Pakistan: Local prices remain depressed with a third straight local price South America 30 cut (this time Rs60pt/50kg bag, or $12pt) posted by Fauji for a new local level at Rs3,630/50 kg. As per our earlier reports, the local S&D guideline Total 490 estimates show little change in Pakistan’s closing inventory projection at a Est. Output modest 230,000t by end March. Q4 235
Q1 210
China domestic: DAP prices in the local market are settling out at a April 80 compromise RMB3,200-3,250pt fot bagged ex warehouse ($515pt), a shade Total 525 below producer targets for early season business. With higher internal Stock build/draw (end Apr) +35 freight tariffs, netting around RMB3,050-3,100pt fot ex works ($490pt).
MAP prices are also heard softening, at RMB2,300-2,500pt fot bagged ex works according to the various NPK blend-stock grades (11-44 upwards). Speciality NPs, NPKs NPKs are seeing better movement in the early days of the pre-spring NP+S: US phosphates price market but with little change in prices. strength in the last few weeks is lifting NP12-40-0 (+10S, 1Zn) back Australia: The latest Trammo US export sale of 30,000t MissPhos DAP into the $510-515pst fot/fob C reflects thin avails of DAFF-compliant DAP or MAP from other origins Florida, NOLA price range from the (Florida or Mexico). Ma’aden is still pending its DAFF certification. early February dip.
Vietnam: Traders are working Vietnam import tests with scope for US MKP (0-54-32): China factory DAP in trader length en route from Tampa/Thailand, against fresh prices are flat at the early 2013 producer tonnage for late March shipment ex Saudi and Philippines. headline levels at RMB7,700 ($1,225) pt fot bagged ex works. The PhosRock: Mosaic takes OCP rock into Tampa; N Africa soft intended price increase for the USA rock import: Mosaic is taking an end February import panamax coming season appears not to have of Moroccan rock (Khouribga material ex Casablanca) into Tampa this been achieved as yet. week-end. This is part of regular Moroccan shipments to Mosaic, mostly for Uncle Sam, Louisiana as with the last 2 years. Technical MAP (12-61-0): Prices are firming gradually in West Mosaic established a logistical chain for incoming rock to its Florida Europe. Chinese and Russian operations as a contingency during the 2010-11 South Fort Meade mine product is understood quoted in a litigation, and is thought to be maintaining this. narrower range $1,175-1,120pt
bagged in containers cfr West North Africa: Reports are circulating that final Q1 volumes of Algerian Europe. export rock have sold near $120pt fob basis 30% P2O5. This confirms a gradual decline from the $130s pt fob in January. This now looks to be a Urea Phosphate (17-44-0): competitive rock source for South American SSP producers. There are European imports from China are reports of knock-on impacts in March rock export executions across heard marginally firmer, assessed at North Africa (Morocco, Tunisia, Egypt) with importer reports of a $940-950 cfr West Europe bagged general 5-7% decline in the final Q1 shipments prices. This follows the containerized. earlier Jan-Feb down move in downstream product prices.
The market awaits N African exporters’ posture on Q2 phosphate rock.
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 5
Company News: OCP launches Brazil domestic channel
OCP Fertilizantes Ltda Morocco, Brazil: OCP is launching a new business model in Brazil, PUBLISHER establishing the Moroccan company’s first direct presence in the internal market, with an inland logistics channel. Profercy Phosphates SC [email protected] Our view: This looks similar to the approach of several other major All rights reserved. No part of this phosphates & compounds producers worldwide, such as Mosaic (in publication may be reproduced. stored in Brazil, India & China), Acron for NPKs in China, Yara across Europe a retrieval system or transmitted in any and Africa, and EuroChem in North America. form or by any means, without the Copyright owner’s prior written permission.
