Collapse in global ammonia prices shows no signs of reversing

26 August 2016 11:41 Source:ICIS News

LONDON (ICIS)--The latest monthly slide in the benchmark Tampa contract ammonia price to $240/tonne CFR (cost and freight) for September loadings – down $30/tonne from August – came as no surprise to market players amid similar falls elsewhere in the world.

The last time the settlement between Yara and Mosaic was so low was seven years ago, and the bad news for suppliers is there appears to be no end in sight to the global supply glut.

Even with major plant shutdowns in the Black Sea, Baltic, Algeria and Australia, prices remain under significant downward pressure, as underlined by latest spot business in the Arabian Gulf and Asia Pacific.

Taiwan-based China Petrochemical Development Corp (CPDC) secured 7,000 tonnes from Mitsubishi for October arrival at $280/tonne CFR Taichung, down almost 10% on September business in the region, and only slightly above recent business in India.

There is talk the cargo could come from the new Saudi Arabian Mining Company (Ma’aden) ammonia plant in Saudi Arabia, in which case the netback would be about $220/tonne FOB (free on board) based on $60/tonne freight.

That is slightly below the $240/tonne FOB that Trammo agreed to pay the Middle East producer for the inaugural export cargo from the new plant, but the trader may struggle to break even given it will be delivered to a spot buyer in west coast India at $265/tonne CFR.

Leading supplier of Russian material Ameropa appears long for September as plans to place a cargo in east coast India fell through amid talk Paradeep Phosphates Limited (PPL) is targeting $240-250/tonne CFR Paradip for next business.

The phosphates group received interest from Mitsubishi, Koch and CIFC under a recent tender, but no offers have been disclosed or an award made.

Trammo secured two spot cargoes from Sorfert Algeria, one of which could go to EuroChem following a spot sale to the buyer at Antwerp, Belgium.

Trammo also sold a spot parcel to a buyer in Greece and was awarded the latest Petrobras Brazil sales tender

In Asia Pacific, PT Cheil Jedang (CJ) awarded its recent purchase tender to Fertcom, which will source the 3 x 6,000-tonne cargoes from PETRONAS.

The Malaysian producer has yet to confirm when its new Sabah Ammonia Urea (SAMUR) nitrogen fertilizer plant will restart after a fatal accident, but Yara’s Pilbara plant in Australia restarted on 25 August.

By Richard Ewing