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Nitrogen and
Phosphate Pricing November 28th, 2008 |
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U.S. Super Phosphoric
Acid Pricing Week ending November 21st, 2008... $17/ unit. Week ending November 28th, 2008... $11.50 to $12.00 per unit. Suppliers cut
offer prices an inventory became a problem. Two producers have cut their
prices in the Midwest and Northern plains. Sulphuric Acid Sulphur prices have fallen from $880 per ton to $10 per ton in main producing regions. A very weak market.
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US Census
Bureau What Do You Know and When Did You Know It?
NH3. Current News. Production of NH3 is accomplished around the US with either natural gas or coal. No nuclear powered NH3 plants are yet in production. NH3 is also imported from other countries and primarily from the southern Caribbean to meet the 21 million ton annual need. Long Term Outlook. Lowest Cost of Production NH3 will come from very small and very large nuclear powered ammonia plants at $160 to $180 per ton NH3 cost…… with no CO2 emission in the process. NH3 will move in time proven safe pipelines in the future. Transports can be used up to a 250 mile radius depending on the area. Railroads may also be used but may not be competitive with small pipelines. In year 2006….Ammonia Plants in the United States ran at 76% of design capacity. This does not include terminated plants. Short tons recorded by the federal government. In year 2006 10,981,000 tons NH3 were produced. In year 2007 11,648,000 tons NH3 were produced….2007 Production up 106% over 2006 1 full year….The First Quarter of 2006 to the First Quarter of 2007…..11,579,000 tons were produced. 1 full year…..The First Quarter of 2007 to the First Quarter of 2008…..11,519,000 tons were produced. Production of NH3 is not increasing….in the last two years production has decreased about ½%. World Wide Production of NH3…..is increasing at about 2% per year. Corn Acres and Wheat acres increased and legume acres declined in this time period 2006 to 2008. The price per US short ton NH3 across the Great Plains has doubled between 2006 to 2008 from $350 per ton average to $700 per ton average. Typical pricing of NH3 1999-2000, $180 per ton. Typical pricing 1984-1985m $90 per ton. The Big N…..NH3 directly applied is the largest share of the Nitrogen Market in the US….at 54% of the entire N applied to crops. NH3 is the….Winner of two Nobel prizes…. And has the technical hedge for North American producers saving up to $50 per acre as compared to Europe or South America… NH3 is the best nitrogen choice for producing commodity crops and providing a reasonable cost of production for energy and food. NH3 is the beginning of ammoniated commercial fertilizers as N, P, and S sources. S sources tend to have lower price increases such as ATS. ATS manufacturers need producers to consume ATS to assure proper petroleum refining operations. Very few manufacturers of ATS means price gouging is possible….but not practiced…low export demand. Prices Quoted Fall 2008 Production Application, Peace River Alberta….$1,260 per US Short Ton NH3 or 77 cent N. This is good case for more competition in the industry. NH3 manufacturing is a key core business in the hydrogen economy. Three hydrogen atoms vs. H2 move very effectively in safe pipelines using NH3. Phosphoric Acid Production of Phosphoric Acid occurs primarily in North Carolina, Florida, Wyoming and Idaho. Phosphoric Acid is neither imported nor exported. Therefore the falling dollar should have no effect on the price….strictly demand domestically should determine the price. Phosphoric rock is no longer imported. Phosphoric Acid is the beginning of all ammoniated P based fertilizer. In year 2006…..11,797,000 tons were produced. In year 2007…..11,977,000 tons were produced. 1 full year….First quarter of 2006 to first quarter of 2007……11,904,000 tons were produced. 1 full year….First quarter of 2007 to first quarter of 2008……11,771,000 tons were produced. In last 12 months ending March 30, 08 production of phosphoric acid has decreased 1.1%. The demand for phosphate based fertilizers is up significantly and with only three to four major producers…Agrium, PCS, Simplot and very little phosphate rock imported due to the falling dollar it is apparent that prices can be increased when supply is reduced. Phosphate pricing has increased from 1980’s pricing of 8 cents per pound of P2O5 to a Fall 2008 price of $1.79 per pound of P205 in Northern Alberta…..The Phosphate Market is manipulated by three producers. The supply of phosphoric acid has been reduced…….and the demand has increased…..new mine sites are being explored….and the economic model says that more money can be made by the producer of phosphoric acid if the supply is reduced….A good case for more competition in the business. Potash. Close to a Monopoly….Potash Corp sets the price for K. More competition….maybe a new underground mine operation in North Dakota is required. Change Required. A good understanding of the issues means……..The fertilizer industry will change. Nuclear powered NH3 plants will be owned by Cooperatives and Power Administrations as carbon emissions are limited. A better source of NH3 is apparent. NH3 will be sold to the fertilizer industry by the Power Administrations. Pipe Lines will move NH3 for the hydrogen economy. Use of mined Phosphate will be reduced since animal sources are now very economical….Phosphate sources are limited…new sources will come on line. Potash supply and pricing can be greatly improved with more competition. No-till farming techniques, Rotational Band Loading of geometrical placed nutrients (Targeted Bands) and Precision Process Management systems such as Exactrix reduce the need for commercial fertilizers presently.
Anhydrous Ammonia.
1. Anhydrous
Ammonia....is directly or indirectly responsible for 3 Nobel
Prizes. Bosch, Haber, and Borlaug.
2. Nitrogen
delivery to the food supply producer is so significant that
6.6 Billion people want a primordial supply answer three
times a day.
3. True....2/3 of
the planets population is alive today because of low
cost NH3.
4. The most
significant technical advancement in the last 200 years is
NH3.
5. The first or
second most prevalent manufactured molecule is NH3 depending
on weight or volume accounting.
6. A $100 to $200
Billion annual sales industry depending on price and how it
is accounted for.