One stand-out point that OCP underlines in its official not (see below) is OCP Fertilizantes Ltda’s ability to respond to just-in-time local Copyright 2013 buying, now the norm in Brazil. Profercy Phosphates SC
The full Press Release text is as below; continuing to page 6:
The OCP Group is launching a new business model in Brazil, designed to Brazil SSP: New import business is further enhance the reliability and affordability of phosphate fertilizer to heard for 20,000t Spanish SSP from farmers across Brazil. OCP is building on its successful marketing presence Asturiana to Fitco at $190pt fob Aviles in Brazil, through “OCP do Brasil”, by launching “OCP Fertilizantes Ltda”, for early May shipment, committing a first-of-its-kind single nutrient distribution channel in Brazil. Spanish export avails for the next 2 months. Through “OCP Fertilizantes,” OCP products will be sold locally and distributed from several logistical platforms and storage centers in ports This fob level is up from the last and agriculture heartland in Brazil. round of comparative Spanish and Egyptian SSP positions through the OCP Fertilizantes will commercialize OCP's phosphates products low/mid $180s pt fob both origins. including its new Performance fertilizer Products and animal feed These supported the last round of products. OCP's existing local entity “OCP do Brasil” will continue its delivered business at $210-215pt cfr efforts to enhance knowledge and engagement with the Brazilian market Brazil. As the European campaign through market intelligence, agronomic research and public affairs and builds, there is no competitive offer public relations activities. detected for Italian SSP exports as yet.
OCP Fertilizantes Ltda is intended to help distributors across Brazil address logistical constraints that have previously limited the market’s capacity to provide adequate supplies at times of peak demand. OCP Fertilizantes Ltda will thus help OCP’s customers secure a reliable source of supply for phosphate fertilizers in a market where supply sources have been more unpredictable.
“We are very excited about OCP Fertilizantes Ltda since it will allow us to be closer to our customers”, said Mhamed Ibnabdeljalil, OCP's Executive Vice President for Sales, Marketing and Raw Materials Procurement. “The single nutrient distribution model is new in Brazil and is designed to provide a reliable and flexible source of phosphate products for a just-in-time procurement by our customers and partners.
This distribution mechanism, along with innovative contractual tools, should help grow the market by encouraging more participation among distributors who have previously been reluctant to enter the market.”
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 6
DAP $ BULK 7 Mar 28 Feb Speciality NPK, NP+S Mar Feb Tampa. US Gulf fob 495-510 484-486 MKP fob China 1225-1230 1225-1230 KSA fob 485-490 485-490 MKP fot ex wks China RMB 7700 7700 Baltic, Black Sea fob 480-530 480-510 MKP cfr West Europe 1390-1400 1390-1400 Morocco fob 500-540 500-540 MKP cfr Brazil 1375-1390 1375-1390 India netbacks1 Tampa fob 530-536 530-536 Tech MAP 12-61-0 cfr EU 1110-1115 1110-1125 (2012-13 contr) Morocco fob 545-546 545-546 UP 17-44 cfr West Europe 945-950 935-950 KSA fob 560-565 560-565 12-40-0 10S 1Zn fot Florida 510-515 505-510 Tunisia fob 520-530 500-530 MKP 0-54-32; UP = Urea Phosphate North Africa fob 500-540 500-540 China fob (expt tax 80% 1/1-14/5 2) n.m. n.m. EU NPK, NP (inland €) 7 Mar 28 Feb Mexico fob 490-495 490-495 15-15-15 cif bulk Benelux 360-375 360-375 Jordan fob 493-498 493-498 17-17-17 cif bulk France 447-452 447-452 Brazil, Argentina cfr 520-530 508-512 0-25-25 cif France 395-400 395-400 Pakistan cfr 525-530 520-525 8-24-24 del bgd Italy 430-440 430-440 