Fertilizers

HOUSTON (ICIS)–Hurricane Francine charged through southern Louisiana and although it gave plenty of soaking rains to the communities and businesses it passed through, most of the fertilizer industry within Louisiana appears to have weathered the storm fairly well. With 100 mile/h winds, Francine was a Category 2 storm at landfall but as of late Thursday, was categorized as a post-tropical storm and was located south of Memphis, Tennessee, with winds down to 25 miles/h and moving north at 9 miles/h. Having a short window as Francine quickly developed and advanced in strength and speed, the domestic fertilizer participants and companies rapidly put their response plans into action over the first part of the week and prepared for the storm. The industry in the Gulf Coast region does have the experience of having to face these threats often, so they are familiar with the challenges and dangers presented but also have constructed facilities and other assets to withstand a tropical storm or hurricane. In New Orleans, there were winds measured at a top speed of 70 miles/h and there was tremendous amount of rainfall with an estimated total from Francine placed at 8.43 inches, with parts of Mississippi having received over 6 inches. Still even with the gusty winds, the city and the fertilizer infrastructure were not significantly struck considering past events faced by this community, with a market source saying that barge operations are seeing all cargoes accounted for. Over in Geismar, despite some reports that there were issues, Canadian fertilizer major Nutrien said it did not have any complications. “Fortunately, we had no impact at the Geismar nitrogen site. Our people are safe and the plants remain operational,” said a Nutrien spokesperson. Yet not all apparently fared as well because there was talk that producer Mosaic is understood to have its Faustina operations offline, but it has not confirmed any plant status. While in Donaldsonville, the power supply is understood to have been restored leading to expectations that there will be a resumption of production occurring soon. Producer CF, who has a large nitrogen complex in this location, has not responded to requests for comment about its storm preparation and has previously stated it will not comment on plant operations. The next big concern will be over how extensive the crops were damaged, which could take some time to determine. Yet with the fierce winds and strong downpours already experienced it is likely that vulnerable crops like cotton and corn would have been impacted. Although with the lesser severity of the storm, it is possible the impacts on other vital acreage like sugarcane and rice have not been as affected. There have already been concerns over farmers facing reduced income levels this year which has been heightened by crop price pressures and has weighed on fertilizer commitments. Combined, these factors make any prospects of lost yields and washed-away profits a real concern for both growers and fertilizer participants.

12-Sep-2024

HOUSTON (ICIS)–As Hurricane Francine charged forward with its landfall in southern Louisiana as a category two storm late on Wednesday, pushing out high winds and heavy downpours, US farmers and fertilizer industry participants appear prepared for the impacts but are hopeful for a short-lived event. With crops like cotton and sugarcane in the fields and fertilizer plants scattered across the landscape, there are concerns over how hard Louisiana will be hit with the state already seeing deteriorating conditions since late on 10 September. Part of the concern anytime there are tropical threats in this area is flooding from significant rainfall especially within the New Orleans area (Nola), whose port is crucial to the fertilizer industry and heavily relied on by agricultural interest as well. With the last few days having been spent getting ready for this storm that quickly developed, the pace of fertilizers has now taken a step back with a source saying “Eyes are just on Francine at the moment. Nola is at a standstill so hoping the impacts are not long-lived.” No production impacts have been reported with producers having been quiet on their activities outside of Canadian major Nutrien, who has both production and other interests in the projected path of the storm. The company said in a statement on 11 September there were no further updates, and it was actively monitoring the storm and did have an active comprehensive emergency response plan. While the most recent US Department of Agriculture (USDA) crop progress report on 9 September did not indicate any numbers for the Louisiana corn crop, recent field reports have indicated a good portion has been completed with rice and soybean harvest underway in many locations. Cotton harvest has not begun for most of the state with defoliating applications having recently underway to prepare for machine harvesting which potentially leaves the crop more vulnerable. Updates on the Louisiana soybean harvest have not yet been released but it is likely some acreage was underway or on the verge of being fully mature with the USDA report showing there was 68% of the acreage that have reached the dropping leaves stage. Like cotton this puts the crop far into maturity and at risk for intense winds and excessive rain. By late on 11 September the storm was having significant impacts on Mississippi as well, which is home to not only considerable crop acreage but fertilizer production and storage but also distribution logistics and retail operations. Like Louisiana, there is considerable soybean acreage in Mississippi, and it is possible that some of this crop was also being harvested or about to commence with it also seeing 68% of their acreage now dropping leaves. The state also has considerable cotton acreage as well that could be severely damaged by Francine. The biggest impact from this hurricane for fertilizers will probably not be seen in terms of infrastructure damage to plants or wrecking of logistic operations but it will be based on how hard this hurt farmers and how long they will be drying out. Once it passes out of Louisiana and through Mississippi the watch will be on for their northern neighbors as the current forecasted path has the storm moving upwards almost parallel with the Mississippi River, bringing further wind and considerable rainfall. Depending on harvest progress some areas could benefit from the added moisture ahead of making fall applications. Others will find the sudden shift in conditions to be extremely limiting to further field work over the rest of September, especially for any acreage flooded in the coming days.

