Copyright 2014 Argus Media Ltd

Argus FMB Potash

Formerly FMB Weekly Potash Report
PRICE GUIDE MARKET SUMMARY
Volumes steady, prices steady
Buyers seem to be taking full advantage of low prices for
MOP around the globe, while producers are faced with the
long, hard business of raising prices back to a level with
which they are comfortable.
In India, CIL has contracted with ICL for the delivery of
100,000t standard MOP at $322/t cfr with 180 days credit.
CIL earlier arranged for 325,000t from Canpotex, on the
same terms.
Southeast Asia is proving highly resilient to the price ideas
suggested by the major producers. As ever, there is often
a gap between what is spoken of and what is achieved,
but it seems fair to say that producers target of $350/t
cfr remains very hard to achieve in many countries in
the region. In Vietnam a cargo of standard and granular
is arriving next week, priced at $315/t cfr port for the
standard, with a $10/t premium for the granular. In Malaysia
offers in a medium sized tender are no higher than $320/t
cfr, and there are rumours of offers substantially lower than
this in other tenders.
As noted last week, Brazil is currently showing very strong
demand for MOP, with delivery of 2mn tonnes in the frst
quarter, up 69pc year on year. The target set by sellers
for sales at $360/t cfr in May appears to have been missed
however, with shipments going through frm at $350/t.
Suppliers are keen to emphasise that the price rise is likely
to be seen in new shipments for June/July delivery.
The SOP market is still very tight, with limited output from
Tessenderlo, K+S and, reportedly, KG Chemicals in South
Korea. At the same time, speculation regarding exported
SOP from China under the reduced export tax appears to
have been justifed. 6,200t was exported from China in the
frst quarter, most of it to South Korea. Some years, pre-
2008, over 20,000t was exported in the frst quarter. With
SOPs export tariff for 2014 lowered to RMB 600/t ($96/t)
we may well see more Chinese SOP in the international
market.
Highlights this week

ICL sells 100,000t MOP to Coromandel...

...while RCF tender not yet fnalised.

GRANULAR MOP CFR BULK
Potash fertilizer prices $/t
Contract Spot
MOP fob standard bulk
Vancouver fob (+$10-25) 265**-275** 270*-315*
NW Europe fob (+$10-25) 265** 290*-320*
FSU fob (+$10-25) 260***-265** 230*-310*
Jordan fob (+$10-25) 280***-285** 280*-310*
Israel fob (+$10-25) 280***-285** 280*-315*
S.E. Asia cfr (+$15-20) 315*-350*
India cfr 180 days (na) 322**
(premium for granular MOP)
MOP cfr granular bulk
Brazil cfr cash 350*-360*
Europe cfr, 280*-290*
SOP fob bulk
US Gulf fob (+$20-25) 595*-600*
NW Europe fob, (+15-20) 420*-450*
* - Indicative price
** - Estimated netback from cfr contracts in India
*** - Estimated netback from cfr contracts in China
Issue 14-20 Thursday 15 May 2014
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for market insights from our editors.
Copyright 2014 Argus Media Ltd Page 2 of 7
Argus FMB Potash Issue 14-20 | Thursday 15 May 2014

China exporting SOP again.

Tender in Malaysia closes at close to $320/t cfr.

APC is sold out until August.

Mosaics Carlsbad mine offine.