Benelux, N France fob/fot 556-560 555-560 20-10-10 del bgd Italy 380-390 380-390 NOLA fob barge (st) 465-470 460-465 8-24-8 del bgd Spain 370-380 370-380 Florida fot (st) 470 470 20-10-10 del bgd UK £ 310-312 310-312 China fot bgd ex wks ($ equ.) 505-510 505-510 1Old 2012-13 contracts at $580pt cfr India 22013 China tax policy PHOSPHATE ROCK $ P2O5 Q1 ‘13 Morocco fob 31-33% 160-170 MAP $ BULK 7 Mar 28 Feb China fot 29-31% 90-95 Baltic, Black Sea fob 480-510 480-510 Syria fob 29-30% 110-115 Tampa fob 495-500 485-490 Peru fob 30% 115-120 Morocco fob 500-540 500-540 Algeria fob 29-30% 120-125 Brazil cfr 515-520 512-515 Tunisia fob 27-28% 105-110 Brazil fot ex-store inland 120d 710-720 720-730 Egypt fob 30-31% 110-115 Benelux. N France fob/fot 570-575 570-575 Jordan fob 34-36% 160-180 TSP $ BULK 7 Mar 28 Feb Togo fob 35-36% 140-150 Morocco fob 395-415 395-415 Russia fob 38-39% 275-280 Tunisia fob 395-415 395-415 Russia domestic del ($ equ.) 38-39% 165-170 Mexico fob 400-405 400-405 India cfr 29-30% 140-150 Lebanon fob 400-405 400-405 India cfr 33-34% 180-185 Brazil cfr 410-420 410-420 Benelux. N France € fob/fot 350-365 350-365 PHOSACID MGA $pt P2O5 Q1 ‘13 Q4 ‘12 Morocco fob 710-900 830-1100 SSP $ BULK 7 Mar 28 Feb India cfr 30d 770 855 Egypt fob 185-190 185-190 West Europe cfr 980-1100 1025-1145 Spain fob ($ equiv) 188-192 180-185 Brazil cfr 980-1050 1000-1100 Italy € fot bgd ex store 225-230 225-230 Brazil fot ex store inland 360-365 360-365 INPUTS (+/- $pt of DAP) Mar (Feb) +/- Ammonia cfr Tampa 625 (655) -6 NPK. NP $ BULK 7 Mar 28 Feb Ammonia cfr Morocco 565 (575) -2 16-16-16 fob FSU 400-405 400-405 Ammonia del wks China 490 (495) -1 16-16-16 fob FSU China netbk. 390-395 390-395 Sulphur plt cfr Tampa Q1/Q4 150 (160) -4 10-26-26 fob FSU 430-450 430-450 Sulphur cfr N Africa 1H ‘13/2H 150 (190) -16 20-20-0 fob East Europe 310-315 310-315 Sulphur ex-warehouse China 200 (192) -3
10-26-26 cfr India 538-542 538-542
16-16-16 cfr China 450-460 450-460 International Prices $ per tonne bulk 16-16-16 cfr SE Asia 460-470 460-470 Profercy Phosphates SC pricing represents last known spot or 16-20-0 cfr SE Asia 330-340 330-340 contract sales. Absent new trades, competitive indications 0-30-10 fot ex store Brazil 490-510 490-510 will apply; i.e. top bid in rising market or low offer in a 15-15-15 fot ex wks China 385-395 387-397 falling market. Netbacks on contract sales, formula or (SOP) otherwise, may feature. International quotes are for 4kt lots & 15-15-15 fot ex wks China 422-425 422-425 above, rounded up to nearest US$. Italics = no recent 25-13-7 fot ex wks N China 360-365 360-365 business; n.m. = no market 10-10-20 fot ex wks S China 355-365 355-365
7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 7 the PROFERCY PHOSPHATES
Forecast6 March 2013
Last Quarter Forecast (12 December): Current bear-market gravity will continue to undermine prices for all phosphate fertilizers …. For DAP, the near-term downside could stretch to $25-30pt at most export points…to see prices down into the $470s pt fob Tampa/US Gulf and Russia. We expect no significant output cutbacks from any key producers. January/February rebound seen; Q1 pick-up to gather pace.
Market outcome & Current position: Slow-motion rebound so far; Exporters holding back The market eventually bottomed out a shade under our December predictions, but demand since then has been enough only for a marginal lift in March load prices. We think the recovery is about to steepen as Northern Hemisphere buyers sense 11th-hour replacement pressure. North America, China and North and East Europe are still in heavy winter conditions. Moisture availability is improving, and there is faith that under-used logistics chains will respond under last-minute through-put pressure.
