Trinidad emerging as East Asia ammonia supplier

New ammonia trade flows from Trinidad to East Asia have developed this year as leading US consumer Mosaic leans on its domestic supply contracts, sharply cutting imports to Tampa, Florida, and redistributing Caribbean supply.

Mosaic reduced annual ammonia consumption this year after shuttering operations at its Plant City, Florida, facility and has relied primarily on its new supply contract with CF Industries in Donaldsonville, Louisiana, to satisfy its feedstock requirements.

The company's transition to domestic supplies has displaced supply from Trinidad, which was previously earmarked for shipment to Tampa, Florida. But as China's nitrogen output is sharply curbed, and Indonesia's Panca Amara Utama (PAU) plant continues to face inconsistent production rates, Trinidad suppliers have shifted focus to meeting East Asian appetite this year.

Rising demand in the Asian markets has also fueled higher spot values in the Caribbean compared to a year ago, as early-year outages and persistent gas curtailments has tightened availability in the region.

Reduced offtake spurs strong Asian demand

Ammonia exports from Trinidad to Tampa fell by 64pc year-over-year to 208,263t between January-June, reflecting Mosaic's transition to domestic supplies and retreat from the global market, according to US customs data.

Tampa imports of Trinidad ammonia routinely surpassed 1mn t/yr between 2009-2016, before sliding to 950,273t in 2017, under Mosaic's contract with Yara. But Mosaic and CF's supply contract permits the former to purchase between 545,000-725,000 t/yr of ammonia, which reduced the phosphate producer's annual offtake from Yara in Trinidad.

This shift in feedstock supply has displaced Trinidad volumes from Tampa and has translated to increased exports to South Korea and China.

Trinidad exports to South Korea has more than quadrupled year-over-year to 100,252t between January-June, according to Korea Customs, as the anticipated 660,000 t/yr PAU plant in Indonesia struggles to meet consistent commercial production rates.

Indonesia has historically been a top supplier to South Korea, comprising almost 30pc of the country's 1.16mn t imports in 2016 before losing its share in 2017. Indonesia's share in the South Korea market has further slipped in 2018 as PAU production has been delayed for nearly one year, allowing exports from Trinidad to meet spot demand.

Similarly in China, Trinidad has emerged as a new ammonia supplier in 2018 as the country's environmental regulations have sharply curbed domestic nitrogen production, and ammonia demand has increased from China's industrial sector. China imported 32,593t of Trinidad ammonia during the first quarter, up from 6,000t during the same period the prior year, according to China Customs. China's first-quarter trade statistics is the most recently available data Argus can access at the time of publication.

Near-term price outlook remains firm

Spot Caribbean prices are about $100/t higher from a year ago at $270/t fob on a midpoint basis, according to Argus data. China's return to the spot market and delayed plant start-ups in key regions have helped fuel the rise, but inconsistent plant operating rates have tightened supply from the island.

A near three-month outage at CNC's 650,000 t/yr plant in Trinidad reduced spot availability during the first quarter, while Yara endured an extended turnaround at its Tringen II plant and a brief outage at its Tringen I facility during the second and third quarters, respectively.

Demand for spot Trinidad volumes will likely maintain firmness in the Caribbean market in the near-term, though this will likely ease when PAU achieves stable production rates and is able to meet East Asia demand. Trinidad shipments could then become less frequent to East Asia and potentially lengthen the Caribbean and US Gulf supply balance, especially after Yara achieves stable production at its 750,000 t/yr facility in Freeport, Texas.

Morocco has remained a steady buyer of Trinidad volumes since 2017, and could increase consumption as it brings on line its JPH4 and JPH5 phosphate units by next year. Argus estimates OCP has secured 307,043t of Trinidad ammonia between January-August, nearly flat with a year ago and is on pace to purchase about 500,000t from Trinidad in 2018.