Company News: Agrium to sell turf/ornamental fertilizer

business to Koch; K+S 1Q results show resilience; ICLs 1Q
results; BHP delays decision on Vancouver port; Qinghai Salt
Lake looks to Ethiopia; PotashCorp to distribute dividend.
ASIA
Jordan
APC report limited availability of supply for new sales,
and is only offering fresh product for August/September
shipment.
India
ICL has sold 100,000t MOP to CIL for 2014-15 delivery at
$322/t cfr with 180 days credit.
It is understood that RCF is likely to split the award of its
tender for 90,000-95,000t MOP between IPL and MMTC,
with the announcement to come within a few days.
The results of Indias general election are to be announced
16 May. At this point in time it is not certain who will
emerge as the leader of Indias next government, though
many believe it will be Narendra Modi and his Bharatiya
Janata Party.
What is certain is that there is a great deal in Indias
fertilizer policies which needs fxing. The Director General
of the Fertilizer Association of India (FAI), Mr Satish
Chander, has highlighted the scale of the problem facing
fertilizer companies, saying The provision made for 2014-
15 in the Interim Budget is again grossly inadequate and
unrealistic. Total fertiliser subsidy for 2014-15 is kept at
Rs. 67970 crore (~$115mn). About 50% of the amount would
be required to clear the bills for 2013-14. Therefore, the
fund left for payment of subsidy for 2014-15 will be meagre
which is likely to be exhausted by May 2014 for domestic
urea and July 2014 for P & K fertilisers.
The Fertilizer Monitoring System - a database used by
fertilizer companies and the government to track payments,
tonnage and prices within India - appears to also have
issues. The notes from a meeting between civil servants
and representatives from the industry show that there have
been incorrect entries of the Maximum Retail Price (MRP)
to the system, and that the government is concerned that
the reported prices do not match those paid at the farm
gate. The government intends to explore this issue further.
China
Exports of MOP out of China in the frst quarter this year
totalled 113,000t, well over double the level exported in 1Q
2013.
A potentially more interesting development are the SOP
shipments coming out of China. Since 2008, the export
tarriffs have made it uneconomical for SOP to be exported.
However, the export tax was reduced this year to RMB600/t
- which certainly leaves a margin for producers looking to
export. With 5,000t being shipped to South Korea in the
frst quarter, and a further 1,200t to other markets, it
seems that some have begun to take advantage of this new
option.
STANDARD MOP CFR COMPARISON
China MOP exports: T
Country 1Q 2012 1Q 2013 1Q 2014 2013/2014
South Korea 11,530 12,981 44,645 244%
Japan 16,500 10,701 27,253 155%
Taiwan - - 14,950
Vietnam 6,321 800 11,629 1354%
Philippines 13,900 12,800 8,015 -37%
Malaysia 3 7,510 6,000 -20%
Others 811 216 349 62%
World 49,065 45,007 112,839 151%
Source: China customs
Copyright 2014 Argus Media Ltd Page 3 of 7
Argus FMB Potash Issue 14-20 | Thursday 15 May 2014
Malaysia Thailand Indonesia
Offers in a tender to supply 12,000t standard MOP to a
plantation in Malaysian Borneo are understood to have
been priced close to Ringgits 1,030/t cfr. This would equate
to $320/t cfr at todays exchange rates. As with previous
tenders, it is not certain that the major producers would
support sales at this price level.
Indonesia has seen some sales made at $325-330/t cfr.
Suppliers are still targeting $350/t cfr for deliveries to
these countries, but more than one has noted the diffculty
in achieving this price when there is product from older
deliveries being sold ex-godown at lower prices.
Vietnam
The Fonthida Naree is due to arrive in Vietnam around 20
May with a cargo of Uralkali product - 10,000t granular MOP
and 15,000t standard MOP. The price is understood to be in
the region of $315/t cfr for the standard MOP, with a $10/t
premium for the granular.
EUROPE
Northwest Europe
The SOP market here is particularly tight with limited
