28 September 2011 06:23 [Source: ICIS news]
By Gabriela Wheeler
Buyers are bracing for further increases as the tight supply situation is unlikely to ease, and with prices in other regions also on the rise.
In the week ending 22 September, ammonia prices were assessed at $520-550/tonne (€380-402/tonne) FOB (free on board) Middle East and at $600-610/tonne CFR (cost and freight)
The Asian ammonia market is usually tightly linked with ammonia indications in Yuzhny, in the
Yuzhny ammonia last traded at $588/tonne FOB for October, up $13/tonne from the previous week, and about $175/tonne higher than a year ago.
October contract prices in
“It seems that ammonia prices will continue to go up in the next few weeks. We are waiting to hear what the
A Taiwanese buyer said that an increase of more than $10-15/tonne in ammonia prices in the
“If the next deal is concluded at $575-580/tonne FOB, which is the current offer level, the increase will be almost $30/tonne in two weeks. Since the beginning of the year, ammonia prices have gone up by more than $150/tonne, and that is crazy.”
Spot ammonia prices were assessed at $405-410/tonne FOB
One of the main sources of ammonia for Asia is the
Qatar Fertilizer (Qafco) started operations at its 750,000 tonne/year ammonia plant in Mesaieed early this month. However, the plant experienced some technical issues in mid-September and had to be shut down. The unit is not expected to be restarted until the beginning of October.
In Ras Al-Khair, Saudi Arabia, a 1.1m tonne/year plant operated by Ma’aden Phosphate Co and SABIC came on stream in February.
But demand within the
SABIC is in a sold-out position for October, and other suppliers report little to no availability for spot business, a company source said.
Japanese trading company Mitsui purchased one of the few November spot cargoes available from SABIC this week, likely for shipment to
Mitsui bought 8,000 tonnes of ammonia at $561/tonne FOB
Mitsui had purchased two spot cargoes from Kuwaiti producer Petrochemical Industries Co (PIC) at $545-550/tonne FOB Middle East for a total of 23,000 tonnes for September loading from
Given the tight market situation and the climbing price indications, producer Fertil in the United Arab Emirates (UAE) is now reported to be offering a 15,000-tonne late October/early November ammonia cargo at $575/tonne FOB
An ammonia buyer said that while feedstock costs keep on increasing, the price of some downstream petrochemicals such as acrylonitrile (ACN) and ABS are plummeting, leading to sharp erosion in margins.
ACN prices fell by $100-150/tonne last week to $1,950-2,050/tonne CFR northeast (
Some downstream producers are starting to reduce operating rates because they cannot afford the cost of feedstocks, said the buyer.
“Those that use ammonia for downstream production may reduce rates or shut down production completely, but we use the ammonia as a fertilizer, so we have no other option than to accept the current price,” said another buyer.
“But it is very hard to absorb such a high cost, I don’t think many buyers can handle it,” the buyer added.
($1 = €0.73)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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