March & Q2 2013 Outlook: DAP, MAP seen firm through Q2; Upside ranging $40-50pt A busy pre-season for the 3 heavy-weight North Hemisphere markets: North America, China & Europe) is now likely, coinciding with early contract and spot buying in India, Latin America, Pakistan, Bangladesh, and Ethiopia. With significant length apparent only in the Middle East, we see scope for $40-50pt spot increases at the main load points through into Q2. The Top 5 S&D issues for Q2 are:
● India will need DAP imports by June arrival latest. It likely recognises price climate is softer today than in April/May ● South America, other Asia buyers now working to pre-empt India ● Morocco nears completion on new Jorf unit; more DAP, MAP; less MGA ● China export offers on dark colour 64-unit DAP may be “rationed” in multi-tier price climate ● US domestic balance is still a close call
net falling local DAP/MAP output, higher imports, the NP+S “offset” and Canada imports yet to show
DAP/MAP trade trend: 55-60% of world imports in Q2-Q3 (a); 60%+ in Apr-Sept '13? Q4 '12/Q1 '13 deferral (b) implies busy mid 2013 (c); Most of this is priced April-July 8.000 a.
7.000
6.000 c. 5.000
4.000 b. 3.000
2.000 000t DAP (green) MAP & (green) DAP (grey) 000t
1.000
0
MAP DAP
[email protected] Page 1
World DAP Trade Balance: Two chart views; Same underlying S&D data
DAP Supply, Demand & Trade Balance Projection 2012-13
Surplus from late 2012 (a.) moves to deficit in late Q1 and through Q2 (b); Assuming India keeps subsidy cut priority over N:P ratio, and that Saudi & China exports rise, Q4 trade surplus likely big 3200 c. a. 2800 b.
2400
2000
1600 '000t DAP '000t 1200
800
400
0
-400 Sept Oct Nov Dec Jan '13 Feb Mar April May June July Aug Sept Oct Nov
Supply Demand Trade balance month/month Trade balance cumulative
*Figures include all US prodn & local demand; All other supply = export avails; All other demand = imports, seagoing & cross-border
DAP Trade Balance & Price Forecast
Return of earlier deferred import demand to create Q2 '13 deficit & price recovery; Emerging Q3 surplus (a)
assumes 5.3mt India imports; 2H 2013 of course still exposed to any switch in India P2O5 priorities 800 700
700
600 600 a.
500
400
500
300
200 400
100 $ pt fob fob Tampa pt $ 0
'000t metric surplus/deficit metric '000t 300 -100
-200
-300 200
-400
-500 100
Trade Balance surplus/deficit Spot DAP fob Tampa Earlier Profercy DAP Forecasts (2010-13) DAP price (Current Forecast)
*Same data as p1 chart; Incl all US prodn & local demand; All other supply = export avails; All other demand =imports, vessel & cross-border [email protected] Page 2
Trade tends chart: Already-compressed world DAP/MAP trade gets looks more intense The existing global DAP/MAP trade trend for heavy deferral in Q4-Q1 appears to be intensifying, with a poor Q4 2012 spilling into a similarly a risk-averse Q1. This suggests demand “compression” in the mid- year months of 2013 may be even more intense than in the last few years. This is related both to macro- related risk-aversion (minimising inventory turn-over & conservative supply chain management) and to credit squeezes. On the supply side meantime, apart from Saudi Arabia and Jordan, most producers will end March with comfortable inventory levels.
In addition, this buyer behaviour is partly a response to the Chinese export tax window system, which encourages import deferral until the window is open (15 May – 15 October 2013). Buyers typically assume that Chinese on-spec DAP/MAP will undermine price goals of the established majors, and that sufficient volumes of Chinese NPs, MAP equivalent and SSP will provide other P2O5 to those buyers in blend-stock markets (esp Brazil). For this reason, spot DAP prices in recent years have followed their “counter-intuitive” trend of falling during Chinese high-tax periods and falling in the low tax.
