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Floods to sow chaos for Brazil’s South logistics

  • Spanish Market: Fertilizers
  • 09/05/24

Unprecedented floods in Brazil's southern Rio Grande do Sul state are expected to create even more chaotic logistics situation in the country and could cut fertilizer usage for 2024-25 soybean crop in the state.

Heavy rainfall has hit the state since 29 April, culminating in the worst floods ever registered in Rio Grande do Sul. The floods have reached the central part of the state, closing the ports of Pelotas and Porto Alegre, which both handle agricultural commodities, including grains, oilseeds and fertilizers. The high waters are expected to move south, reaching Rio Grande port.

The three Rio Grande do Sul ports handled about 44.8mn metric tonnes (t) in 2023, with the larger Rio Grande port accounting for at least 42.6mn t, according to port data.

The state's geographic layout and a particularly narrow channel for floodwaters to reach the sea suggests the worst is yet to come in the southern part of the state. Water levels are about to increase in the Lagoa dos Patos, a lagoon that receives water from many rivers and flows to the Atlantic Ocean.

But operations are running normally in the Rio Grande port as of 9 May. The national association of cereal exporters Anec project that 343,250 t of soybeans and 131,778 t of soymeal will be shipped in the week ended 11 May, according to port schedule data. Shipments between 28 April and 4 May — which account for the days where rainfall reached its peak and the state began to flood — totaled 183,559t and 133,424t for soybean and soymeal, respectively.

Lineup data from maritime agency Williams predicts that soybean exports may total 838,600t, nearly doubling the volumes from the forecast a week ago. The estimated average waiting time for shipping rose to just three days from the two days projected on 29 April. The Rio Grande port was the fifth largest soybean exporter in 2023, with 3.8mn t shipped last year, according to the National Waterway Transportation Agency (Antaq).

Waiting time for discharge fertilizers is at around one day, unchanged from the previous week. Rio Grande port was third in terms of fertilizer import volumes in the first quarter 2024, according to lineup data from maritime agency Unimar. Paranagua, in Parana state, received 2mn t of fertilizers, followed by Santos port and Rio Grande, with 1.9mn t and 990,640t, respectively.

Lineup data for May and June suggest that Rio Grande is about to receive 540,900t and 66,375t of fertilizers, respectively. Vessels lined-up for Rio Grande may be diverted to other ports, specially for Sao Francisco do Sul, in Santa Catarina state, and Paranagua according to market participants.

Even if fertilizer volumes would be discharged as initially planned, the flow to agriculture producing areas would be compromised. The main access to the port, the BR-116 roadway, is already partially blocked, hampering truck flows in the state.

Drivers have already been searching for short-stretches to move goods, as long-stretches force them to look for longer alternatives, considering there are around 88 partial and full road blockages in the state as of 9 May.

Logistics company Rumo also partially interrupted operations in Rio Grande do Sul state on 6 May. The company has a grain terminal in Rio Grande port and a rail network of around 7,220km in Brazil's South region, which includes Rio Grande do Sul, Santa Catarina and Parana states.

Fertilizer companies that operate in Rio Grande do Sul are reportedly trying to move their product to warehouses away from the rivers. Considering the agricultural production, volumes that had already been sowed and were in silos are now soaked. With more damage expected to be measured farmers in Rio Grande do Sul may be discouraged from investing in technology and fertilizers for the upcoming 2024-25 soybean crop.

More rain forecast for the weekend

Brazil's national meteorological institute Inmet expects rainfall to intensify once again in Rio Grande do Sul starting this Friday between the state's center-north and west portions.

Rain levels are expected to subside by 12 May, but may surpass 100mm before then.

The coastal areas in the north regions and south of Santa Catarina state are also expected to be affected, according to Inmet.


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19/07/24

India's June NP/NPK output and sales up, imports down

India's June NP/NPK output and sales up, imports down

London, 19 July (Argus) — India's output of NP/NPK fertilizers rose on the year in June, while domestic sales climbed sharply, but imports fell. June NP/NPK production rose by 4.9pc on the year to 917,400t, as imports decreased by 5.4pc to 264,000t, provisional government data show. Sales under India's direct benefit transfer (DBT) system reached 1.343mn t last month, up by 51pc year on year. The data for trade and production imply total NP/NPK stocks in India of just over 5.168mn t at the end of June, down by 3.1pc on the month and 1.6pc on the year. Domestic NP/NPK production in April-June — the first three months of India's 2024-25 financial year — reached almost 2.512mn t, up by 2.9pc on the corresponding period of 2023-24. April-June DBT sales were up by 42.1pc on the year at 2.185mn t, while imports decreased by 20.1pc to 709,000t, the data show. India's import market for complex fertilizers has been in a quiet phase as participants focus on a pricing-based impasse around DAP . A resolution of the DAP situation should in turn lead to a rise in import activity around NPS and NPK grades, including key formulae 20-20-0+13S and 10-26-26. Prices for these products are set to climb in next business, in line with a general firming of the global market for complex fertilizers. By David Maher Indian NP/NPK stocks, output, imports, and DBT sales Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Indian DAP stocks fall by 430,000t in June


