Fertilizer International 508 May-Jun 2022
31 May 2022
Fertilizer Industry News
Fertilizer Industry News
WORLD
Moody’s expects NOLA prices to remain above $1,000/t
Certain fertilizer prices are likely to remain above $1,000/t well into 2023, according to Moody’s.
In an assessment published on 18th March, the credit ratings agency linked its forecast of prolonged high fertilizer price levels to increases in natural gas prices and fewer fertilizer exports from Russia and Belarus.
Its price forecast is based on three US Gulf NOLA benchmarks: ammonia, diammonium phosphate (DAP) and potash. Ammonia could still be above $1,000/t at the start of 2024, according to this analysis.
Moody’s had originally expected fertilizer prices to decline and normalise this year, after the highs posted in 2021. Instead, it now expects Russia’s invasion of Ukraine to cause prolonged rises in fertilizer prices, which it links to increased demand pressures resulting from curtailed supply from Russia and Belarus.
“We expect significant increases in fertilizer selling prices and increased international demand as a result of the dramatic reduction in Russian and Belarusian exports.” said Moody’s. “Russia (including Belarus for potash) is one of the largest [fertilizer] suppliers to the global market.”
The high-price environment for fertilizers and other commodities, including natural gas, is likely to have different consequences globally. US nitrogen fertilizer producers, for example, are expected to benefit as the country’s vast natural gas reserves will act to limit their feedstock costs. Moody’s is in fact predicting a substantial increase in earnings and cash flows for North American fertilizer producers in response to lower Russian and Belarusian exports.
European producers, in contrast, will face higher natural gas costs with some producers already curtailing ammonia production (Fertilizer International 507, p8).
“Russia’s invasion of Ukraine will have a limited direct effect on North American chemical producers because neither country accounts for more than one percent of most producers’ revenues, assets and raw materials,” said Moody’s.
Elsewhere, though, Moody’s expected: “Higher oil and energy prices and the loss of Russian exports will increase commodity prices, exacerbating the inflationary environment and straining certain supply chains. This combination of factors will reduce margins for specialty [chemicals] companies and most companies’ European operations.”
It added: “But many North American commodity producers will benefit, particularly fertilizer companies, because their raw material and energy costs remain relatively low.”
Fertilizer prices on average have climbed by around 30 percent since the start of the year. CRU’s fertilizer price index – a general market barometer – reached a record high of 377 in the third week of March. It easily surpassed the previous 2008 peak (360) in late March and then carried on climbing to reach 390 by the month’s end.
“Potash hit new records as buyers in Brazil and Southeast Asia panicked at the lack of exports from Russia and Belarus. Urea prices jumped in the Baltic, Black Sea, China and elsewhere. Phosphates closed in on records in Europe and Latin America, while sulphur jumped in Brazil and the Mediterranean,” CRU reported in late March.
As April progressed, however, the fertilizer price index did fall back by 10 points over several weeks, with CRU eventually recording a marked slump in urea and ammonia prices and weakening phosphate prices as April ended.
Indian and Latin American crops ‘at risk’
Rabobank published its assessment of the Russia-Ukraine war’s impact on global fertilizer markets in early April. The Netherlands-based agricultural bank concluded that higher fertilizer prices and/or a shortage of supply will not have an immediate impact on food prices and/or food production. This was partly because ocean shipments of fertilizers for the northern hemisphere’s spring season were largely complete before the war began.
Instead, Rabobank expects India and Latin America to be the first ‘at risk’ crop-growing regions.
“India is partially out of danger, but Latin America is highly exposed. Potash availability for soybean production might be compromised as Belarus and Russia account for 40 percent of the world’s potash production and exports,” commented Rabobank.
“Consequently, Brazil’s 2023 soybean harvest might be the first crop to experience direct negative impacts from Russia’s war in Ukraine. The good news is that Latin American markets don’t need fertilizers in their fields until September – which means fertilizers need to arrive at Brazilian ports in July-August,” the bank added.
Rabobank concluded that this left industry players with several months to work out a solution to Brazil’s fertilizer supply deficit.
CANADA
One million tonne potash production boost
Nutrien has announced that it is raising potash production from its Saskatchewan mines this year in response to uncertain supply from Belarus and Russia.
It now plans to increase its 2022 potash output by almost one million tonnes to approximately 15 million tonnes. Most of this additional volume is expected to be produced in the year’s second half.
“Our thoughts and sympathies are with those impacted by the crisis in Ukraine and we hope for an immediate de-escalation of this conflict,” said Ken Seitz, Nutrien’s interim president and CEO. “The impacts of this conflict extend beyond Eastern Europe as a disruption in supply of key agriculture, fertilizer and energy commodities could have implications for global food security.”
