23 December 2011 20:56 [Source: ICIS news]
By Frank Zaworski
HOUSTON (ICIS)--Strong agricultural fundamentals are expected to drive robust demand for ammonia in 2012.
The US market for ammonia used for agricultural and industrial purposes is projected to reach about 21m tonnes in 2012, up from about 20.5m tonnes in 2011, according to ICIS.
Of the total consumed in the US, approximately 8.34m tonnes, roughly 40%, is used in industrial applications such as commercial cleaning products, refrigeration and the synthesis of pharmaceuticals.
Ammonia for agricultural use accounts for about 12.5m tonnes or 60% of total US consumption.
US ammonia production, at 13.41m tonnes in 2011, is expected to remain at that level in 2012 as no new plants are in the works.
To meet the market demand for more than 20m tonnes, the US relies on imports.
In 2011, the US is estimated to have imported 7.08m tonnes of ammonia from various sources including Trinidad & Tobago and Ukraine.
For 2012, US imports are projected to increase to 7.43m tonnes, primarily to meet additional demand from the agricultural sector.
Ammonia is the major source of the plant nutrient nitrogen, which is critical for the production of major crops such as corn and wheat.
Compelling incentives for US farmers to plant corn in 2012 provide a favourable outlook for the fertilizer industry, US ammonia maker CF Industries said in a November statement.
"CF projects that U.S. farmers will plant 93.5m acres [37.9m ha] of corn in 2012, an increase of 1.6m acres from 2011," Wilson said.
Other market analysts estimate 2012 planted corn acres will be in a range of 92m-94m acres, possibly outdistancing the 93.7m acre record US corn crop planted in 2007.
About 4.5m tonnes of ammonia were applied to US corn plantings in 2011.
A 2m-acre increase in corn plantings would translate to a 136,000-tonne increase in ammonia demand based on a typical ammonia application rate of 150 lb/acre (168kg/ha).
"Global shipments of phosphates in 2012 will increase about 3% from 2011 to 62m-64m tonnes because of increasing demand in North America, South America and Asia," said US fertilizer major Mosaic executive Larry Stranghoener.
Ammonia pricing in 2012 is anticipated to follow a pattern consistent with prior years.
In 2011, the benchmark US Gulf price for ammonia was at a yearly low of $475/tonne (€366/tonne) CFR (cost and freight) Tampa in January, increasing to a high of $705/tonne CFR Tampa in November.
Ammonia begins 2012 on a higher level from a year earlier as the January price is set at $555/tonne CFR Tampa.
"In 2012, North American fertilizer markets will be extraordinarily strong in an environment of tight supply," said Bill Doyle, chief executive of Canada's PotashCorp, the world's largest fertilizer producer.
($1 = €0.77)
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