N. american stocks fall another 9% in augustThe latest TFI MOP figures for North America show that inventories have dropped again in August for the third month in a row. They fell 9% by 221,000 MOP product tonnes from end-July to reach 2.35 million or 1.582 m K2O nutrient tonnes at the end of August. Inventories nearly always go down in July and August while the mines are on their turnarounds for holidays and maintenance. They are still 33% above the 5-year average for the end of August, however. Even so, suppliers will be encouraged by the trend. Whether it will continue in September and October remains to be seen. Much depends on the US fall season and, indirectly, that in Europe. Suppliers believe the high crop prices will support farmer demand.
As said last week, the Eurozone crisis continues to affect confidence and the absence of fresh contracts in China and India are still bearish factors in the short term.
Brazil continues to be the brightest market, where farmers are consuming MOP at levels very close to last year’s record. BPC has shipments of 150-180,000t MOP to this market in September alone.
Highlights this week
▪ N.American MOP stocks down for third month running.
▪ BPC shipping 150-180,000t to Brazil in Sept...
▪ ...and Jan-Aug imports close to 2011’s record.
▪ BPC sales to Costa Rica, Venezuela, Mexico & Colombia.
▪ Update on outstanding contracts to ship to India.
▪ Firmer Ringgit in Malaysia helps US dollar equivalent.
▪ Market shares change in Malaysia.
▪ Reports of new sales and contracts in Indonesia.
▪ August imports of MOP by Vietnam average $525/t.
▪ Granular MOP prices stable in France.
▪ Company News: SRC Announces Construction of a New Mineral Processing Pilot Plant; Potash West announces initial assay results;
350
400
450
500
550
600
Braz
il $/t
310
320
330
340
350
360
370
380
NW Europe Euro/t
MOP Brazil MOP NW Europe
graNular mOp cfr bulk
potash fertilizer prices $/t
contract spot
mOp – fob standard bulk
Vancouver fob (+$10-25) 450***-455** 460-485*
NW Europe fob (+$10-25) 430** 440-485*
FSU fob (+$10-25) 420**-425*** 450-480*
Jordan fob (+$10-25) 440***-475** 460-480*
Israel fob (+$10-25) 440***-445** 440-480*
S.E. Asia cfr (+$15-20) 480-510*
India cfr 180 days (na) 490-530
(premium for granular MOP)
mOp – cfr granular bulk
Brazil cfr cash 500*-525*
Europe cfr, € **** 350-363*
sOp – fob bulk
US Gulf fob (+$20-25) 595-600*
NW Europe fob, € (+€15-20) 415-435*
(premium for granular SOP)
* - Indicative price
** - Estimated netback from cfr contracts in India
*** - Estimated netback from cfr contracts in China
**** - this price for France/Benelux. Others as much as €375
An Argus Media companyView the methodology used to assess potash prices at
www.argusmedia.com/methodology. Your feedback is always welcome at [email protected].
Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
NOrtH america
united states As noted in the Market summary above, the latest TFI MOP figures for North America show that inventories have dropped again in August for the third month in a row. They fell 9% by 221,000 MOP product tonnes from end-July to reach 2.35 million or 1.582 m K2O nutrient tonnes at the end of August. Inventories nearly always go down in July and August while the mines are on their turnarounds for holidays and maintenance. They are still 33% above the 5-year average for the end of August, however, as the usual PotashCorp graph below shows. This is also 25% up from end-August 2011.
This is due to sales outweighing production in August, despite production going up and sales down compared to July 2012. Production was 0.683 m short tons K2O, which was 6% up on July 2012 but 23% down on August 2011. Producer ‘Disappearance’ (a measure of sales) was 0.832 m, which was 11% down on July 2012’s figure but 9% up on August 2011.
Year-to-date production (July-August only) was 23% down on the same two months in 2011 at 1.326 m short tons K2O. Meanwhile disappearance was 10% up at 1.764 m.
In the US Gulf, Nola prices are still around $460-465/st fob barge ($507-512.50 per metric tonne) and some believe prices are drifting down. Upriver, the Corn Belt warehouses are still mainly in the range $495-505/st ($545-557 per metric) but some business have been confirmed at $490 ($540) on the lower Mississippi river and $510 ($562) on the
upper river system. There are growing expectations that the approaching fall season will be a busy one for potash.
latiN america
brazil We mentioned last week that Brazilian importers were showing some buying interest. It is understood that BPC has added a couple more cargoes to bring its total shipments in September to 5 or 6 cargoes of around 30,000t granular MOP each.