Seitz added: “Nutrien is responding to this period of unprecedented market uncertainty by safely expanding potash production to help provide our customers with the crop inputs they need. We continue to closely monitor market conditions and will evolve our long-term plans to ensure we utilize our assets in a safe and sustainable manner that benefits all our stakeholders.”
Nutrien’s 2022 potash production is now expected to increase by nearly 20 percent on 2020 levels, equating to more than 70 percent of the extra global production over this period. To deliver this extra output, the company is anticipating a small increase in capital expenditure at its Saskatchewan potash mines in 2022. The Canadian fertilizer giant will also be hiring additional employees to help it boost production.
Positive economics for Martison phosphate project
Canadian developer Fox River Resources Corporation has published a preliminary economic assessment (PEA) for its Martison phosphate project.
The proposed project is located in Hearst, Ontario, near to existing rail, power, and natural gas infrastructure. Construction plans include an open pit mine, beneficiation plant, slurry pipeline, road corridor and a fertilizer production complex. The latter is comprised of a phosphoric acid plant, a super phosphoric acid (SPA) plant, a granulation plant, a sulphuric acid plant, a warehouse and loadout facility, and a rail yard.
The PEA is based on production capacities of 221,000 t/a for super phosphoric acid (SPA), 474,000 t/a for granular mono-ammonium phosphate (MAP) and 247,000 t/a of granular NPS. According to the economic base case set out in the PEA, the project would have:
- Initial capital cost of $1.86 billion
- Average cash operating cost of $307/t
- Average opex plus sustaining capex of $329/t
- Net present value (8%) after tax of $1.47 billon
- Internal rate of return after tax of 17.4 percent
- Paypack period of 5.2 years.
The company plans to target markets in Eastern Canada, the prairies and northern US states. These should offer the Martison project a freight advantage relative to US and offshore phosphate producers, especially for the project’s planned deliveries to nearby provinces.
Fox River Resources believes that now is the right time to advance the project. CEO Stephen Case said: “Western Canadian phosphate market demand has doubled in the past decade and remains the fastest growing market in North America, a market which the Martison project is designed to serve. With no current domestic production of finished phosphate products in Canada and a competitive operating cost, Martison is uniquely positioned to capture these markets that are primarily served by producers in central Florida, Idaho and the Gulf Coast.”
INDIA
P&K subsidies rise to $8bn
The Indian government dramatically increased its nutrient-based subsidy (NBS) rates for phosphate and potash (P&K) fertilizers on 27th April. The subsidy increases are designed to protect India’s farmers from rocketing global prices and will apply to this year’s April-September Kharif season.
The planned NBS allocation for this six-month period has now been set at INR 609 billion ($8.0 billion). This is up 6.6 percent on the P&K subsidy budget for the entire 2021/22 season, estimated at INR 571.50 billion ($7.5 billion) by the Indian Department of Fertilizers (DoF).
India’s decision to raise the NBS was taken after a further spike in global fertilizer prices (see our main story), following Russia’s invasion of Ukraine at the end of February.
Diammonium phosphate (DAP) is India’s most widely used fertilizer after urea. The new NBS subsidy rate for DAP has been set at INR 2,501 per 50 kg bag (around $654/t).
The latest DAP subsidy represents a $222/t increase on the previous Rabi special rate, according to an analysis by CRU. However, despite the latest NBS hike, DAP import offers at the end of April ($1,0501,100/t cfr) still equate to a loss of around a $200/t on imports sold inland, CRU suggests. It calculates that the breakeven point for Indian DAP imports and domestic sales is around $875-900/t cfr currently.
India’s farmers are heavily import reliant for their fertilizer supply. But escalating prices have sent import costs spiralling. ICIS, for example, reported that the cost of the country’s fertilizer imports in March increased eightfold year-on-year to $1.66 billion, up from $204 million in 2021, due to the shortage of supplies globally and high prices.
IPL signs potash supply contract with ICL
Indian Potash Ltd (IPL) has signed a five-year potash supply deal with ICL Group.
The Israeli potash producer will supply IPL with 600,000-650,000 tonnes of muriate of potash (MOP) annually from 20222027, India’s Ministry of Chemicals & Fertilisers confirmed on 21st March.
The deal with ICL was welcomed by Mansukh Madaviya, the Indian government’s chemicals and fertilizer minister. He said India’s agriculture sector has “huge potential and provides ample opportunities to collaborate and innovate” with Israel.
ICIS has reported that India has been looking to source alternatives to Russian fertilizer imports, following the invasion of Ukraine, including supplies from Canada and Israel. This is to ensure sufficient fertilizer availability for the start of the subcontinent’s summer sowing season in April.