production from both Tessenderlo and K+S. The price
of 420-450/t fob NW Europe still applies to new sales;
suppliers are comfortable still with the premium it
commands over MOP.
On the MOP side, the market is quiet as the application
season for potash is largely over. The autumn season will
see demand pick up again, and there have been indications
that some buyers will look to secure supplies of granular
MOP well before the season begins.
K+S is understood to have announced the following prices
for Germany in June: Granular MOP 330/t delivered; Korn
Kali 235/t cif inland.
UK
Granular MOP is quoted at 255/t fca bagged, although
suppliers are now indicating a rise of 8-10/t for the third
quarter.
Russia
Uralkali is sold out for May shipments, but still has product
for June.
Russian MOP exports as reported by the Federal Customs
Service were 2.4mn tonnes in the frst quarter, up 48pc
year on year.
There have been no further developments regarding
potential future cooperation between Uralkali and
BPC.
Belarus
Belarus National Statistics Committee reports that
production of MOP totalled 2.44mn tonnes in the frst
quarter; an increase of 7.2pc from the frst quarter
2013.
NORTH AMERICA
Canada United States
The North American potash market remains supported by
logistical constraints. Barge availability is still limited at
Nola. Loaded barges likely could still fetch the low-$350s/st
fob, while June-arriving imports are believed to be biddable
at $340/st fob. Applications in the Corn Belt are ongoing
with spot tightness pushing warehouse values toward $390/
st fot.
Mosaics K-Mag/MOP mine in Carlsbad, New Mexico, remains
offine indefnitely following the collapse of a storage
warehouse on 5 May. The company has no timeline for when
shipping and production will resume as offcials assess the
extent of the damage. The facility has capacities of 0.5mn
t/yr MOP and 1mn t/yr K-Mag.
North American potash producers ending inventory for April
was 2.7mn tonnes, down 10pc from April 2013 and nearly
even with the fve-year average. Inventories have declined
each month since topping out at 3.2mn t in January as
producers have cut back production from 2013 rates and
posted increased domestic sales.
Domestic sales for April were just less than 1mn t
for the third straight month and 47pc higher than
the prior-year period. January-April domestic sales
total 3.8mn t in 2014, up 48pc from the same time in
2013. Spring demand in the US and Canada improved
this season after prices bottomed out in January
following a gradual multi-year slide, rejuvenating buyer
confdence.
North American potash exports for the month broke
the 1mn t barrier for the frst time since May 2013,
but continue to lag behind overall 2013 levels. Potash
exports in April were 1.1mn t, down 19pc from the same
time in 2013. January-April exports total 3.6mn t, down
12pc from the prior-year period, partly because winter
weather-related rail delays have limited potash shipments
from Saskatchewan production points to Vancouver
ports.
Copyright 2014 Argus Media Ltd Page 4 of 7
Argus FMB Potash Issue 14-20 | Thursday 15 May 2014
LATIN AMERICA
Brazil
The market is holding steady, with sales confrmed at $350/t
cfr. Producers have not yet achieved their May target of
$360/t cfr, but are aiming to lock that in for new sales with
delivery in June/July.
COMPANY NEWS
Germany
K+S 1Q results show resilience
K+S frst quarter net income of EUR124.1mn on revenues
of 1,189mn has declined 34pc year on year. Revenues are
down 7.1pc. A sharp decline in margins on non-EU MOP sales
was the main factor. However, K+S reports high demand for
its products in Brazil and Europe.
Potash sales in the frst quarter totalled 1.94mn
tonnes, 4.6pc lower than the frst quarter 2013. Sales in
Europe were up 14pc from the previous year to 1.27mn
tonnes, as buyers took advantage of lower prices.
Offshore sales totalled 670,000t, down 27pc from 1Q
2013.
Argus FMB Potash Sales Selection
Origin Seller Buyer Destination 000t $/t bulk Shipment
FSU/Russia Uralkali n.a. L. America 5sMOP
10-15 less than
gMOP