S&D Briefs 2013: Supply changes in Saudi, Morocco; Demand deferral/destruction tests
India: By buying no imports deep into Q2 or later, as is often projected by Indian buyers, we estimate a local DAP supply crunch would bite in late July/early August. In this no-imports scenario, we project DAP inventories would fall to about 1m tonnes, just under one month’s typical demand in Q3.
Latest DAP import purchase date: We project the latest DAP import price settlement date on prospective US imports is in early April, to complete loads by 15 May, in turn to meet latest arrival dates in mid June. This situation is illustrated in the chart (below). For Saudi Arabia, the latest date, basis arrival security argument, would be one month later (ie in May). Continues p4
India local DAP S&D: Stocks falling from peak; No new imports suggests crunch July/Aug With no further imports, and asuming local output & sales flat with 2012; DAP stocks would fall to 1months' demand at end July/early August (a); To avert this, imports needed landing mid June latest
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O ₂ Local DAP price 2400
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a. '000t DAP (red, green), all ferts '000t P ferts '000t all green), (red, DAP '000t
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DAP stocks DAP Imports Local DAP Output DAP Sales Local DAP price Sales total P₂O₅
Profercy Phosphates &FAI: Assumes ave. 23 units P2O5 in NPK sales in calculation of total P2O5 sales [email protected] Page 3
Upside exposure, as in 2012: but we think Indian buyers are concerned not to risk a late purchase, and exposure to higher prices buying at the same time as South America and the North American spot peak, as last year. From China, exporters will discuss allocations but not prices until the local campaign is over, by mid April. Deferring purchases in the hope of Chinese export price “opportunities” is historically not an India tactic (more in China section below).
China price floor: We believe there is acceptance in India that cash costs in China’s large non- integrated sector will floor DAP values near $470pt fob China, reflecting $495-500pt cfr India.
Saudi Arabia: Ma’aden is seen lifting output to capacity from Q2, towards 200,000tpm of DAP. Ethiopia demand could provide key bridge Ma’aden through comfortably until the likely big-volume movements to India. Colouration is key question, potentially opening more scope in South & Southeast Asian markets (Pakistan, Bangladesh, Thailand & Vietnam).
China: One extra low-tax export month in 2013 could theoretically give scope for an additional 1-1.5m tonnes of DAP/MAP exports. It is clear many other markets will continue defer until the China window opens. This is the main reason for price increases in the early months of the low tax window.
Export timing: Chinese exporters are unlikely to address exports until the inventory situation after the local season is clear (likely known by early April). Non-integrated sector cash cost are still assessed around $470pt fob China export tax paid. Like the $530s pt fob last year, this is likely to be a firm floor; suggesting India can hope for DAP at no lower than $495pt cfr.
Spot DAP prices & China DAP Export Taxation
Once again, spot DAP prices fall at start of Chinese high tax period (a, b, c); Just one high-tax period in last 4 years started with higher DAP prices (1), due to big Indian demand; Tax bands 80% & 5% in 2013. Big, unexpected increase in India interest (unlikely) seen needed break these pricing trends 120 700
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% Export tax Export % $ pt fob Tampa fob pt $ d. 450
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Export tax (from mid 2011 flexi-tax) Export tax (top rate falls to 80% 2013) DAP fob Tampa
[email protected] Page 4
North America: US DAP/MAP production is down 6% year on year (as NP+S output rises), with about 450,000t less DAP/MAP on the US industry output slate in calendar 1H 2013. Although this is so far offset by falling exports, we think off-shore demand for US DAP/MAP is about to accelerate from Canada (too late for other origins to reach this market in time) and across Latin America.
US imports, calendar 1H balance: US imports total 535,000t MAP booked from all sources July 2012 to March 2013, and 215,000t DAP. Of this 750,000t total, some 160,000t arrived by the end of October from Morocco, Mexico & Lithuania, featuring in fall usage. So, net a significant MES offset (see below) the question is, “Will the 590,000t import balance be too much for the US to digest in Spring?”
