LONDON (ICIS)--Fertilizer majors Mosaic and Yara on Friday agreed a rollover in the monthly contract for August loadings of ammonia for Tampa - the first time since early Q2 the key US index did not drop.
The untouched figure of $205/tonne CFR (cost & freight) from July was met with surprise by some industry players who had predicted a fresh fall amid oversupply and bearish sentiment west of Suez.
Recent and imminent plant shutdowns in Trinidad appear to have provided support for a rollover, even as a trio of 25,000 tonne spot cargoes from Louisiana giant CF Industries hit the international seaborne market.
Ammonia exports from the Caribbean country averaged nearly 400,000 tonnes/month in 2019, but in January-May this year that average fell to around 330,000 tonnes on capacity cuts, plant shutdowns and the permanent closure of a wholly-owned Yara unit in late 2019.
In early July, Trinidad Nitrogen Company Limited (Tringen) took the last minute decision to defer the temporary maintenance stop of its 500,000 tonne/year ammonia plant at Point Lisas by several weeks.
Initially due to go offline on 7 July, the export-oriented facility – a joint venture between National Enterprises Limited (NEL) and Norway's Yara – will run until an undisclosed date in August.
There is no word on the status of its 300,000 tonne/year sibling unit at the same coastal site, but Canadian major Nutrien recently halted production at two of its four 600,000 tonne/year units on the island due to weak prices.
The global ammonia market is fundamentally oversupplied after a wave of new plants came online in recent years, with cheaper natural gas costs in regions such as Europe encouraging producers to run plants at full pelt.
Weaker downstream demand for the nitrogen fertilizer from chemicals manufacturers due to the coronanvirus pandemic has also impacted international prices, although ammonia manufacturers have fared better west of Suez.
Yara regularly loads ammonia cargoes from Trinidad for customers in the US and Brazil, as well as for its own operations in Europe. Photo courtesy of Yara.