Fertilizer Industry News

Fertilizer Industry News

BELARUS

BPC secures new Chinese and Indian potash supply contracts

The Belarusian Potash Company (BPC) has agreed new annual potash supply contracts with India and China.

The announcement to supply Indian Potash Limited (IPL) with 800,000 tonnes of potash in 2021 was announced on 29th January. This was followed on the 10th February by a similar supply agreement with a consortium of Chinese potash buyers (Sinochem, CNAMPGC, CNOOC) for an undisclosed volume.

Both contracts were agreed at a price of $247/t cfr. This represents an increase of $27/t and $17/t, respectively, on BPC’s annual settlements with China and India last year.

The price level of the BPC-IPL settlement was immediately criticised by rival potash producers and exporters for undercutting the market.

Alexander Terletskiy, the CEO of Uralkali Trading, said: “Considering the positive market conditions demonstrated in the second half of 2020 and early 2021, as well as the continuous growth in demand for potassium chloride in the main consumer markets this year, Uralkali believes that the price of the contract signed with India is not in line with the current market trends, and does not meet the interests of leading producers of potash fertilizers.”

Canpotex, the North American potash export consortium owned by Nutrien and Mosaic, said: “This [is] significantly below current market levels for potash in key offshore markets and a complete disconnect from the strong fundamentals currently being seen for major agricultural commodities in numerous growing regions throughout the world.”

Nutrien was similarly critical. “We understand that the potash agreement with India was settled at the highest government level with limited commercial involvement,” said executive vice president Ken Seitz, the CEO of Nutrien Potash. “This contract price in no way reflects the market-based pricing in the current key offshore potash markets which, like other fertilizers, is being supported by strong global crop fundamentals. Nutrien wholly supports Canpotex’s position to not follow this price level for potential sales into India in 2021.”

Despite the rhetoric, Canadian exporters do not seem unduly worried by the BPC settlements. Canpotex said it was fully committed for potash sales until the end April 2021, even without new contract settlements with its customers in China and India. The consortium also expects further export market demand growth in 2021, building on its record 2020 potash shipments.

WORLD

Jump in fertilizer freight rates

Average freight rates for dry bulk fertilizers have risen to new highs in recent weeks, reports Argus Media, citing a jump in shipping costs from Baltic ports.

A basket of fertilizer freight rates hit an average of $31.83/t in mid-February, their highest level since Argus first began collecting the data in September 2015. The average rate has risen by close to $10/t since the start of December – equivalent to a 45 percent jump.

The commodities and routes covered by Argus include shipments of urea from Algeria to Brazil, MAP from Russia to Brazil, potash from the Red Sea to India, and sulphur from the Black Sea to north Africa.

The factors behind the rise include ice-blocked Russian Baltic ports, surging commodity demand from China, and a rise in grain and soybean shipments from the Americas.

The rise in freight costs from Russia’s Baltic ports in recent months has been particularly marked. The average cost of shipping 25,000-35,000 tonnes of MAP from the Baltic to Brazil, for example, hit $42-44/t in mid-February. This is the highest level on record, according to Argus, exceeding the previous high of $42.50/t set in 2013.

Winter weather conditions in the Baltic worsened towards the end of February, with the Russian ports of Vyborg, Vysotsk and St Petersburg imposing fresh restrictions on vessels from the start of March due to the build-up of sea ice.

From 1st March, only ships with an ice-class rating were permitted to enter St Petersburg port, unless accompanied by an ice-breaking vessel. These restrictions were conditional on the ice thickness reaching 15-30 cm. As of 10th March, an ice thickness of 35-45 cm was still being reported at St Petersburg by the Baltic Sea Ice Service. Similarly, ice 15-30 cm thick was also being reported by the service at Ust-Luga, a major fertilizer export hub.

Icebound Baltic conditions in the third week of February also led EuroChem to purchase a 15,000 tonne spot cargo of ammonia from the UAE at $405/t cfr for March delivery to Antwerp. Thick ice at Sillamae port prevented the company loading ammonia from its Kingisepp plant in Russia, a situation that was expected to last for weeks.

EuroChem generally ships around 40,000 tonnes of ammonia a month from the Russian port of Sillamae to Antwerp. But its current ammonia vessel, Gas Snapper, is not equipped for voyages through ice. Yara’s Coral Ivory, in contrast, as well as other new vessels in Yara’s fleet, are all ice-class ships, and can therefore continue to load from Sillamae, reports Argus.