11-Sep-2024

HOUSTON (ICIS)–Having lashed out across northern Mexico and south Texas with rain and winds over the past 24 hours, Tropical Storm Francine has started to track further with an expected landfall in Louisianna as a moderate hurricane on 11 September. With numerous manufacturer plants, storage and shipping operations, especially within New Orleans, the state of Louisianna is an important segment for the US fertilizer industry, which has quickly turned more concerned over the possible hurricane. Especially as the tropical threat has increased in the last 36 hours and possibly bringing even more destructive impacts than initial thought over the coming days. High winds, heavy rainfall and subsequent flooding is a part of the immediate forecast with the acreage in the path of Francine maybe being subject to crop damage and significant inundation. This could decrease yields, halt harvesting and will hold back any additional field work for several weeks, including any fall fertilizing. For now, the focus is on preparing as much as possible for what might develop within the next 24 hours with producer Nutrien said it was keeping watch and was getting ready. “We are actively monitoring the situation surrounding Tropical Storm Francine and have comprehensive emergency response plans in place to ensure the safety of our people and operational integrity of our facilities,” said Nutrien spokesperson. CF Industries, with considerable operations in the storm’s project path, has not responded to inquiries over plans for storm preparation or maintaining operations. Also, without comment has been producer Mosaic, but ammonia sources said it was expecting the storm would have little bearing on current activity as it is still a quiet period for the nutrient. A phosphate source said some imports volumes which were scheduled to arrive soon have been delayed a bit because of these renewed weather concerns. Overall the cautious but not overly concerned sentiment is prevalent with it likely due to the less severity of this potential hurricane, but also because the fertilizer industry has weathered some challenges in recent years like the pandemic and international conflict. Given the past events experienced, an industry source said “I think the market has shrugged it off so far because that's how we're doing most shocks so far this year and it's worked”. Late on Tuesday afternoon Tropical Francine was at a wind speed 65mph and moving northeast at 10mph with their predictions that it will strengthen further as it moves closer to landfall estimated now to be sometime during Wednesday.

10-Sep-2024

HOUSTON (ICIS)–After a quiet few weeks for hurricane activity and with crop harvesting and movement of nutrients for autumn applications advancing, the US Gulf Coast and its agricultural and fertilizer interests are again facing a tropical weather threat. Tropical Storm Francine has developed in the Gulf of Mexico with the system moving rapidly at 60 miles/h with the edge closing in near Brownsville, Texas, along the US-Mexico border late on Monday. It is now being forecasted to bring heavy rain which could result in flooding and there is the possibility of storm surge. There are expectations that tropical storm force winds may extend up to 160 miles from the center. As Francine begins the trek northward, US farmers and fertilizer industry participants are watching the developments as the conditions will certainly deliver impacts to growers, with wind and rainfall possibly resulting in crop damage and delayed post-harvest fertilizing. Parts of south Texas are already beginning to experience these conditions with the rest of the Texas coast in the path as well, but the forecast has it eventually turning towards Louisiana. Given the duration until it strikes, it is likely the storm will intensify and gain enough in the coming days to become a moderate hurricane with impacts stretching far from the initial site of landfall. This will halt field work as well as stop harvesting progress across many states and in the aftermath will leave acreage soaked across many areas. For the fertilizer segment, there is awareness of the threat as the potential path takes it near the key location of New Orleans and across the locations of production facilities within the state, including those of CF Industries. The producer did not respond to an enquiry on its upcoming storm preparation, but no activity so far has been heard from any manufacturers in the region. As an industry source said “nobody is talking about this yet”, but that likely changes in the next 48 hours especially if the tropical system ends up displaying potential to be larger than currently anticipated.