Apr
FSU/Russia Uralkali n.a. L. America 15gMOP 355-360 cfr Apr
FSU/Russia Uralkali n.a. Colombia 15sMOP
10-15 less than
gMOP
Apr
FSU/Russia Uralkali n.a. Colombia 5gMOP 355-360 cfr Apr
FSU/Russia Uralkali n.a. Vietnam 10gMOP 15 premium Apr
FSU/Russia Uralkali n.a. Vietnam 25sMOP 320s cfr Apr
FSU/Russia Uralkali n.a. Malay/Indo 80sMOP market Apr
FSU/Russia Uralkali big buyers Brazil gMOP 340s cfr Mar
Israel ICL big-medium buyers Brazil gMOP 340-345 cfr Mar
Canada Canpotex n.a. Brazil 100gMOP 360 cfr Apr-Jun
Canada Canpotex n.a. L. America gMOP 360 cfr Apr-Jun
Canada Canpotex n.a. L. America sMOP 350 cfr Apr-Jun
GRANULAR MOP CFR BRAZIL
Copyright 2014 Argus Media Ltd Page 5 of 7
Argus FMB Potash Issue 14-20 | Thursday 15 May 2014
Revenue from MOP sales totalled 201.2mn, down 35pc
from 1Q 2013. However, revenue from specialty products
like SOP and KornKali saw a modest increase of 4.3pc to
238.2mn. Slightly unusually therefore, bulk MOP sales
accounted for less revenue than the lower volume specialty
sales.
The incident at K+S Unterbreizbach facility, where
three miners died in October 2013, has led to lower
production from the site in the frst quarter of this
year. Consequently K+S does not expect total 2014 sales
volume to signifcantly exceed 2013s level of 6.94mn
tonnes.
K+S expects slightly higher global potash sales in 2014 of
60mn tonnes, up from its estimate of 59mn tonnes in 2013.
The company thinks that the potash price has bottomed
out, with the supply contracts to China and India providing
a price foor and a more general stabilizing effect on the
market. It does not expect a signifcant rise in potash prices
over the year however.
The Legacy project in Canada is reported to be proceeding
on schedule. Capital expenditure for the solution mine is
expected to total 800mn in 2014. The mine is still on track
for commissioning in 2016.
SNAPSHOT - WORLD POTASH PRICES/NETBACKS
sMOP spot
$270-315/t fob
Vancouver
gMOP spot
$345-353/st fob
barge Nola
gMOP spot
275-285/t cif Bel-
gium/Netherlands
gMOP spot
$350-360/t cfr
Brazil
sMOP spot
$280-315/t fob
Middle East
sMOP spot
$315-350/t cfr
S.E. Asia
sMOP contract
$305/t cfr China
sMOP = standard
gMOP = granular
t = tonne
st = short ton
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Argus FMB Potash Issue 14-20 | Thursday 15 May 2014
Israel
ICLs 1Q results
ICL posted net proft for the frst quarter of $131mn on
revenue of $1,613mn. Profts are down 57pc year on year,
though revenues are roughly similar.
Potash sales in the frst quarter totalled 1.47mn tonnes,
up 12pc year on year. ICL cites strong demand in Europe,
China and Brazil as the major factor. Inventory has
reduced to 929,000t from 1.13mn tonnes at the start
of the quarter, and is 7pc lower than the level last
year.
Production of potash totalled 1.27mn tonnes in the frst
quarter, down 2.5pc year on year.
The company is to distribute a dividend to shareholders of
$91.5mn on June 25 2014.
There are slightly diffcult times ahead for Dead Sea
Works, the subsidiary which produces most of ICLs potash.
Hotels near one of the evaporation ponds operated by
DSW are seeking an injunction which would prevent ICL
from raising the level of the dyke surrounding the pond.
If successful, this seems likely to impact ICLs production
negatively.
China Ethiopia
Qinghai Salt Lake looks to Ethiopia
Qinghai Salt Lake Industry has signed a memorandum of
understanding (MOU) with Ethiopias Ministry of Mines
regarding exploration and development in the Danakhil
basin.
The MOU appears to be a very preliminary framework
agreement - senior leadership from both QSL and the
ministry will meet periodically and the two parties will
cooperate on exploration and planning.
Interest in the Danakhil basin seems to be growing; ICL
recently purchased a stake in Allana Potash and there are
a slew of other junior mining companies prospecting in the
area.
Canada
BHP delays decision on Vancouver port
BHP Billiton has negotiated a 30 day extension for the
decision over the future of Vancouver ports Terminal 5.
The company, which is constructing the Jansen potash-
