Ammonia prices soften in the Black Sea and Baltic

16 November 2012 15:03  [Source: ICIS news]

LONDON (ICIS)--Ammonia prices in the Baltic and Black Sea softened slightly this week as buyers chased the final cargoes of 2012, while traders in Asia scrambled to secure shipment to meet contract commitments amid healthy demand and tight availability, sources said on Friday.

Trader Transammonia (Trammo) purchased two 23,500 tonne ex-Yuzhny spot cargoes from Finland-headquartered NF Trading at $620/tonne (€484/tonne) FOB (free on board), with the price in line with the producer’s previous business earlier this month when it sold 50,0000 tonnes to Norway-based fertilizer group Yara for December loading.

The first Trammo cargo will load in late November and the second in late December, with both shipments seen heading to Asia Pacific, most likely South Korea or Taiwan.

NF Trading also sold a 40,000 tonne cargo to producer Koch this week for shipment to the US in late December. While the price was not confirmed by either side, there were suggestions it may have been at a slightly lower level, possibly at around $615/tonne FOB.

Black Sea ammonia prices peaked at $650/tonne FOB last month because of robust demand from the US ahead of the fall application season, and from Asia where supply has been squeezed drastically by major plant turnarounds in North Africa and the Middle East.

With Yuzhny prices now at $620/tonne FOB - or possibly lower - the price for December’s US Gulf ammonia contract settlement is expected to retreat about $30/tonne to $690-695/tonne CFR (cost and freight) Tampa. Talks are already underway and an announcement is expected next week.

In the Baltic, Yara purchased 12,000 tonnes of ammonia at $620/tonne FOB from Russian producer Acron for loading at Estonia’s Sillamae port next month. That price was $5/tonne less than the same buyer paid a producer for an identical sized Baltic cargo the previous week.

In North Africa, energy authorities told Egyptian producer EBIC-OCI that natural gas supplies to its plant at Ain Sokhna will not be restored until 21 November at the earliest after they were cut on 6 November for maintenance.

The shutdown has compounded supply problems in the wider region as Bahrain’s GPIC commenced a one-month ammonia plant turnaround on 3 November and Qatar’s Qafco shut down one of its ammonia lines this week for routine maintenance.

East of Suez, Asian buyers continue to support strong demand at relatively-high prices as they compete for limited Yuzhny cargoes due to a series of major plant turnarounds at their normal suppliers in the Middle East and North Africa.

In addition, Yara Pilbara's Burrup plant in Western Australia remains off-line for an extended turnaround but is expected to restart at the end of November.

Ammonia consumption in the Asia Pacific region has diminished because of production cutbacks in downstream nitric acid, caprolactam and acrylonitrile units.

Only one spot deal was heard in the region this week, with Indonesia-based trader Indevco awarded the 18,000 tonne ammonia sales tender held by fertilizers conglomerate Pupuk Indonesia Holding. Indevco is understood to be in discussions with traders about the cargo.

($1 = €0.78)

By: Richard Ewing
+44 208 652 3214

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