However, prices for granular MOP were still variable with some sales earlier at around $520-525/t cfr while there was talk of business concluded below $500/t cfr at an industry conference (although all suppliers are denying this).
The latest figures of MOP arrivals this year to the end of August may well be seen as support to BPC’s comment that competitive offers from K+S Kali and ICL were keeping prices down. The accompanying table shows BPC and Canpotex have lost volume and market share compared to last year, while those from K+S Kali and ICL have risen. Total demand is very close to last year’s record of 5.29 million tonnes and is only off by 4.5% at 5.05 m.
As said last week, the two companies are likely to deny these comments. K+S Kali pointed out in reports earlier this year that its high shipments in the first part of the year will be counter-balanced by less in the latter part and will end up with its typical 15-18% share of around 1.0-1.3 million for the whole of 2012. Indeed it shipped only 50,000t in August and expects September to be around 95-105,000t.
Port congestion is still a problem but at least the times were improving this week. Estimates of waiting times for vessels arriving today at Paranagua have gone back down again slightly from last week’s 50-52 to 48-50 days for the commercial quay, down from 10-11 to only 2-4 days for the
NOrtH americaN prOducers’ pOtasH eNd-mONtH iNveNtOry (million metric tonnes)
— TFI (IPNI data) and PotashCorp
August ending inventory was down by 221,000 tonnes KCI from the previous month and 33% above the previous 5-year average
Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
Fospar terminal and down also from 26-29 to 20-22 days at the Ponto do Felix terminal.
costa rica BPC is shipping 6,000t granular MOP to this market in September.
venezuela colombiaBPC is also shipping 15,000t standard and 10,000t granular MOP in September under a sale to Pequiven.
This will be followed by a combination of 25,000 standard and granular MOP to Venezuela and Colombia in October.
mexico Finally, BPC is shipping 4,000 granular MOP to this market in September.
asia
india Meteorological reports in the Indian press continue to be optimistic because the monsoons are reducing the deficiency of rain as every day goes by. It is said that around 73% of the country has now had normal rains, although others vary from 26% to as much as 43% down. Even the latter are much better than a few weeks ago.
As indicated in recent weeks, the delayed contracts from the 2011/12 year are now almost complete. Including those vessels on the water that will arrive by 30 September, only 150,000t will be outstanding and arrive in October. Of this, about 50,000t is for IPL from K+S Kali (and there have been
freight enquiries circulating), 80,000t for Zuari from APC and ICL and finally about 20,000t for CIL from ICL.
india: mOp contracts 2011-12 to ship as of 30 sept
buyer supplier firm shipped balance
IPL BPC 1,200,000 1,198,803 NIL
IPL ICL 1,000,000 999,804 NIL
IPL APC 375,000 386,025 NIL
IPL IPC 400,000 424,752 NIL
IPL K+S 200,000 150,050 49,950
IPL Canpotex 180,000 181,788 NIL
total ipl 3,355,000 3,341,222 49,950MMTC/MTPL/RCF/Kribco BPC 475,000 472,483 NIL
RCF IPC 70,000 68,628 NIL
Zuari Group ICL 240,000 203,565 36,435
Zuari Group APC 200,000 156,695 43,305
Zuari Group BPC 400,000 379,699 NIL
Shriram BPC 100,000 96,532 NIL
MCFL BPC 85,000 85,356 NIL
MCFL IPC 30,000 33,000 NIL
CIL ICL 150,000 127,566 22,434
CIL Canpotex 350,000 367,251 NIL
TATA Canpotex 350,000 361,845 NIL
Zuari Group Canpotex 100,000 97,454 NIL
Deepak BPC 60,000 62,948 NIL
NFCL BPC 260,000 259,786 NIL
ICL Indogulf 30,000 30,000 NIL
Non-ipl total 2,900,000 2,802,808 102,174
total 6,255,000 6,144,030 152,124
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Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
china No date for a meeting for official negotiations with the Chinese buying consortium has been set as yet. Buyers and suppliers had informal talks at an industry conference last week. Buyers wanted a decrease while suppliers are prepared to rollover prices. Talks are continuing by telephone but the Chinese market is still suffering poor demand even though the NPK manufacturers have shown a little more interest.
Chinese soybean and corn imports have shot up dramatically this year (see the Ag Commodities section later in this report) so there ought to be every incentive for the Chinese government to encourage farmers to maximise domestic production with the use of potash and other fertilizers.