09-Sep-2024

HOUSTON (ICIS)–Industrial gas firm Messer announced it has entered into a long-term renewal of a carbon dioxide (CO2) purchase and sale agreement with US fertilizer producer LSB Industries. As part of the agreement, Messer said it will subsequently commit more than $9 million into the liquid CO2 plant at LSB’s Cherokee, Alabama, facility with a focus of this investment on the continued safe and reliable operations at the site. The plant manufactures fertilizers including ammonia, urea and urea ammonium nitrate (UAN) and it also makes industrial and mining offerings including ammonium nitrate (AN) solutions and diesel exhaust fluid (DEF). Messer said this deal will help increase security of its CO2 supply and provide continuity to customers for decades to come. “The efficiency upgrades for the plant modernization effort will add more molecules to our network and reduce CO2 emissions at the site in-line with our sustainability goals,” said Chris Ebeling, Messer executive vice president, sales & marketing, North America.

09-Sep-2024

SAO PAULO (ICIS)–The Brazilian government’s decree changing natural gas regulations could potentially overhaul the market and, along the way, benefit the chemicals industry by providing it with cheaper energy and eventually with ethane-based feedstocks. The job of a lobbyist may be well paid, but it must be a hard one most of the time. For years, Brazil’s chemicals trade group Abiquim had been lobbying for the government to pass regulations which would allow the natural gas which comes as a byproduct from crude oil production to stay within the economy, and not be just reinjected into the ground again. To make common cause on that lobbying, Brazil’s polymers major Braskem has also been saying for years that it stands ready to expand its Duque de Caxias facilities, in the state of Rio de Janeiro, as soon as the necessary gas and derivatives were available. For years, those demands had fallen in deaf ears. Until 26 August, when the cabinet presided by Luiz Inacio Lula da Silva passed a decree contemplating, among other measures, higher powers for the oil and gas regulator ANP to set up the amount of gas which is reinjected into the system, for instance. If fully implemented, the decree could completely change the natural gas market in Brazil, and ultimately benefit the chemicals industry via lower energy costs and, potentially, having more ethane, rather than crude-based naphtha, as a raw material. In a written response to ICIS, Abiquim’s director general Andre Passos celebrated the decree and did not share the fears of some analysts, who see in giving regulators more power than traditional willingness to basically intervene the market. REINJECT OR NOT TO REINJECT – AND WHO PAYS THE BILLActing on natural gas in Brazil had almost become an imperative since the US shale gas revolution changed that country’s energy landscape, making it again a net exporter and reviving the petrochemicals industry to an extent no-one could imagine just two decades ago. In the US and Brazil, the two largest chemicals producers in the Americas, the contrast is stark: natural gas prices in the southern neighbor are around four times higher than in the US. However, some analysts have said they are concerned about the type of action taken, arguing that giving regulators such as the ANP more power could lead to more government interventionism in the oil and gas sector, potentially denting Brazil’s crude sector attractiveness to invest. However, lest not forget that Brazil’s crude sector is mostly dominated by one player, Petrobras, and this player is majority owned by the state: its CEO is appointed or dismissed as the President sees fit, and the crude major is effectively one more arm of the cabinet – a ministry of energy bis, so to speak. Still, Brazil’s crude sector was meant to go towards more liberalization, not less. And this is where the decree on natural gas passed in August overreaches, according to critics, the scope of what a government should do or should not do to encourage certain economic activity. According to the decree, the ANP will be able to mandate to crude oil players the levels of natural gas they can reinject back into the system during their crude oil extraction operations, and how much they should make available for companies and households. In simpler words: crude producers will have to go from reinjecting most of the gas – at a very low cost – to create an infrastructure to transport that gas onshore. For now, crude oil majors operating in Brazil have, for the most part, kept quiet about the decree. In a written response to ICIS on 29 August, Shell said it was “analyzing” the decree, without any further comment, a response it has not updated as of 3 September. Petrobras and Equinor had not responded to a request for comment at the time of writing. Equally, Braskem did not respond either to questions about potential petrochemicals expansions or how the decree could affect investments in crude oil and, ultimately, affect the industrial sectors if that was to happen. Petrobras’ CEO, Magda Chambriard, said, however, the company would do “everything