UNITED STATES

February freeze forces nitrogen plant shutdowns

A number of US nitrogen producers were forced to temporarily cease production in mid-February due to the effects of extremely cold winter weather.

The shutdowns were prompted by a combination of high natural gas demand and low availability, as the US experienced its coldest February in 30 years. This affected nitrogen production across a swathe of the United States, from Texas in the south to Nebraska in north.

The severe weather affected urea plants with a combined production capacity of around five million short tons, according to Argus Media, equivalent to 90,000 st/week, as well as substantial ammonia and urea ammonium nitrate (UAN) production capacity.

The February freeze was caused by an arctic blast moving down from Canada into the US as far south as Texas. Some 73 percent of the continental US was covered by snow as of 16th February. Parts of Texas were colder than Alaska, with Dallas reaching a low of 4°F (-16°C) on 15th February, the coldest temperature in the city since 1989.

US natural gas supplies were severely affected during the freeze as some production facilities were shut off while heating demand simultaneously rocketed. As a consequence, natural gas prices across the country reached record levels as attempts were made to ration demand to compensate for the scaled-back supply. The Katy hub price in Texas, for example, rose to $377/ mmBtu on 16th February.

While the unprecedented polar storm in mid-February caused a wave of petrochemical plant shutdowns across US Gulf Coast states, the impacts on US fertilizer production have proved more difficult to ascertain.

In Louisiana, both CF Industries’ Donaldsonville and Nutrien’s Geismar sites were reported to still be operating in mid-February. Operators in Texas, meanwhile, began shutting down nitrogen production in the state over the weekend 13-14th February, and were expected to remain off line the following week. PCI Nitrogen shuttered its ammonium sulphate plant, for example, while Nutrien’s Borger site also went off line.

On 16th February, gas distributor Enable Gas Transmission told industrial consumers in Oklahoma to cease their offtake to preserve supplies for electricity generation and residential customers. Yet the extent to which this affected production at Koch’s Enid nitrogen plant and the two CF Industries nitrogen plants in the state is not known.

Koch’s Beatrice plant in Nebraska did, however, have its gas offtake cut by 90 percent at one point during the freeze. Some Iowa plants – including OCI Wever, CF Industries Port Neal and Koch Fort Dodge – were also believed to have been taken offline in mid-February, although this has not been verified.

US nitrogen plant closures, even if temporary, will affect the market, predicts Argus: “Though near-term retail fertilizer demand is low because of the widespread cold weather, lost supply because of the shutdowns will likely be felt in a snug market when demand returns.”

US Borax launches two new fertilizer products

US Borax, part of Rio Tinto, has launched two new fertilizer products on the market.

Anhybor® and Zincubor® have both been created for fertilizer manufacturers wishing to produce micronutrient-enriched compound fertilizers.

The products are designed to address the micronutrient deficiencies faced by agricultural producers and meet increasing market demand for boron and zinc.

“A lack of boron in the soil is known to limit the development of a variety of crops, including corn, cotton, oil palm and soy,” commented US Borax. “Anhybor® and Zincubor® were developed to help these crops reach their yield potential by providing the optimal amount of micronutrients.”

Anhybor® is manufactured from borax using a dehydration and fusion process. The product can be used to coat the different fertilizer constituents of NPK blends, with the aid of a binder material, or applied directly to soils. For compound fertilizers, the high boron content of Anhybor® is an advantage according to US Borax, as less product is required to reach the target boron content.

Zincubor® is a two-in-one product that has “a perfect 2:1 zinc-to-boron ratio to meet the exact zinc and boron demands of most crops”, says the company. It helps avoid zinc deficiency symptoms in crops. These include ‘rosetting’ and the characteristic clustering of small leaves at the top of plants. Zincubor® can also be used as a micronutrient coating for compound fertilizers, with the aid of a binder, or applied directly to soils. Valuably, the product can also be used to produce suspension fertilizers.

Cleiton de Sequeira, the global market development manager for agriculture at US Borax, said “With these two new products, US Borax broadens the reach of the solutions it provides producers to achieve the maximum yield potential of their crops by addressing zinc and boron deficiencies. The proven performance, stability, and efficacy of Anhybor® and Zincubor® , combined with the flexibility both products afford distributors and retailers makes them excellent additions to the market.”

CHINA

Stamicarbon licenses second ultra-low energy urea plant

Stamicarbon has signed a licensing and equipment supply deal for a second ultra-low energy urea plant in Jiangxi province.