19/07/24
19/07/24

Indian DAP stocks fall by 430,000t in June

London, 19 July (Argus) — A major lack of DAP imports into India has caused stocks to fall by over 400,000t in June, according to Fertilizer Association of India (FAI) data, with Argus estimating stocks are currently at 2mn t. Imports have slowed considerably because of the current maximum retail price and subsidy in India, which effectively makes importing above $500/t cfr uneconomic. But global prices are way above this level. Chinese fob prices at $580/t imply landed costs close to $600/t cfr India, while neighbouring Pakistan has paid above this level over the last few days. Reports emerging from India on 18 July suggested that the government was mulling a special subsidy on DAP of 3,000-3,500 rupees/t ($36-42/t) to plug some of the shortfall. India produced 343,600t of DAP in June, imported 273,000t and sold 1.05mn t. Stock draw/build, equivalent to production plus imports minus consumption, was thus at -430,000t. Cumulative production fell by 15pc on the year to 1mn t for April-June for the kharif season so far, with imports down by 48pc at 1.12mn t, and sales also falling by 11pc to 1.93mn t. Imports are at around 376,000t, comprising tonnage from Russia, China, Saudi Arabia and Morocco, show Argus line-up data for July so far. This would bring imports for kharif so far to nearly 1.5mn t for April-July, compared to 2.7mn t in the same period of 2023. By Mike Nash Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU fertilizer industry calls for support: Q&A


17/07/24
17/07/24

EU fertilizer industry calls for support: Q&A

London, 17 July (Argus) — As the EU gears up to install a new European Commission for 2024-2029, LAT Nitrogen's chief executive officer Leo Alders tells Argus political support remains necessary to tackle a range of challenges threatening EU industry, including subsidised US ammonia production with carbon capture, use and storage (CCUS), and the EU's 'unrealistic' goal of cutting net greenhouse gas (GHG) emissions by 90pc by 2040. But Alders sees growing political "goodwill" to help EU industry against cheap fertilizer imports from Russia, which are used to fund the country's war against Ukraine. Edited highlights follow. What does the fertilizer industry want from the next European Commission? Clear points are effectively releasing emissions trading system (ETS) funds for converting the industry to green fertilizers. We also want carbon sequestration to be allowed as it is in the US. And we need a policy on nutrient efficiency, which has never really happened. For us, too, spillage is not the desired objective. The international context, too, is important. Grey ammonia produced in Europe could move to the same cost levels as US blue ammonia with subsidised CO2 sequestration. If or when that happens, then Europe will see massive imports of US blue ammonia. We think that by 2027 or 2028, volumes coming out of the US will grow exponentially. That's a trend that we think is unstoppable. The underlying issue, of course, is that energy in Europe is at higher price levels than on any other continent. We need to stay in Europe with our production capacity. But the threat is there. Are 90pc GHG cuts by 2040 feasible for you? When discussing the ETS measures, the carbon border adjustment mechanism, and so on, we took a positive approach as an industry. And we go alon g with the zero [carbon] target for 2050. That's all right. But now the [2040] target is not official, more a desired milestone that emissions will be cut by 90pc by 2040. As an industry, we think that target is totally unrealistic and cannot support it. That's a clear point of view. Converting to a green industry will require massive capital. Technologically, it takes time to do all of this. Is the ETS working well for the fertilizer industry? Proceeds from ETS certificates go partly to national budgets and partly to the EU budget. That's all nice. But our industry needs to invest massively to complete the transition. We pay massive amounts of money for CO2 certificates. There was the promise that national and EU levels would subsidise decarbonisation projects from the ETS. In reality, we've seen very few subsidies materialising. So we actually have a counter-proposal: why not allow the industry to park the money for green investments? In theory, the national level is obliged to reinvest 50pc of ETS income back into the industry. The reality is different. Isn't the EU still wary of prohibitive €100-150/t tariffs on Russian fertilizers? A ban on Russian fertilizer imports would require unanimity. Tariffs, though, require majority support among EU states. That seems feasible. At least 15 states appear to support the idea. There is actually no supply issue. We don't have any issues replacing Russian volumes. There may be a possible time element and rebalancing in the first three or four months. But after that, the European industry would be fully capable of supplying our farms. So political support is growing? More and more people understand how Russian gas is being transformed into fertilizer. They've understood that routing gas to Europe is becoming more and more difficult. The EU has been totally unsuccessful in pushing back against Russian urea, so Russia is building some 650,000 t/yr in extra capacity, expected on line next year or thereafter. As an industry, we don't want to be shutting down units in Europe because of cheap subsidised Russian fertilizers. And then, what happens if one day Russia decides to cut or weaponise fertilizer supplies? By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German sulphur exports drop 53pc in Jan-May