possible” to reinject as much gas as it is able to, but also reminded how this reinjection will only be possible in the production platforms to be started up in the future. “On the platforms that are already there [in operation] and on those that are already being delivered, this [reinjecting more gas] will not be possible," said Chambriard, quoted by specialized publication Offshore Energy. Abiquim’s Passos is not concerned at all and said that the powers given to ANP is a natural step for “an aspect of oil and gas production” that was not previously covered by the regulators. “The power to regulate will be used considering the interests of producers, consumers, and the state and, obviously, without implying a disincentive or a halt to new investments. In any case, given the magnitude of investments in oil, new investments specifically for gas would not significantly alter the competitiveness of oil exploration and production (E&P) in Brazil,” said Passos. “Abiquim is confident that the costs associated with E&P in Brazil's oil sector are sufficiently low to cover any additional costs that may arise.” And to the fears about higher intervention from the government, Passos said it was a “global characteristic” of the crude oil and gas sectors to be highly regulated. CHEMICALS CHEERS, FINALLYAbiquim’s Passos is well aware of Petrobras’ CEO warning about the slowness in the natural gas market, and how it may take years for the changes benefiting chemicals to take place. But, after years of unsuccessful lobbying, Passos is a happy man who says the authorities have finally a vision of what chemicals should be and what its problems are. With that, he is ready to wait. “Nothing will be immediate. However, there is a compatibility between the time needed for greater availability of natural gas, improving the competitiveness of this raw material in Brazil, and the time required for petrochemical projects to mature – we should consider that this is a structural action with medium- and long-term impacts,” said Passos. However, after years of lobbying for a decree like the one just passed, the trade group was understandably exultant, not least because this comes just two months after another success. In June, Abiquim and Passos as its representative were part of Lula’s entourage when he went on a state visit to gas-rich Bolivia in June. During the visit, Brazil and Bolivia signed agreements to expand natural gas supplies, in a long-running business relationship which has made Bolivia the key supplier to the Brazil’s most populous, industrious and wealthiest states in the south via the pipeline Gasbol, the longest natural gas pipeline in South America at 3,150 kilometers (1,960 miles). At the time, Abiquim described the agreements inked in Bolivia as a “historic” step for Brazil’s chemicals and which, together with the latest natural gas moves, could pave the way for a truly competitive sector in the global stage, said the trade group. Agreements on fertilizers were also signed as Brazil, already one of the world’s bread baskets, continues to post a large trade deficit in that field. According to Brazil’s government, the deals in Bolivia and the decree on the regulatory environment for natural gas could unleash investments of Brazilian reais (R) 96 billion ($17 billion) in natural gas, biomethane, and fertilizer plants, as cited by Abiquim in its statement following the decree’s passing. SEVERAL DEALS, LITTLE RESULTSAbiquim’s lobbying has been directed where it could make the most difference: the government and Petrobras, admittedly achieving more success with the former than the later. In its quest for expanding natural gas supplies and lower prices, Abiquim knocked on Petrobras’ door in 2023 and formed a working group to explore solutions to the “critical situation” the chemicals industry was in. Nothing was heard about that working group, so this year the two parties gave it another shot and singed a memorandum of understanding (MoU) aiming for the same: to find ways of making the petrochemicals industry more competitive. So far, nothing concrete has been communicated, while chemicals remains with its operating rates at record lows as imports continue flooding Brazil and the wider Latin America, with an increase in import tariffs later this year one of the elements which, according to Abiquim, could start fixing the beleaguered Brazilian domestic chemicals production. “Over the last few months, both teams (Petrobras and Abiquim) have been concerned about handling anonymized data from the sector. Creating a safe environment for members to access competitive natural gas is Abiquim's focus,” said Passos. “The high volume of natural gas consumption for the sector justifies the continuation of the negotiations. We are very pleased with the technical capacity and fairness of the process and how it has been handled by both parties.” Front page picture: Abiquim's director general Andre Passos (second from the right) in Brasilia on 26 August, when the new national energy and natural gas policies were signed  Picture source: Brazil's Ministry of Mines and Energy  ($1 = R5.64) Insight by Jonathan Lopez