7. NH3 is more
basic to modern society than any other chemical or technical
achievement. Our society would fail without low cost NH3.
8. NH3
manufactured locally in safe inland areas is critical to
our National Security, development of renewable energy, and
CO2 sequestration of fossil fuel power plants and engines.
9. NH3 moves
safely in pipelines and has an extremely good safety record.
Other means of transport include, DOT Transports, Rail Cars,
Barges and Ships.
10. Only 7% of the
NH3 manufactured in a Haber Bosch plant passes your teeth
and gums.....50% is lost in the environment due to poor
application process and techniques of the past.
11. NH3
when directly applied provides 30 more net dollars per acre
and allows a technical hedge to North American Farmers
competing in a world market.
12. The Big N, NH3
directly applied is 55% of the total nitrogen market and
growing....more acres are applied with NH3 than all other
5 derivatives combined. Urea 23%, Solution N 18%.
13. All commodity
crops prefer ammonic nitrogen (NH4) in initial growth and
elongation.
14. Doubling the
efficiency of applied NH3 with Process Management TAPPS
Exactrix Technology requires less NH3 Haber Bosch plant
capacity, less NH3 storage, less neutralizing lime
application and less CO2 emission, all with Exactrix TAPPS
application.
World Markets
drive US Gulf Fertilizer pricing as of Friday, Dec. 12, 08
US Gulf Barges
NH3....$118 per short ton....7.2 cents per pound N.
US Gulf Barges
Urea....$195 per short ton.....21.2 cents per pound N.
US Gulf Barges
Solution 32....$230 per short ton......35.9 cents per pound
N.
NH3 Pricing
Dec. 10, 08....World Markets in Fertilizer.
Producer
Wholesale Markets.
FOB Black
Sea....$65 per tonne.
Delivered Tampa,
Florida......$125 per tonne.
Barges at New
Orleans......$125 per tonne.
Railcars loaded at
$450 to $500 per ton.
Koch Nitrogen
selling at $350 per short ton at Texas Panhandle Pipe line
for Dealer and Producer Transport pickup.
Three Month Price
Swing...Sept. 10, $931 per tonne....Dec. 10, $125 per tonne......Down
86.6% in 12 weeks....single biggest drop ever observed in
the NH3 business.
Keep in mind that
it takes $65 per tonne to move NH3 from The Black Sea, Yuzhnyy to
Tampa, Fl....so the net back is $60 per tonne to
NH3 producers that provide cfr terms...freight included.
Looking
Ahead......Guaranteed Delivery Annual contracts in
India show some interest at $300 to $325 per tonne in
2009....
This December
period should be lowest point in NH3 pricing....with
several plant shutdowns in the Black Sea, Trinidad Tobago,
US and Canada. Idle backed plants running at 70% include
Borger, Texas. The Kellogg Centrifugal Train Compressors in
the 300 to 1,500 ton per day syngas ammonia plants can not
operate technically and economically below 70% of
rated capacity. This is why NH3 pressure vessel storage is
very important at the crop production site. Do not store
NH3 in the ground....store it above the ground in 250 psi
pressure vessels.
Exactrix
Producers with On-Farm-Storage may want to consider running
their DOT 11,000 gallon transports to pipeline terminals.
Koch Nitrogen seems to have set the price for The January,
February, March, Winter Application period in Texas,
Oklahoma and Kansas at $350 per short ton. January
deliveries are indicated at $310 to $320 per short ton
delivered Hugoton, KS.
Comparison of
Urea and NH3 in the world wholesale market delivered to the
US seaports...Urea Dropping 72.4% in the 12 week period.
NH3 is about
7.3 cents per pound of N....$125 per ton.
Urea is about
21.2 cents per pound of N.....$195 per ton.
Exactrix Owners
Formulating TAPPS with 10-34-0.
SuperPhosphoric
Acid 0-68-0 Market pricing is dropping with inventories
building and phosphate plant shutdowns planned.
DAP World
Market....US Seaports, A drop of 63.4% in three months.
Exactrix TAPPS
Formulation with 12-0-0-26S....with Thio-Sul by TKI...30
cents to 40 cents per pound nutrient.....from Billings,
MT or Coffeeville, KS, Koch Nitrogen at Brandon Low
Temperature ATS product.
It would appear
that the Fertilizer Industry will need to buy back some of
the high priced inventory that the Coops and Retail dealers
have purchased in the summer months. Record profits at all
levels in the fertilizer industry could mean record losses
in 2009. Large retailers with Urea warehouses could be in
a price trap on the Great Plains since NH3 pricing is so
responsive to market conditions and demand.
Final Comment.
2009 Production
Year....Anticipate May June Fertilizer prices to return
to late 2007 average pricing....There will be less
demand for nutrients.
Change in rotation
and Soybeans appear to be the great equalizer.
Great Plains
Dryland Producers with low land cost will idle up to 1/3 of
their acres as credit lines are adjusted to meet risk and
return.
Longer
Term....Within 3 years a significant round of inflation is
anticipated. Scrap dealers are buying up cheap steel,
cooper and aluminum and holding. Sounds like the Indians
are gathering more wood than usual, could be a tough winter.
Exactrix®
Producers will enjoy an additional 12% margin with 166% more
crop available nutrients applied. Exactrix®
owners report that they have a unique technical hedge.
Expanding
fertilizer plant tonnage is not required as
application efficiency and federal and
state legislation reduces the need.
For
sure.....Better NH3 distribution infrastructure is needed.
For sure..... Nuclear NH3 plants should be considered in
a dual purpose PUD financial structure.
Nutrients are way
over-applied when new application technology is
considered. Exactrix®
is a great equalizer for producers defending their bottom
line.
Exactrix® Global
Systems LLC |