In total, around 10-12 percent of India’s fertilizer imports are sourced from Russia, Ukraine and Belarus. Previously, Russia supplied nearly 17 percent of India’s MOP imports and around 60 percent of its NPK imports, according to trade data.
Record-breaking output at Paradeep
Major fertilizer producer Indian Farmers Fertilizer Collective (IFFCO) has revealed that its Paradeep plant produced 805,000 tonnes (P2 O5 ) of phosphoric acid in 2021. This makes Paradeep the largest single site production plant for phosphoric acid in the world, according to the company.
IFFCO’s single reactor phosphoric acid plant at Paradeep has a daily production capacity of 2,650 tonnes (P2 O5 ). Its output is used in the production of downstream phosphate-based fertilizers including diammonium phosphate (DAP) and NPS products. The production of finished phosphates at the site reduces India’s import dependency on imported complex fertilizers.
AUSTRALIA
Stamicarbon selected as NeuRizer project licensor
Stamicarbon has been selected as the licensor for the NeuRizer urea project (NRUP) in Leigh Creek, Australia. The site is located 550 kilometres north of Adelaide in South Australia.
NRUP is aiming to be Australia’s first fully integrated, carbon-neutral urea production plant, having on-site availability for all the inputs (gas, power and CO2 ) required for low-carbon urea production.
Stamicarbon will deliver the process design package (PDP) for the 2,850 tonne/day capacity urea melt and granulation plant, as part of the project’s frontend engineering and design (FEED). NRUP will use Stamicarbon’s Launch Melt™ flash design for the melt plant (with a pool reactor) and its Launch Finish™ granulation design for the granulation plant.
Stamicarbon’s Launch Melt™ design significantly reduces the melt plant’s steam consumption due to its high energy efficiency. Its Launch Finish™ fluid-bed granulation design also has favourable characteristics. These include low formaldehyde consumption, low dust and ammonia emissions, high product quality, and high on-stream times. Launch Finish™ also significantly reduces the physical footprint and capital cost of the plant by minimising the equipment required. Fewer equipment items also help cut maintenance costs and deliver operational savings.
Stephen Zwart, Stamicarbon’s vice president of licensing, said: “This is the first new grassroots urea capacity in Australia in decades. It is a genuinely solid project with an innovative concept that has been built from the ground up. We are proud to be contributing to carbon neutral fertilizer solutions that will help close urea supply-demand in Australia, supporting farmers and food production across the country.”
The NRUP is a nationally significant project for Australia, given its potential to deliver a secure, low-cost supply of high-quality, carbon-neutral fertilizer for both local markets and for export. Start-up is currently scheduled for 2025.
UNITED STATES
PVS to acquire Sackett-Waconia
PVS Chemicals (PVS) has entered into a definitive agreement to buy Sackett-Waconia. The deal to purchase the leading US fertilizer blending equipment manufacturer was announced on 4th April.
Having been established 125 years ago, Sackett-Waconia has a long track record in the design and manufacture of fertilizer handling, blending and process equipment. The company specialises in customised systems designed to match individual customer requirements. Sackett-Waconia’s blending systems and equipment can be found throughout North America and around the world. Its robust equipment is engineered specifically for the rigours of the fertilizer industry and is designed with a long service life in mind.
Detroit-based PVS is a third generation, privately-owned manufacturer and distributor of chemicals, including fertilizers. It operates throughout the United States as well as in Asia and Western Europe.
David Nicholson, the president and CEO of PVS, said: “PVS is honored to be entrusted with the next chapter of Sackett-Waconia, a company that complements PVS’ other lines of business. First and foremost, our goal is to continue to provide our customers and partners with the excellent craftsmanship and innovation that has been the foundation of Sackett-Waconia for the past 125 years. Additionally, PVS is pleased that Larry Taylor, the current CEO of Sackett Waconia, will remain in his position for the foreseeable future, ensuring continuity and a seamless integration.”
In reply, Larry Taylor said: “Sackett-Waconia’s success is its partnership with its customers. I look forward to continuing what has made us successful for so long as part of the PVS family.”
CHINA
Casale buys Green Granulation Ltd
Casale has acquired Chinese granulation technology provider Green Granulation Ltd (GGL). The company offers its own proprietary granulation technology and is a successful designer and constructor of urea and calcium ammonium nitrate (CAN) granulation systems. It is headquartered in Hong Kong with a subsidiary office in Beijing.
The takeover is part of a strategy by Casale to strengthen its market position by adding to its already comprehensive portfolio of fertilizer production technologies. The company is aiming to become a ‘one-stop-shop’ for the entire production cycle of nitrogen-based fertilizers, by offering complete technology coverage from raw materials through to final products.