03-Sep-2024

HOUSTON (ICIS)–Fertilizer producer OCI Global announced it has successfully completed the sale of its equity interests in Iowa Fertilizer Company (IFCO) for $3.6 billion to Koch Ag & Energy Solutions. The producer said the closing of the deal involving the large-scale US greenfield nitrogen fertilizer facility marks a significant milestone in OCI’s strategy to unlock value for shareholders Located in Wever, Iowa the plant was the first greenfield nitrogen fertilizer plant built in the US in over 25 years, and the largest private construction project in Iowa’s history, adding more than 3,500 jobs during the construction period. The facility opened in 2017 and has the capacity to produce 3.5 million tonnes of nitrogen fertilizers and diesel exhaust fluid annually. “This acquisition marks another significant investment in the growth of our fertilizer business,” said Mark Luetters, Koch Ag & Energy Solutions president. “In the past 15 years, we have invested $2 billion in our North American production facilities to enhance reliability, expand production and improve logistics for our customers. This investment enhances our ability to serve customers long-term by providing additional flexibility to adapt to their nitrogen preferences.” The Wever facility adds to the Koch Fertilizer holdings, which includes four nitrogen production facilities in the US and one in Canada plus an extensive terminal network. The company and its affiliates also have partial ownership of three nitrogen facilities in Trinidad and Tobago, as well as a phosphate production facility in Morocco. The sale was first announced last December and OCI said it is confident that under Koch’s stewardship, IFCO will be well positioned for its next phase of growth. “This milestone further reinforces OCI’s standing and record as a successful developer, operator and investor. Looking ahead, we will continue to deploy our distinctive knowledge, management expertise and entrepreneurial spirt into further value accretive ventures,” said Nassef Sawiris, OCI executive chairman.

29-Aug-2024

HOUSTON (ICIS)–The US Department of Agriculture (USDA) announced it is partnering with business owners to expand innovative fertilizer production, create more rural jobs and strengthen local economies by awarding $35 million through the Fertilizer Production Expansion Program (FPEP). Appearing at the annual Farm Progress Show in Boone, Iowa, USDA Secretary Tom Vilsack revealed the agency is granting funds for seven projects in seven states through the FPEP, which is funded by the Commodity Credit Corporation. This program provides grants to independent business owners to help them undertake such efforts as modernize equipment, adopt new technologies and build production plants. “The investments announced today will increase domestic fertilizer production and strengthen our supply chain, while creating good-paying jobs to benefit all Americans,” said Vilsack. USDA has invested $286.6 million in 64 projects across 32 states through FPEP. These projects have created 768 new jobs and will help increase domestic fertilizer production by over 5.6 million short tons. The FPEP was created with a commitment of up to $900 million in funding to address issues facing farmers due to rising fertilizer prices due to a variety of factors including the Ukraine conflict and a lack of industry competition. Citing examples of the investments, the agency highlighted that in Virginia ammonium sulfate producer AdvanSix will expand a facility utilizing an almost $12 million grant. The company currently provides 31,400 agricultural producers with ammonium sulfate on the East Coast and in the Midwest. Through this project, AdvanSix will expand their operational capacity by 195,000 short tons/year and increase their total output to more than 36,000 agricultural producers.