mining facility in Saskatchewan, had previously agreed with
the port authorities to pay them a retainer to keep the
terminal free for BHP. BHP would then, when it reached
the right stage in the development of Jansen, arrange a
lease with the port and construct the usual transhipment,
storage and loading facilities to export its potash by
sea.
BHP notably switched to a staggered development of
Jansen in February this year, with the avowed intention of
bringing the project to commission at a more favourable
point in the market.
Agrium to sell turf/ornamental fertilizer business to Koch
Agrium will sell its turf and ornamental fertilizer business to
Koch Agronomic Services, an affliate of Koch Fertilizer, for
$85mn as the Canada-based producer works to streamline
its portfolio amid falling profts.
Koch will acquire a production facility in Sylacauga,
Alabama, and intellectual property rights to Agriums
slow-release and controlled-release nitrogen fertilizers,
including Polyon, Duration, XCU, Nutralene and
Nitroform. The sale is expected to close in the second
quarter.
Agrium decided to sell its turf and ornamental business
after completing a strategic overview of its Agrium
Advanced Technologies business unit in 2013. In 2012 Agrium
reported gross proft of $51mn on sales of $314mn from its
turf and ornamental business.
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Kochs existing stable of turf and ornamental fertilizers
include the UMAXX and UFLEXX stabilized nitrogen
fertilizers, and HYDREXX - a soluble fertilizer additive.
PotashCorp to distribute dividend
The board of PotashCorp has agreed that the company will
distribute a dividend of $0.35/share on 1 August 2014. This
is in line with its most recent dividend, and suggests an
annual total of $1.40/share.
The company is continuing to buy back shares, with its most
recent gambit being private agreement purchases from
an arms length third-party seller. PotashCorp will be
purchasing these shares at a discount to the market price.
Potash freight
Loading Destination Tonnage
Rate ($/t)
Low/High
Vancouver China 60-65 20 22
Red Sea WC India 25-30 22 24
Argus FMB Potash Methodology
Argus uses a precise and
transparent methodology to
assess prices in all the markets
it covers. The latest version of
the Argus FMB Potash
Methodology can be found at:
www.argusmedia.com/methodology.
For a hard copy, please email
[email protected], but
please note that methodogies
are updated frequently and for
the latest version, you should
visit the internet site.
LAST UPDATED: JULY 2012
The most up-to-date Argus FMB Potash methodology is available on www.argusmedia.com
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ARGUS FMB POTASH
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Contents:
Introduction 2
The market 2
Price assessments 2
Fertilizer
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2014 Companies Include
Fertgas | Biofert | Verbrugge Terminals |
Yara | Agrium | Fertera | Nitron | TiszaTextil
| Tessenderlo Chemie | Interjute | Tallship |
Escofert | Phosagro-Region | Carlos Sousa
Indstria | ICL FE | Euroports Terminals
Antwerp | Nitrogenmuvek | Achema |
Agronova | NT | Adriatica Dunav | Oilseeds
Trade | Victoria Group | Interfert | Koch |
Zakkencentrale | Wilson EuroCarriers | DLA
Agro | Rosier | Achema | SIA Elagro Trade |
Nitrofert | Fertil | Belor Eurofert | Zhivel-Agro
| Doschem | ANIG | EuroChem | Ekochema
| Polish Agriculture Development | Algio
| Agropolychim | Metalexfrance | Unifert
| Sembodja Bulgaria | Cargill Poland |
Sandvik Process Systems | Sirius Minerals
| Ostchem | Rabobank | Uralkali | Quest
International Trading | Cargill | Valagro |
Euro Fert | Lovochemie | Polyfer Handels |
Arvi Fertis | Fischbein | Inspectorate Russia |
Samsung C & T Corporation | Genfert Trading
| EMT - Blending and Bagging | Fertilia | Helm
| T.C.I | ArrMaz Chemicals | CFNR/CFND | Bio
Huma Netics | Pirexim | NF Trading | Fosfan
| Fertilore | Rusagrotrans | Haifa | Salinen
Austria | K+S KALI | Arvi Group | Ameropa
and many more...