Analysis: Trade statistics show snug amsul market

OREANDA-NEWS. May 28, 2015. A more than 250,000st decline in net exports of ammonium sulfate (amsul) fertilizer year-to-date (July-March) suggests a well-supplied US distribution system. But a closer look at production disruptions and likely increased consumption tells a different story.

Exports have declined just under 190,000st from the same period last year, primarily because of a near 100,000st decline in shipments to Brazil. Meanwhile, US amsul imports over the July-March stretch have increased by more than a third to 378,146st because of about 100,000st more arriving from China.

The net result of the lower exports and higher imports is 282,872st increased amsul supply, all else equal. That total represents over 12pc of estimated annual US amsul consumption.

However, the product's limited availability and steady price increases dating back to mid-summer contradict the trade statistics' suggestion of increased supply.

In late-July, Corn Belt summer fill pricing was issued by a major east coast producer at \\$270/st fot, just a \\$10-20/st drop from pre-fill warehouse prices. Strong buy-in to that fill program and persistent tight inventory heading into the peak demand season caused prices to rise to \\$300/st fot by year-end.

Domestic production issues and increased consumption have offset lower net exports.

Honeywell's 1.8mn st/yr amsul facility in Hopewell, Virginia, suffered at least one notable outage in March. There has been speculation that the plant has had recurring issues with both production and shipping availability.

DSM's 330,000 st/yr amsul facility in Augusta, Georgia, was also having mechanical difficulties in March, when the plant was among the assets spun off to an investment advisory firm. That outage was expected to last six weeks.

A Freeport, Texas, producer has also experienced production issues this spring that impacted production levels.

Pasadena, Texas, amsul producer Rentech voluntarily reduced production by 25pc to 500,000st/yr as part of a restructuring plan implemented in the fourth quarter of 2014. The company has focused more on domestic sales with higher netbacks.

On the point of consumption, a number of suppliers have indicated that amsul demand at the dealer and grower levels has increased for two key reasons. Amsul can be used as an alternative to ammonium nitrate, which has garnered lower domestic demand because of regulatory and safety concerns following the 2013 West, Texas, fertilizer explosion. Growers are also increasingly seeking products that provide sulfur for agronomic reasons, prompting companies like Shell to invest in technology to embed the micronutrient in nitrogen fertilizer.

Corn Belt amsul warehouse prices have maintained their upward momentum, rising to \\$325/st fot and higher in some locations this month. Some traders expect a shallower than usual drop for 2015 fill prices owing to ongoing tight supply. Others expect imports, particularly from China, to weigh on prices once grower demand wanes this summer. That country's January-April amsul exports grew by 40pc year-over-year to 1.7mn t.