Brazilian MAP prices holding despite surge in P2O5 stocks
CF Industries announced late last week that it has begun restarting its ammonia plants at the Donaldsonville Complex in Louisiana. Start-up of other units including urea and UAN were to follow.
In a company statement, the producer noted it will communicate directly with customers regarding impacts caused by Hurricane Ida, with shipping proceeding on an as available basis. CF Industries had shut down all production units at the facility on 28 August, prior to Hurricane Ida making landfall. A force majeure notice was subsequently released on 3 September.
While production is restarting at the plant, the Nola barge market continues to be impacted by logistical issues caused by Hurricane Ida.
The hurricane choked off the main supply for September (CF Industries’ Donaldsonville plant). Prior to that, demand in the US was seasonally weak. Only one vessel was due to arrive in September with even CF more focused on UAN rather than urea production. As a result, September supply was already at a bare minimum.
Once CF went down, removing approximately 5,000t of granular urea from the market each day, supply of urea tightened sharply. This caused prompt and September values to escalate rapidly.
Prior to Hurricane Ida hitting in late August, September barges were trading in the low $430s ps ton fob Nola. In just under two weeks, values advanced to a high of $552ps ton fob Nola, the highest level seen trading in the region since May 2012.
The sharp gains did not extend beyond prompt and September barges. October/November barges traded at $480-490ps ton fob Nola, a metric equivalent of $524-534pt cfr. This in contrast for prompt/September values trading just above $600pt cfr metric equivalent.
While the restart of the urea unit at CF and the clear up of the barge logistics is not expected to happen in time to alleviate the tightness in September, the September/October spread is clearly unsustainable and set to converge. Signs of this happening only became apparent this week with a loaded barge trading as part of a spread at $515ps ton fob Nola on Tuesday, down $37ps ton from the high reached last week but still at $562pt cfr metric equivalent. Nevertheless, US barge values are still high relative to other markets with latest November barge values reflecting a healthy $513pt cfr, level with offers in Brazil.
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