26 April 2012 07:32 [Source: ICIS news]
By Gabriela Wheeler
NAGOYA (ICIS)--The spot prices of ammonia in the Middle East are continuing to rise because of tight availability, reduced exports from Iran and healthy Asian demand, Middle Eastern producers and Asian buyers said on Thursday.
Ammonia prices are expected to remain firm for at least another month, as demand is not expected to weaken and supply levels are not likely to improve until most production issues are resolved, the producers and buyers added.
Middle East spot ammonia prices have climbed from $350-370/tonne (€266-281/tonne) FOB (free on board) on 22 March to above $500/tonne FOB on 26 April.
Japanese trading company Mitsui purchased one of the few April spot cargoes available this week, which is likely to be shipped to Asia, a company source said.
Mitsui purchased the 6,000 tonne spot cargo from United Arab Emirates producer FERTIL at $510/tonne FOB Ruwais for loading at the end of April. The price is $50/tonne higher than a deal concluded by Mitsui at $460/tonne FOB at the end of March for a 23,000 tonne spot cargo from the Middle East.
Spot availability from the Middle East is tight because of ongoing and imminent plant shutdowns in the region. The Middle East is one of the main sources of ammonia for Asia.
Iran’s Razi Petrochemical Co (RPC) will shut its 670,000 tonne/year ammonia plant at Razi Petrochemical Complex near Bandar Imam Khomeini for 30 days of maintenance, starting in early May.
In Saudi Arabia, an extended unplanned shutdown at the Ma’aden Phosphate Company (MPC) ammonia plant at Ras Al Khair has worsened the tight supply situation in the region. The outage, which started on 13 April, has been extended for 14 days and the 1.1m tonne/year plant is not expected to be restarted until the end of the month.
Safco’s number IV plant at Al-Jubail in Saudi Arabia is undergoing a turnaround. The plant, which has the capacity to produce 1.1m tonnes/year of ammonia, was taken off line on 7 April for 30-40 days. Safco is a subsidiary of SABIC.
SABIC is performing maintenance work on its ammonia pipeline at Al-Jubail. The work started on 7 April and will last for about one month.
SABIC said it has sold all its cargoes for April and May, and other Middle East suppliers said there is little to no availability for spot business.
In Qatar, there are indications that Qatar Fertilizer Co (QAFCO) may be able to restart its 750,000 tonne/year QAFCO V ammonia plant at Mesaieed in late April or early May. The plant was shut shortly after its start-up in late January because of technical problems. QAFCO has had to arrange a series of product swaps with other suppliers to meet all its contract commitments since early February.
Aside from production issues, reduced exports from Iran are adding to the problem, Asian traders said. International trade sanctions against Iran and ship operators' inability to secure vessel and cargo insurance have resulted in reduced ammonia supply from Iran to Asia, the traders added.
As a result, Asian traders who typically source product in Iran are booking more cargoes from other origins such as Australia and Malaysia.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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