The agreement is with Henan Xinlianxin Chemicals Group who are currently commissioning the first plant in China designed using Stamicarbon’s Launch Melt™ ultra-low energy design.

The second urea plant for Henan Xinlianxin will have a production capacity of 2,334 t/d and features a pool reactor. It is expected to enter production in 2023. Stamicarbon has agreed to deliver the process design package, together with proprietary high pressure equipment in Safurex® , plus associated services for the urea melt plant and prilling plant.

The Launch Melt™ design – which recycles heat three times – offers unrivalled energy savings, according to Stamicarbon. It also reduces plant operating costs by cutting both steam and cooling water consumption.

This is the third licensing deal between the two companies in five years. The latest agreement follows an initial revamping project signed in 2016, and the award of the design license for the first ultra-low energy urea plant in 2017.

INDIA

Government to sell-off 20% of NFL

The Indian government has decided to sell 20 percent of its stake in National Fertilizers Ltd (NFL), India’s largest public sector fertilizer producer.

India’s Department of Investment and Public Asset Management has invited merchant banks to tender for contracts to manage the sale. Divesting 20 percent of NFL could net the government around $54 million in proceeds.

The sale, if successful, would still leave the state with a controlling 55 percent interest in NFL. Financial institutions currently hold a minority 25 percent share of the business.

NFL, which is headquartered in the northern state of Uttar Pradesh, is a major domestic urea producer. The company’s five gas-based urea plants collectively produced 3.6 million tonnes of urea in 2019/20. It also imports large volumes of urea and diammonium phosphate (DAP) into India annually – these amounting to 1.19 million tonnes and 685,000 tonnes, respectively, in 2019/20.

NFL’s well known Kisan urea brand has a domestic market share of around 16 percent currently.

The company’s fertilizer sales reached an all-time record of 5.7 million tonnes in 2019/20. The combination of rising sales, healthy market share and the scale of its production and import capabilities should make NFL an attractive proposition for private investors.

Casale to debottleneck IFFCO’s Kandla complex

IFFCO has asked Casale to debottleneck two production lines at its Kandla complex in Gujarat. The site is one of IFFCO’s oldest phosphates and NPK production centres.

Kandla’s two existing lines, which operate on Grande Paroisse‘s dual-pipe reactor (DPR) technology, were originally commissioned in 1999. This technology is now licensed by Casale, following its acquisition of Grande Paroisse’s nitrates and phosphates technology portfolio in 2013.

“We are happy to announce that when IFFCO decided to debottleneck the two lines, it opted for Casale’s Solid Fertilizers technologies and expertise,” Casale said in a statement, adding: “Under the terms of the agreement awarded earlier this year, Casale will study the modifications required to boost output by 15-25 percent, depending on the fertilizer grade to be produced, as well as furnish, for each of the two lines, one new granulator pipe reactor (GPR) to replace the existing one in the granulator.”

The new GPR can be easily installed into existing granulator drums without major modifications, according to Casale. The technology is central to the company’s current revamping approach as it:

• Increases the phosphoric acid feed to the plant
• Increases the N/P molar ratio
• Minimises the impact on the scrubbing system and the rest of the plant
• Increase the plant’s overall operational flexibility.

PAKISTAN

FFC plans second DAP plant

The Fauji Fertilizer Company (FFC) has announced plans to build a new diammonium phosphate (DAP) plant in Pakistan.

The proposed one million tonne capacity project could enter production as early as 2024, although its success will hinge on FCC securing natural gas for the plant at a discount.

A Pakistan government scheme is encouraging the construction of new domestic fertilizer capacity by offering to supply natural gas at discounted rates for 10 years. FFC has already applied to Pakistan’s energy ministry requesting 30 million cubic feet per day of natural gas for the new plant at the concessionary rate – and is expecting a decision on this within months. Rival fertilizer producer Fatima is one of the scheme’s current beneficiaries.

Natural gas is required as a feedstock in the production of ammonia, which in turn is a major raw material for DAP manufacture, alongside phosphoric acid.

FFC subsidiary company Fauji Fertilizer Bin Qasim Limited currently operates Pakistan’s only DAP plant at Bin Qasim near Karachi. This manufactures around 800,000 tonnes of DAP annually using phosphoric acid imported from Morocco. This is supplied by Pakistan Maroc Phosphore (PMP), the jointly owned Fauji-OCP plant located in Jorf Lasfar. The second DAP production plant would similarly rely on imported acid.