There are unconfirmed reports that no Russian MOP has been railed across the border so far this month. Despite this, there are other reports that prices have shaded down by Rmb 50 to around Rmb 2,600/t DAF at the border ($410) since our report two weeks ago.
MOP stocks at the ports are understood to have come down from around 1.7 to 1.5 million tonnes in recent weeks. Perhaps the Chinese are using more MOP than they would like overseas suppliers to know while contract price negotiations are under way.
indonesia malaysia The strengthening of the Malaysian Ringgit against the US dollar in past couple of months has meant that local prices for standard MOP are now equivalent to a higher figure for $/t cfr port in bulk, when costs are deducted. Local prices are said by some to be Ringgits 1,580-1,610/t free-on-truck ex-godown (warehouse) near the port in West Malaysia. The low of the range nets to around $495-505/t cfr port in bulk, depending on what costs you deduct. The high end nets to $507-513/t.
The accompanying table shows one estimate of loadings by supplier for shipment to Malaysia from the beginning of this year until around the middle of September. The figures for last year’s period are not available, unfortunately but K+S Kali and ICL now have around 27% between them. K+S Kali does ship kieserite to Malaysia regularly but this is said not to include that tonnage.
Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
However, the new round of tenders will begin in two-to-four weeks time and these will be a good test of current ideas for next year, as the product will be for delivery in the first-half of 2013.
Meanwhile BPC is understood to have booked two cargoes of 25,000t each recently to Indonesia and Malaysia, which are being loaded in second-half September.
There are reports in the local press in Canada that Canpotex signed long term contracts with four Indonesia buyers during a visit to Indonesia by Brad Wall the Premier of Saskatoon, Canada. No tonnages were given, however, and Canpotex is a regular shipper to this market over many years. Prices may also be still decided at the time of shipment, which is also similar to today.
Crude Palm Oil (CPO) prices are still around the very profitable low-2,900s Ringgits/t on the futures market. However, they did dip below 2,900 on the latest day which will keep the plantation owners cautious.
vietnam Imports of MOP in the month of August amounted to 45,263 t with a value of $23,765,421 according to local statistics. The average therefore comes to $525/t but of course does not distinguish between standard and granular grades of
MOP. To arrive in August the product is likely to have been loaded in July and probably sold back in the second quarter.
eurOpe
france...Granular MOP is stable with imported material at €345-350 pt vdb, and EU origin at €360-365 pt franco in bulk.
ag cOmmOdities
united states The US corn harvest remained well ahead of previous years, with more than a quarter of the drought-damaged crop out of the fields in the week ending 16 September.
Poor conditions caused by months of severe drought have encouraged farmers to harvest much earlier than normal. Growers in the 18 states producing most of the US corn crop have harvested 26% of the crop, according to the National Agricultural Statistics Service — up from a five-year average of 9% and the 8% growers had harvested at the same point of 2011.
sNapsHOt - wOrld pOtasH prices/Netbacks
sMOP spot$460-485/t fob
Vancouver
gMOP spot$465-470/st fob
barge Nola
gMOP spot€350-363/t cfr
Benelux
gMOP spot$500-525/t cfr
BrazilgMOP spot €407/t cfr S. Africa
sMOP spot$440-480/t fob
Middle EastsMOP contract
$470/t cfr China 1st-Half 2012
sMOP contracts$490-530/t cfr Indiainc. 180 days credit
Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
Iowa producers, which consistently produce the most corn of any state, had harvested 22% of the crop, compared to a five-year average of 2%. More than half the crop — 51% — was harvested in Kansas, where the entire state suffers some form of drought and 60% endures the most severe drought stages, according to the US Drought Monitor.
Crop conditions were little changed from the previous week, according to the statistics service. The 18 main corn states reported 50% of the crop as at least in fair condition, up 2% from the previous week. Less than a quarter of the crop — 24% — was considered in good or excellent condition, compared with 51% last year.
china The latest figures from the Market and Economic Information Department of the Ministry of Agriculture for Jan-July show China imported 34.92 million tonnes of soybeans, an increase of 20.1% on 2011. Imports of corn also jumped from 0.209 to 3.127 million in the same period.
cOmpaNy News
canada src announces construction of a New mineral processing pilot plant
On 14 September, the saskatchewan research council (src) announced the “construction of a new mineral processing pilot plant. The new pilot plant, coupled with SRC’s existing mineral processing expertise, laboratory and testing facilities, will allow mining companies in Western Canada and beyond to access a full range of applied research, development, process design, scale-up, and pilot-scale demonstration, plus new and improved processes for recovering valuable metals and minerals.