Casale now owns the following assets as a result of the GGL purchase:
- The cold recycle granulation (CRG) granulation process
- A proprietary granulator and scrubber design
- A team of experts and qualified technicians
- The experience gained from several industrial references.
CRG fluidised bed technology is the most advanced granulation process available, according to Casale, being designed to accept a lower concentration of urea melt feed (circa 96% urea plus biuret). The technology also leads to lower build costs and higher efficiency, thanks to its unique plant design and horizontal layout. Additionally, adoption of the CRG process will provide Casale’s customers with operational, economic and environmental benefits such as:
- Lower total investment costs
- Lower power consumption
- Simplified operations
- Higher operational flexibility for both urea and CAN granulation.
Federico Zardi, Casale’s CEO, said: “This acquisition not only adds a new technology that perfectly fits into our portfolio, but it also strengthens our presence in the local Chinese market. Casale and GGL started cooperating some years ago and today’s investment decision confirms our strong confidence in the CRG granulation process, which has been also incorporated in the new 594,000 t/a Casale urea plant that will be completed in the first half of 2025 in Yangiyer, Uzbekistan.”
UZBEKISTAN
Construction agreement for Yangiyer ammonia-urea plant
Casale has entered into a construction agreement for the large-scale Yangiyer ammonia-urea plant in Uzbekistan’s Syrdarya region.
The trilateral agreement is between Swiss-headquartered Casale, the Cyprus-registered investment company Ferkensco Management Limited and Singapore-registered construction company Enter Engineering Pte Ltd. It was signed in Tashkent at the end of March.
The state-of-the-art Yangiyer project incorporates an ammonia unit (495,000 t/a capacity) with urea production and granulation units (594,000 t/a capacity). Construction of the $500 million plant will create more than 500 local jobs and is scheduled for completion in the first half of 2025.
The construction agreement follows the award to Casale last year of all technology licenses and the front-end engineering design (FEED) contract for the ammonia, urea and granulation units. This was backed by European funding. Casale has also been named as the project’s general designer. It will be supported by Uzbekistan’s UzlitiEngineering design institute, a wholly owned subsidiary of Enter Engineering.
Lorenzo Pennino, head of the commercial division at Casale, welcomed the agreement: “We are grateful to have entered into a long-term partnership with Ferkensco Management and thus enhancing our international reach thanks to this collaboration in Uzbekistan. Our goal is to continue… providing top quality technical expertise with an unyielding focus on efficiency, reliability, and safety.”
Alfonso Tengco, Enter Engineering’s representative, added: “This agreement builds on a successful and longstanding relationship between Casale and Ferkensco Management in the implementation of this important project. We are proud to be part of this initiative and will leverage our EPC experience and expertise to ensure that Uzbekistan has a modern and efficient plant capable of providing its agricultural sector with high-value fertilizer products.”
Timur Juraev, Ferkensco Management’s representative, said: “We are delighted that our focus on long-term international cooperation with such reliable partners as Casale and Enter Engineering is bringing positive results. This modern facility, when completed, will produce highly efficient nitrogen mineral fertilizers, helping Uzbekistan meet domestic demand, and also expand foreign market trade.”
JORDAN
New phosphoric acid plant planned
Jordan Phosphate Mines Company (JPMC) has signed a memorandum of understanding (MoU) with German industrial projects company LUMA-International to build a new phosphoric acid in southern Jordan, the country’s Petra news agency has reported.
The agreement was signed in Amman on 30th March by Abdulwahab Rawad, JPMC’s CEO, and Ralf Keller, the managing director of LUMA-International. Under the agreement, JPMC will supply the new phosphoric acid plant with its phosphate rock raw material needs, while LUMA has committed to buying all of the plant’s output.
Two days previously, JPMC also signed a phosphate rock supply agreement with LUMA-International. It will sell 850,000 t/a of phosphate rock to the German company at international market rates. No information on the rock’s ultimate use or destination was provided.
Muhammad Thneibat, JPMC’s chairman, who was present at both signing ceremonies, hoped the deals would widen cooperation on phosphate fertilizers between JPMC and German companies. He stressed the importance of the agreements for increasing in-country manufacturing capacity and reducing production and export costs. He also said the agreements would boost JPMC’s status and competitiveness in global markets.
In reply, Keller said that his company was looking forward to more cooperation with JPMC, including new partnerships to produce phosphoric acid and phosphate fertilizers. Keller praised JPMC’s production and export achievements. He also expressed his appreciation of the company’s openness to global markets and willingness to diversify its partnerships.
