Benchmark ammonia price falls again on softening demand

21 February 2013 17:48  [Source: ICIS news]

LONDON (ICIS)--Ammonia prices in the Black Sea have fallen again after Yara purchased a combined 75,000 tonnes from two producers at $550/tonne (€413/tonne) FOB (free on board) for March loading – down $20/tonne on previous business – market sources confirmed on Thursday.

Norwegian fertilizer giant Yara bought 40,000 tonnes from NF Trading and 35,000 tonnes from Odessa Port Plant (OPZ) for loading in Yuzhny next month.

No other sales for March have yet been heard, although US firm Koch – which paid $585/tonne FOB for its February Black Sea cargoes – is understood to be seeking its usual 80,000 tonnes for shipment to the US ahead of the imminent spring application season.

Separately on Thursday, Yara purchased 20,000 tonnes of Baltic ammonia from NF Trading at $560/tonne FOB – down $20/tonne on previous business – for loading in Sillamae, Estonia, next month.

That product will come from the Nitrofert plant in Estonia that suffered an unplanned outage earlier this month but is understood to have restarted production in the past couple of days.

The lower benchmark price in Yuzhny will be reflected in Yara's contract price settlement for the US Gulf, with negotiations understood to be at an advanced stage on Thursday.

The current price level of $655/tonne CFR (cost and freight) was based on Yuzhny's upper price level $585/tonne FOB for February loadings.

According to market sources, the $20/tonne slide in Black Sea prices will likely see a price settlement in the $620-645/tonne CFR Tampa range for March loadings.

Finland-headquartered NF Trading normally has 130,000-140,000 tonnes per month of Black Sea ammonia available for spot purchase, while its monthly spot availability in the Baltic is normally around 20,000 tonnes.

Earlier this year. NF Trading signed a one-year supply agreement with Morocco’s Office Cherifien des Phosphates (OCP) that involves one 23,400-tonne cargo being delivered to the phosphate producer each month – normally out of Yuzhny.

Ammonia prices in the Black Sea and Baltic have fallen steadily in recent months due to softening demand from industrial buyers in South Korea and Taiwan, along with reduced seasonal demand from agricultural users in India.

Yuzhny's price level reached $650/tonne FOB during the early part of the fourth quarter of 2012 but has fallen steadily since. The latest fall was expected after a sharp fall in the Arabian Gulf price triggered by Transammonia's purchase of 39,000 tonnes of spot ammonia from Saudi Arabian producer SABIC at $530/tonne FOB which awas $90/tonne less than previous business.

That US-bound cargo was made available by a three-week shutdown of Ma'aden's diammonium phosphate (DAP) line in Saudi Arabia, though the plant restarted earlier this week following the completion of the routine maintenance.

($1 = €0.75)

By: Richard Ewing
+44 208 652 3214

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