Member of the Legislative Assembly for Saskatoon Fairview Jennifer Campeau on behalf of Economy Minister and Minister responsible for SRC Bill Boyd was in attendance today to announce construction.
Located in Saskatoon, the pilot plant will enable SRC to provide services and expertise previously unavailable in Saskatchewan, and will allow mining companies to increase productivity and competitiveness in an environmentally sustainable manner.
The new pilot plant will support the development and demonstration of new and improved methods for processing minerals such as potash, gold, base metals, coal, oil sand, oil shale and especially rare earth minerals. It will enable the pilot-scale demonstration of new technologies that will be able to increase mining yields and decrease costs.
“Mining and mineral processing are key sectors of our economy, with Saskatchewan being one of the largest mineral producers of potash and uranium in the world,” Campeau said. “This pilot plant will ensure Saskatchewan has the leading-edge support capabilities to develop mineral deposits in the most efficient way while minimizing environmental impacts.”
The facility will greatly increase SRC’s ability to develop, test, scale-up and demonstrate extraction and processing methods for rare earth minerals - one of the few centres in Canada with this emphasis. Difficult and costly to extract, rare earth minerals are in high demand worldwide for use in manufacturing technologies such as smart phones, flat-screen monitors, electric car batteries and aerospace alloys.
“SRC already has a long track-record of providing real-world solutions to the mining industry with up to 65 years of applied research, development, demonstration, and testing
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Argus FMB Potash Issue 12-38 | Thursday 20 September 2012
support for industries from potash, uranium, gold, base metals and diamonds, to oil sands, oil shales and coal,” SRC President and CEO Dr. Laurier Schramm said. “This pilot plant, in addition to SRC’s current capabilities in this sector, will allow us to work with industry to test new technologies at a realistic scale of operation, and to solve industry problems with effectively designed solutions.”
With the launch of some services taking place shortly, the $2.2 million pilot plant is expected to be fully operational by spring 2013.
SRC is one of Canada’s leading providers of applied research, development and demonstration (RD&D), and technology commercialization. With more than 400 employees, $78 million in annual revenue and 65 years of RD&D experience, SRC provides services and products to its 1,900 clients around the world. For more information, check out SRC’s new interactive website at http://www.src.sk.ca.”
australia On 17 September, potash west announced “initial assay results from resource definition drilling conducted at the Dinner Hill prospect within the Dandaragan Trough Potash Project. Drilling was completed in late June and comprised 83 vertical aircore holes for 3,215m drilled on a 400m x 400m grid.
Highlights:
• Resource definition drilling at Dinner Hill Project, completed on 400m x 400m spacing, over an area of 10 sq km.• Target Molecap Greensand continuous over the resource area• Selected intervals from 32 out of 83 holes drilled include:
o PWAC268; 12m @ 4.63% K2O from 19m (incl. 6m @ 5.29% from 24m)o PWAC269; 13m @ 4.51% K2O from 21m (incl. 7m @ 5.40% from 26m)o PWAC272; 10m @ 4.55% K2O from 22m (incl. 7m @ 5.21% from 24m)o PWAC271; 7m @ 3.20% K2O from 5m
• Mineralisation remains open to the east, south and north• Maiden resource estimate expected early October
The drilling defined excellent continuity of well-preserved Molecap Greensand at an average thickness of 9m, thickening to a maximum of 14m to the south and to a minimum of 4m to the north. Mineralisation remains open to the north and south as well as to the east. The Molecap Greensand is the primary target at Dinner Hill because of the higher contained K2O grades. It is commonly overlain by a considerable thickness of lower grade, variably oxidised, Poison Hill Greensand. This material has yet to be metallurgical tested but the Company is confident that this lower grade material can be successfully recovered.
2,262 one metre samples were submitted for assay, results for 1,175 have been received. All composited intersections greater than or equal to 3.0% K2O above a lower cut-off grade of 2.0% K2O from the assayed 32 drill holes are tabulated on the company’s website.
Managing Director Patrick McManus said: “These results are confirmation that the greensand is widespread, high-grade and continuous in this area. Also apparent is a significant P2O5 content. The K-Max process® we have developed, will also produce a Phosphate product, significantly enhancing project economics. We expect a maiden JORC Resource Statement, for this area, to be completed by early October. This resource will underpin a scoping study to be completed
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this year. The fact that the mineralisation continues, and thickens, to the south indicates that the resource can be increased by further drilling” The Company will investigate the southern extensions to Dinner Hill to confirm the thickening of the high-grade greensand beds and continuity over significant strike extensions.”
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