17/07/24
17/07/24

German sulphur exports drop 53pc in Jan-May

London, 17 July (Argus) — German sulphur exports halved in the first five months of this year, GTT data show, as production has declined and consumption is recovering from the post-pandemic slump. Average monthly exports dropped to just 11,000t from 23,000t in the same period last year. Imports remained stable at 23,000t. Top export markets in 2023 Belgium, the Netherlands, France and Sweden dropped to zero this year. Belgium previously received 52,000t, Netherlands 26,000t and Sweden and France 13,000t each. Minor Swiss exports at 7,000t maintained stable. German sulphur production has dropped as a result of sanctions on Russian crude imports. This has particularly impacted the 150,000t/yr sulphur capacity TotalEnergies Leuna and the 175,000t/yr PCK Schwedt refineries previously connected via pipeline to Russian crude supply. Sanction impact was followed by Red Sea insecurity cutting a further 10pc of the region's sulphur production as Middle East feedstocks declined, and sweeter slates became even more widespread. European refineries, German plants included, were running at high rates last year with refining margins very high, and this year's maintenance season has been heavier as a result of deferred turnarounds. In Germany, Miro's 131,000t/yr sulphur capacity Karlsruhe refinery was under maintenance in April. Two refinery conversions to biofuels production are planned to take place in 2025, with Shell's Wesseling plant to take 80,000t/yr of sulphur production capacity off line and BP's Gelsenkirchen a further 25,000t/yr. This is a trend repeated in other countries in the region, in a move to meet emissions reduction targets, so sulphur production is set to decline further. Sulphur consumers which have struggled with low downstream demand, high energy prices and inflation, as well as competition from cheaper Chinese imports of caprolactam and titanium dioxide, are beginning to see some improvements. The European fertilizer industry has been more resistant, and some capacity additions are bucking the general European trend. This has led to several companies targeting the European molten sulphur market with high-priced spot tonnes in this year, as well as others accelerating planning of new remelting capacity, to address the deepening shortages. Some companies are looking into adding molten sulphur tanker capability to import more spot tonnes to the liquid-only market, where most buyers have no capacity to handle solid sulphur imports. New projects along these lines are expected to be announced in the coming months. By Maria Mosquera Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Yara to supply PepsiCo with reduced-carbon ferts


17/07/24
17/07/24

Yara to supply PepsiCo with reduced-carbon ferts

London, 17 July (Argus) — Norwegian fertilizer producer Yara has signed an agreement to supply global food and beverage manufacturer PepsiCo with 165,000 t/yr of fertilizer using feedstock from Yara's renewable and CCS ammonia production projects. The agreement stipulates Yara will work towards supplying PepsiCo with fertilizer products exclusively from Yara's ‘Climate Choice fertilizers' range by 2030. The length and start date of the supply agreement were not disclosed. Yara's Climate Choice fertilizers range will include nitrate fertilizer products which are produced using ammonia from the company's 20,000t/yr renewable ammonia plant in Porsgrunn . The plant began commissioning earlier this year. The range will also include products using ammonia feedstock from Yara's carbon capture and sequestration (CCS) production project at Sluiskill , which is expected to begin CCS operations in 2026. The range also includes Yara's premium nitrate-based fertilizer products, with which newer catalyst technology results in carbon footprint reductions when compared to older production plants. The carbon footprint of the ammonia feedstock will vary dependent on these production pathways. Porsgrunn ammonia can produce nitrate mineral fertilizers with a 70-90pc carbon reduction when compared to fossil-fuel natural gas production pathways. Argus estimates nitrate fertilizers require 0.26-0.43t ammonia per tonne of nitrate product on average (see table). The ammonia consumption rate varies on the nitrate product concerned, and whether it is technical or fertilizer grade. Argus estimates Yara's supply agreement with PepsiCo could equate to a requirement of around 43,000-71,000t of ammonia. Yara has signed similar agreements with other agriculture companies within Europe. In January the company signed an agreement with Nordic grocery chain Reitan Retail, Norwegian agriculture co-operative Felleskjopet Agri and Norwegian milling group Norgesmollene, to supply the consortium with nitrate-based fertilizer products with a reduced carbon footprint. And in 2023 Yara signed a similar agreement with German flour producer Bindewald, Gutting Milling Group and German bakery Harry Brot. Pricing structures for the agreements have so far not been disclosed, but the producer is expecting a premium for the low-carbon attributes of its finished fertilizers, especially once the EU's Carbon Border Adjustment Mechanism (CBAM) becomes operational in 2026. Once CBAM is applied, the increased cost for more carbon-intensive products will determine the achievable premium for lower-carbon nitrate fertilizer, the company expects. By Lizzy Lancaster Tonnes ammonia per tonne nitrate product AN (technical grade) 0.41 AN ( fertilizer grade) 0.43 CAN 0.34 AS 0.26 Argus Average ammonia feedstock estimates, actual rates vary by country. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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