SOP sales increase on NPK demand, expected MOP price increases

12 September 2011 16:51  [Source: ICIS news]

LONDON (ICIS)--Global sulphate of potash (SOP) sales have picked up in recent weeks due to an increase in nitrogen phosphorus potassium (NPK) demand in North Africa and Latin America and fears of muriate of potash (MOP) price rises for the fourth quarter, several producers said on Monday.

“An increase is coming. It has to be if you look at what BPC [Belarusian Potash Company] is trying to get in southeast Asia and where prices are at in the US,” said one SOP producer. “And when it happens, SOP [prices] will have to increase as well.”

BPC recently announced an increase of $25/tonne for spot sales into southeast Asia, targeting $535/tonne (€391/tonne) CFR (cost and freight) for standard MOP. While this price has yet to be achieved in the region, Brazil has been paying $550–560/tonne CFR for MOP since the second quarter, and there is strong market sentiment that suppliers will target $580/tonne CFR for fourth-quarter sales.

“The big ones [producers] are tight with contract sales into China and India, especially with India settling so late,” said a Middle Eastern producer.

This is the reason SOP producers believe many NPK blenders, which use granular SOP, have begun booking cargoes a bit early, to try and purchase the necessary quantities for autumn fertilizer applications ahead of any price increases.

Belgium-based Tessenderlo reports recent additional sales into North Africa and will be supplying 8,000 tonnes of granular SOP to a private NPK blender in Morocco. Additional – albeit delayed – SOP interest has also emerged in Egypt, although business may not conclude until after the country holds elections in November as the recent political turmoil has made buyers hesitant to purchase large quantities.

While Germany-based K+S has not yet announced a price increase for the fourth quarter, market sources expect a €15/tonne price increase soon. Currently, K+S granular MOP sells at €363–368/tonne CIF (cost, insurance and freight). Bulk granular SOP sells at €400–430/tonne FOB (free on board) into northwest Europe. SOP sells at a premium to granular MOP because of costly inputs – sulphur and MOP.

However, SOP producers fear the run-up in MOP prices could cause problems because SOP is used on fruit and vegetable crops, which do not provide the same profit margins as the big cash crops that rely on MOP.

“Farmers who use SOP can’t afford the increases as easily,” the producer said. “Besides that, European farmers are still recovering from the E coli scare in Q2, which damaged profits substantially.”

($1 = €0.73)

For more information on fertilizer, visit ICIS Pricing Fertilizers

By: Lauren Williamson
+44 (0) 20 8652 3214

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