Downward Tampa ammonia settlement imminent

22 October 2008 22:36  [Source: ICIS news]

HOUSTON (ICIS news)--An agreement on the November contract price for ammonia out of Tampa appeared imminent on Wednesday, with market participants expecting a drop of several hundred dollars as a result of various market forces.

Buyers, sellers and traders all said negotiations appeared to be zeroing in on an agreement of $600/tonne (€456/tonne) CFR for November, a drop of $331/tonne from the $931/tonne CFR October price.

Sources said a confluence of downward price pressure had encompassed ammonia prices, with cheaper corn values, increased supply because of recent plant openings, weak demand in the US farmland and the global financial slowdown all playing a factor in contract negotiations.

“There seems to be quite a lot of ammonia around the [Gulf of Mexico] at the moment, which isn’t helping the negotiations, and the rest of us are waiting for fall application to begin in earnest, which it has not yet,” a producer said.

Prices in New Orleans have already come off high levels set earlier this fall, with a deal being done recently at $615/tonne FOB (free on board), sources said, down from $880/tonne FOB a month ago.

When ammonia prices jumped over the past year to their current levels, buyer Mosaic announced it would soon be switching some of its diammonium phosphate (DAP) production to monoammonium phosphate (MAP) to save money on ammonia costs.

Meanwhile, a 500,000 tonne/year plant in Donaldsonville, Louisiana, owned by Terra recently came back online, restoring some supply to the inland US market, which now needs less imported ammonia.

Major players in the US ammonia market include Terra, Yara and Transammonia.

($1 = €0.76)

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By: David Rosen
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