Flood of US spot sales set to wash away ammonia producers’ price targets

LONDON (ICIS)–Ahead of the imminent settlements of August contracts for ammonia cargoes bound for Tampa and from the Baltic, market attention was focused firmly on the Americas.

US giant CF Industries appears to have sold at least 75,000 tonnes of spot material for prompt lifting from Louisiana, with talk buyers are targeting buyers thousands of miles away in China, South Korea and Taiwan.

Such a strategy would trigger downward price pressure both sides of the Suez at a time when capacity cuts have had limited impact, and suggest another fall in the monthly Tampa contract settlement by Mosaic and Yara.

Potentially adding to the sudden surplus, is talk US major Koch may also have 40,000 tonnes available as a planned contract delivery to PEMEX on Mexico’s Pacific coast may not now take place.

Reduced output from ammonia producers in North Africa, Trinidad and Indonesia has failed to lift prices amid fundamental overcapacity.

The situation has been compounded by reduced industrial demand from countries amid anti-coronavirus measures.

CF Industries has not revealed a reason for the sudden burst of spot sales from Donaldsonville, with downstream plant shutdowns and/or weak domestic demand the most likely explanation.

A vessel used by Nutrien – which has at least one, if not two, of its four 600,000 tonne/year units in Trinidad offline because of soft prices – is among the tankers due to arrive in Louisiana this month.

The Canadian titan has not confirmed any deal with CF Industries, or updated ICIS on the status of its Caribbean plants. No Black Sea sales for August loading have yet been confirmed for loading at Yuzhny, while manufacturers in the Middle East are concentrated on contract commitments.

Saudi producer SABIC hopes to restart one of its plants by 1 August following a short shutdown, while Malaysia’s PETRONAS will resume operation at one of its units in the next few days after maintenance. Aside from CF Industries’ sales to Trammo and, possibly, Nutrien, spot players were most active in Indonesia, with Mitsubishi selling a 21,000 tonnes cargo to Yara for delivery to South Korea.

That cargo will load at Luwuk next week, while elsewhere in the country, manufacturer Kaltim – which is due to finish a major plant turnaround soon – sold 5,000-8,000 tonnes to Trammo for August lifting from Bontang.

No result has yet been confirmed in South Korean group PT Cheil Jedang’s (CJ) latest purchase tender for an August delivery to Indonesia involving 6,000 tonnes.

In contrast, Indian spot demand remains in a lull, although west coast-based Fertilisers and Chemicals Travancore (FACT) issued a new purchase tender for 7,500 tonnes following the scrapping of two similar enquiries.