28-Aug-2024

HOUSTON (ICIS)–As summer draws to a close, the US harvesting efforts are beginning to ramp, but with crop prices still less favorable and farmer economics now back in question, the short-term fertilizer demand prospects continue to be unclear. The sights of combines rolling across fields collecting up the various acres is usually a sign that a return of applications is coming soon as it is typical after crops are completed for some growers to place another layer of nutrients, especially for those who use nitrogen products. Yet the level of engagement in further commitments over the next few weeks is not certain, according to market sources. What is more apparent is that increased demand faces the obstacle of unfavorable crop prices for farmers, projections of less income and a potentially longer stretch of harvest because of the challenging weather at spring interrupting planting schedules. As an industry participant said it really is simply about price direction at this time and how people are viewing market direction and that “lower prices will stimulate demand. Higher prices will lower demand.” Currently US corn is at 84% of the reported acreage in the dough stage with soybeans setting pods having reached 89%. Both crops are overall being reported as mostly fair to excellent condition. Recent crop tours have highlighted the potential for there to be really strong yields upcoming, especially for corn in certain states, which would normally be a positive aspect for farmers, but the projections of a larger harvest this year has also added extra weight upon corn prices. Farmer economics have recently come under the spotlight with US Department of Agriculture having forecast a drop of net farm income for 2024 of $43 billion year on year with a total income estimate of $116.1 billion. In 2023, net farm income figure had a 16% drop from 2022, so farmers are set to potentially experience the most significant two-year farm income decline in recent history. That is one of the troubling factors for those who are looking ahead at the domestic path forward for fertilizer buying and values, with a market participant saying, “I think overall, demand will be low due to farmer economics and poor sentiment in agriculture as a whole.” Demand is also lagging because there were good refilling efforts over the summer for many products. Although likely sitting in tanks on farms, or in retail warehouse right now, there should be a good portion of those volumes which will go out over the next three to four weeks, or longer if weather holds favorably. As a market source said optimism for an uptick is running very thin at the moment “so far it continues to be dead on UAN, and nitrogen demand in general. Maybe pre-river close demand kicks in, but I'm not too hopeful for any rally.”

26-Aug-2024

HOUSTON (ICIS)–Although the Canadian railroad labor strife is poised to carry on further, US fertilizer participants are not growing overly concern as this action comes at a slower time of the year for domestic applications and fresh buying. With it being late August most of the attention of domestic growers are either on advancing harvesting campaigns or commencing those efforts soon, with some locations still tending to mature crops. There were also strong summer refilling efforts, which together is overall keeping the pull for nutrients light for most products although volume of nitrogen, phosphate and potash have continued to move over August on barges and terminals. As a source said they had zero concerns so far and not hearing that the situation is concerning customers either, “I assume if it persists there will be. It’s just happening at a time of year that it isn’t impactful enough to our industry.” The railroad strike appeared to have been resolved on 22 August when the government directed the matter to the Canada Industrial Relations Board (CIRB) for binding arbitration, with Canadian National (CN) and Canadian Pacific Kansas City (CPKC) having said they were preparing to begin running. Then on Friday labor union Teamsters Canada Rail Conference (TCRC) issued a strike notice for 26 August, against railroad Canadian National (CN) with approximately 6,500 unionized employees set to withdraw their service starting Monday. As there was prior to the start of this strike activity, there is also optimism from some that this will not be a protracted dispute. The US is about to enter a period of what has been anticipated to be good post-harvest demand, with a source saying a work stoppage “could be an issue then but generally these things resolve quickly.” Earlier this week industry group Fertilizer Canada said disruptions to rail services across the country will cost the fertilizer industry millions per day in lost sales revenue, with an average of 69,000 tonnes of fertilizer product transported per day. 75% of all fertilizer produced and used in Canada is moved by rail, with minimal transportation alternatives, with 90% of those volumes which are destined for the US market delivered by rail.

23-Aug-2024