MES offset: It is hard to quantify the US offset by way of higher MES production, however we estimate about 450,000t of new NPs + S & Z will be in the local US market 1H 2013 vs 1H 2012 as a Mosaic continues to ramp up to capacity. Assuming about of 150,000t of these new MES are exported, the remaining 300,000t MES would give an offset of about 230,000t MAP equivalent.
US exports to Canada: Also key in the North American S&D mix are deferred Canadian imports (mainly MAP). US cross border and vessel shipments to Canada so far this season (July ’12-Jan ’13) are about 18% down year on year, with just one lot each ex Morocco & Russia providing little cushion. So, we estimate there is scope for March-June US exports to Canada to surpass 200,000t MAP/DAP, in a window during which other suppliers are already too far away hit the Spring market in time.
US bottom line: Netting out the above points, and independently of export pick-up to other markets, the US looks in near balance for 1H 2013; equation below DAP/MAP combined.
Net +590,000t imports – 450,000t output loss = +140,000t Less 1H exports to Canada = -220,000t Add MAP equiv of new MES avails = +230,000t Provision on NOLA MAP re-export risk = -25,000t (from earlier import barges taken low end $455pst fob NOLA ------US bottom line = +125,000t DAP/MAP in surplus *
*Close call: This estimated surplus is about 4% of regular US local supply Jan-June (roughly 3.0m tonnes local output & imports). With US industry inventories still under control close to 1 month’s output, plus all-time high 2013 corn plant calls, and all crop futures still strong, this puts the US closer to balanced rather than long.
US DAP/MAP exporting "too much" mid year 2010-12? Stocks dip opens way for imports
Where blue/red bars break above grey mountain area (a. b. c), US DAP/MAP exporters had to dig into stocks to meet export commitments; This was common in PhosChem's 3-year contracts (expiring now) 1400 a. b. 1200 c. Black line: producer stocks & outlook DAP/MAP combined 1000
800 '000t DAP DAP '000t& MAP 600
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MAP production light grey area) DAP production dark grey area) Export MAP Export DAP Domestic MAP Domestic DAP [email protected] Page 5
South America: The main motors of South American import demand, Brazil and Argentina are going into the main import season April – October with moderate inventory, strong local prices and firm farm economics. The key points of our view on Brazil and Argentina is in line with the last Forecast.
Brazil: The 2012 Vale increase in TSP/MAP production at Uberaba III is now established with total domestic output up 168,000t P2O5 all products (up 8% vs 2011). However, this is outweighed by an increase of 465,000t P2O5 in local sales (all products), while calendar 2012 imports were up a negligible 10,000t P2O5. The shortfall was made up from inventory depletion during the long period of import deferral in 2H 2012 (see shaded area in chart below). DAP imports are powering forward, to 700,000t in 2012, and probably near 800,000t this year with corn plant seen at an all-time high of 15.5m hectares, up 2% on last year and yields seen up 12% over the 5-year average (USDA). Beans area is seen up by a firm 10% to 27.5m ha.
Argentina: Similar to Brazil, the local Argentine market sold more than it imported (no local concentrated phosphates production, just SSP). This left a moderate carry-over of 125,000t MAP/DAP, a slim 25,000t TSP and 150,000t SSP. Argentina beans area is seen up strongly (as in Brazil), growing 7% to 19.5m ha, and USDA calling soy yields up 19% from last year. Imports of all phosphate fertilizers in Argentina in 2013 could regain the 2011 volumes at 750,000t MAP, 320,000t DAP and 150,000t TSP. Imports in 2012 slumped to 525,000t MAP, 300,000t DAP and 65,000t TSP.