Pakistan imported 1.3 million tonnes of DAP in 2019 and 1.1 million tonnes in 2020, according to Argus Media. Construction of the new plant could therefore reduce the country’s annual DAP imports to around 300,000-500,000 tonnes, based on current figures.

IRAN

Lordegan urea plant begins exports

The Lordegan Petrochemical Company has exported the first ammonia shipment from its newly-commissioned ammonia-urea plant at Chaharmahal in Bakhtiari province.

The 2,500 tonne cargo was despatched to neighbouring Turkey, according to the company, with the plant’s first urea export cargo also due to be shipped soon.

The recently-completed Lordegan plant has an annual production capacity for ammonia and urea of 670,000 tonnes and one million tonnes, respectively.

NORWAY

Yara secures partners for Porsgrunn green ammonia project

Yara International has linked-up with two new partners to help deliver the switchover to green ammonia production at its Porsgrunn production plant in Norway.

The company signed a letter of intent on 18th February with Norwegian state-owned Statkraft, Europe’s largest renewable energy producer, and investment firm Aker Horizons.

Yara first unveiled its ambitious project to full electrify the Porsgrunn plant and produce 500,000 t/a of green ammonia at the end of last year (Fertilizer International 500, p10). This project could be delivered within 5-7 years, according to Yara, if enough renewable power was available and public co-funding was secured.

“With Statkraft and Aker Horizons onboard we gain key expertise within renewable electricity, power markets, industrial development and project execution, giving us a unique opportunity to realize the project,” said Svein Tore Holsether, president and CEO of Yara.

Yara and its new partners will be targeting market opportunities for both green ammonia and green hydrogen in areas such as agriculture, shipping and industry. These will be pursued through the recently created Yara Clean Ammonia business unit.

“A partnership with Yara and Statkraft, two fellow Norwegian industrial pioneers, marks the beginning of a new industrial adventure in Norway,” said Oyvind Eriksen, chairman of Aker Horizons. “The first project in Porsgrunn can be a lighthouse project – providing competitive advantage in a growing global hydrogen economy and building on existing capabilities in the Norwegian supplier industry to create new jobs for the future.”

RUSSIA

Uralkali sponsors F1 Team

Russian potash producer Uralkali has signed a sponsorship deal with the Haas Formula 1 (F1) Racing Team.

The team will now be known as Uralkali Haas F1 Team for the 2021 FI race season with Uralkali as the team’s title sponsor. Uralkali will also be redesigning its corporate logo as part of the sponsorship arrangements.

This year’s F1 race calendar, which starts with the Melbourne Grand Prix in Australia on 21st March, features 23 races in 22 countries, ending with the 2021 season finale in Abu Dhabi on 5th December. Uralkali hopes its F1 sponsorship campaign will increase its global profile and enhance sales in key export markets. The company currently supplies potash to 16 countries on the F1 calendar.

F1 remains the world’s largest annual global sporting event. The sport amassed a total TV audience of 1.5 billion in 2020, equating to an average of 87.4 million viewers per Grand Prix.

Uralkali’s surprise sponsorship move is a first for both the fertilizer industry and F1. The top tier of motorsport is more typically associated with market-leading consumer brands and technology companies such as Coca Cola, IBM, Microsoft, Puma and Unilever.

The value of Uralkali’s F1 sponsorship deal with Haas has not been disclosed. However, major sponsors and partners such as the denim brand Jack & Jones and Swiss watchmaker Richard Mille are believed to have contributed around $2 million each to the team in previous seasons.

CROATIA

Kutina plant restarts

Fertilizer producer Petrokemija has completed a $14 million programme of repairs and revamps at its Kutina chemical plant. This enabled production to partially resume at the site on 8th February.

Operations at Kutina were shut down on safety grounds following a magnitude 6.4 earthquake in Petrinja in central Croatia on 29th December last year. Repairs were subsequently required to fix damage to the site’s ammonium nitrate (AN), calcium ammonium nitrate (CAN), NPK, sulphuric acid and urea plants, as well as associated water processing and power facilities.

Petrokemija has used the unexpected shutdown to its advantage by revamping Kutina’s ammonia plant. This included a $3.5 million investment in a new air preheater for the plant’s primary reformer.

Repairs to Kutina’s AN and CAN plants are still ongoing with both plants scheduled to re-start soon, according to Petrokemija.