Brazil P₂O₅ S&D: Early 2013 supply fits demand; 2H 12 import deferral (a) depleted stocks
Late 2012 import deferral opened up big gap (a) in the local position; covered from stocks
kt P₂O₅ depletion; Local output boost means production ave. 170kt/m P2O5; vs local Q2 demand 300-400kt/m P2O5 600
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Imports NP/NPK¹ SSP DAP TSP MAP Local prodn (all grades) Local deliveries (all P₂O₅)
1Mainly 14-34+S, but increasingly 12-40; 12-48; 13-33 (all +S), plus Chinese 20-20 & 16-20
Africa: There is good scope for Ethiopia to take more DAP, probably up to 200,000t more (from a 300,000t contract enquiry) to load in Q2. In East Africa, Kenya and Tanzania still have scope to take more DAP pre the Chinese export window opens. Growth West Africa is being partially met by Moroccan DAP but growing volumes of Russian and Spanish NPKs (mainly cotton formulations).
North Africa domestic: The Moroccan domestic market is looking like a 475-500,000t DAP market for 2012-13. This extends the firm 15-20% annual growth rates seen here for a4th year. However Moroccan growth has been offset by a slowdown in Tunisia and Libya (in step with Tunisian production under-performance). [email protected] Page 6
Morocco: OCP is due to commission its first of two new granulations trains (ie not new P2O5) at Jorf during Q2, boosting DAP/MAP, but cutting phosacid commensurately. We see OCP tactics based on an anticipated pick-up in South America for more DAP/MAP; while markets likely to see less OCP phosacid would be India (5-6 importers not aligned in the OCP jv group), plus SE Asia and the EU.
Tunisia: GCT continues to run DAP production below capacity, holding the system at a moderate 50% first to establish this as a sustainable output level. We forecast this will not change toward higher level DAP loads until late 2012, with heavy Q3 phosacid priorities expected to be seen for India.
Russia, East Europe: Calendar Q2 is normally a heavy demand period on MAP across Europe, especially within FSU countries, plus increasingly in cross-border trade to markets such as Belarus and to the EU eastern frontier countries.
Total volumes for April-June in this area are near 180,000t Russian export MAP and up to 150,000t in the local Russian market. This will allow Russian producers a gradual move back to MAP (from NPKs) and to take a more selective approach on long-haul MAP business to South America, or DAP to Asia.
West Europe: We estimate that over half of the 2012-13 season DAP imports have been deferred into the last-minute shipment window March-April/June. If true, there is scope for a strong pick-up among western European importers for about 650,000t DAP (MAP is small for Q2) in this 4 month period.
This is enough to keep a strong draw on Moroccan and Lithuanian exports through June. As Tunisia under performs on DAP production (MGA priorities to India – see above), the role of EU demand on global phosphates markets will be significant in this window.
This scenario thus foresees a firm DAP output slate in Morocco through to end May, which would in turn maintain a cap on Moroccan MAP avails. If this plays out, there will be good scope during Q2 for US MAP exports into Atlantic Coast South America, and Mexican DAP/MAP to Pacific markets.
Other Asia: This is becoming a fragmented market area with the growth of Russian NPKs making strong headway in capturing market share in Thailand, likely displacing DAP interest later in the year. This is not the case in Pakistan, Bangladesh or Vietnam, which continue to focus on waiting until the Chinese export window opens, to secure preferred China origins (18-46 and dark colour).
South Asia: Neither Pakistan nor Bangladesh (together 1.2m tonnes DAP import demand April- November) have done much to pre-empt Indian buying in the Nov-Feb international bear market, and are now exposed to a demand concentration competing vs India and other regions in the West. Both of these markets have moderate carry-overs. Like in many markets globally Pakistan off-take was stymied during the risk averse late 2012 season, despite sporadic local price competition between local produced and imported DAP.
South East Asia: Vietnam domestic production is solid, and DAP imports are projected sub 400,000t in 2013. Thailand, as above, in Q1 has taken some 110,000t Russian NKPs & 125,000t DAP.
Producer margins, tactics: Cash margins in the integrated phosphates producer sector are still very healthy. North African and Florida returns today still ranging $165-175pt on DAP, and more in Saudi Arabia and Russia. In this climate, it was always unlikely even during the DAP price downturn of late 2012 that any substantial cutbacks would take place, perhaps not even turnaround rescheduling.
[email protected] Page 7
December DAP $pt fob Tampa: Cash Cost & Arbitrage Thresholds +/- $450pt fob Tampa Forecast position a) Mosaic US/China arbitrage b) China 100% non-integr. cash cost equiv Tampa c) Mosaic Louisiana cash costs basis 100% rock imports, spot sulphur but captive ammonia 700
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Current DAP $pt fob Tampa: Cash Cost & Arbitrage Thresholds +/- $435-460pt fob Tampa
Forecast a) Mosaic US netback on exports to China system b) China 100% non-integr. cash cost equiv Tampa position c) Mosaic Louisiana cash costs basis 100% rock imports, spot sulphur but captive NH3 700
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Profercy Phosphates & Swap settlements: a. $460spt fob Tampa for US exports into local China DAP market b. Tampa equiv ($440pt fob) on Chinese 100% non-integrated DAP sector costs estimated at $470pt fob tax paid, in turn implying lowest possible $495pt cfr India; c. Mosaic Louisiana cost basis imported rock, market sulphur, & captive NH3
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PUBLISHER
Tom Jago Profercy Phosphates SC [email protected]
Tel: +34 952 833 906 +34 951 40 40 73 Cell: +34 665 832 954
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the Copyright owner’s prior written permission.
Copyright 2013 - Profercy Phosphates SC
[email protected] Page 9 .
Profercy hosphates &NPKs P
8 March 2013
Phosphates firm: Brazil MAP in $530s pt cfr; $550 cfr next PUBLISHER Morocco, Brazil: Fresh sales for a relatively limited volume of 25- 30,000t Moroccan MAP have emerged settled in the low $530s pt cfr Profercy Phosphates SC Brazil, for end March shipment. There is a busy programme pending at www.profercy.com
Jorf for the rest of this month as heavy weather continues to disrupt Copyright 2013 current dispatches. Editor: Tom Jago
New MAP price target: Rather than $530pt cfr being the target as Tel: +34 952 83 39 06 previously expected into April, OCP has since revised this upwards +34 951 40 40 73 Cell: +34 665 832 954 to $550pt cfr, and for a lower-than-expected volume near 130- 140,000t MAP and 10-20,0000t DAP. There is a claim of some sales achieved at this new top level, pending verification. Sri Lanka TSP: Dragon Asia’s So, to summarise the various price tiers and load windows that OCP has competitive offers in this week’s laid out for March/April, the following picture is emerging (dates & 12,000t TSP tender at $380/$385pt volumes approximate): cfr (basis respective 180-day and 270-day terms) were down $6-8pt 1-20 March loads, $510-515 cfr: Business for about 150,000t on the previous tender in late MAP/DAP to load through late March has been done in the last two January. At that time, competitive weeks at $510-515pt cfr Brazil. TSP has been settled in parallel, for levels were $386 / $393.40pt cfr about 60,000t at $415-420pt cfr. same terms from Golden Barley – all for Chinese export product. End March loads, low $530s pt cfr: A further 30,000t MAP has been sold between a small number of buyers in the low $530s pt cfr.
1-25 April loads, $550pt cfr: After achieving business into the $530spt cfr, OCP has since raised its price for fresh business for most of April to $550pt cfr.
End April loads: OCP has indicated to those remaining under offer at $550pt cfr, that any surplus of MAP ultimately available to load in the last days of April will be in the $550s pt cfr.
Jorf Lasfar delays: The reason for these discreet shipment windows is ongoing heavy weather at Jorf from a storm system bringing heavy rains across North Africa, southern Spain & Portugal this week. This is creating delays that are having a knock-on impact through March with a strong OCP program to Europe, Asia, North America, Africa as well as Brazil.
Northwest Europe: DAP is variously reported closing the week in Europe at $555-557pt fca Gent/Antwerp for March but with seller determination building for $560-562pt fot/fca. A Russian import MAP cargo is identified at $564pt cfr, against supplier claims of $570-572pt cfr.
Profercy Phosphates & NPKs [email protected] www.profercy.com © Copyright 2013 Page 1