NOLA granular urea barge prices continued to surge early this week, with prices reported to have easily topped the $500/st FOB mark. They were reported to have quickly moved as high as $520/st FOB and beyond, according to market sources. Many buyers had put off buying and now the prospect for an early spring and big corn acreage have them seeking product, according to sources.

For more information, see the Green Markets Web-Edition March 2.

Christmas has arrived early this year for U.S. urea buyers thanks to the Euro crisis!!!

In the last two weeks, Green Markets reports urea price reductions over $65 per short ton f.o.b. NOLA while Profercy reports NOLA purchases at $375 per ton. The November NOLA average hovered at $470. That puts things in perspective.

What we are hearing is that the problems aren’t just the weak Euro depressing fertilizer (and grain) prices; the bigger worry is that the Euro will actually collapse as a currency. Any transaction caught in the middle if/when this occurs will likely not be paid, be paid very late, or at a steeply discounted rate in some other currency (eventually). Traders aren’t making deals because they are scared.

“A picture is worth a thousand words”, the old saying goes. Check the graph below.

Source: http://www.fertilizerworks.com/html/market/Profercy.pdf

Back in June, we passed along a market prognostication concluding with others that (1) world inventories of Urea would remain tight through December, (2) there would be no major build-up of producer inventory (product would be sold as it was produced), (3) any price reversals would be temporary, and (4) prices would continue to trend upwards.

We could be a little embarrassed, but this topsy-turvy world economy is mystifying to everyone including us. Is it the see-saw 1930’s all over again? We don’t know. One thing for sure – deficits and government debt are scaring the daylights out of everyone.

On the fertilizer supply side, U.S. and Canadian natural gas remains cheap keeping domestic manufacturing costs down, the fertilizer market is in its seasonal ebb as northern hemisphere markets shifts to the southern hemisphere. Imports are strong because Europe is weak(er).

On the demand side, Europe is sitting on held-over urea inventory from last season, Indian purchases are soft, speculators are trying to unload long positions, and U.S. buyers are wondering how low pricing can go before winter-fill to replenish warehouses for spring.

So this is the market snapshot in December – a far cry from six months ago.

From all of us at Cervantes-Delgado, Inc. (CDI), we wish all of you a very Merry Christmas and a Safe and Prosperous New Year!

From time to time, CDI sends out market assessments when we see odd, perturbing, or disturbing events occurring in the urea market place.  Now is such a time.  Urea prices have skyrocketed over the past two months, an event which not only has shocked us but also the rest of the industry.  Initial causes were flooding, closures throughout the Mississippi River, plant outages, rebuilding of low inventory stocks, the forward strength of the grain markets and speculation here in the U.S.

Over the last week, however, an additional and more serious event has occurred which has world wide implications.  China is normally a big exporter of urea especially during the second half of the year.  There is now a growing realization that China will not be the big export player that it was last year due to a tougher export tax policy.  Consequently, there is now a scramble worldwide for product from other origins. For the U.S., what had been a temporary shortage due to natural disasters here at home has now become a world shortage for everyone.

The net result has been a dramatic increase in prices.  The U.S. Gulf has seen a run up in prices of $45-$50 per ton in just the last week over and above the price jumps of the last month.  A $50 per ton increase in dry urea translates to the following for:

32.5% Urea Solution =  $0.1136 per gallon

40% Urea Solution    =  $0.1174 per gallon

50% Urea Solution    =  $0.1191 per gallon

Prognosticators such as Green Markets and Profercy are now forecasting (1) that world inventories of Urea will remain tight, especially July through December, (2) there will be no major build-up of producer inventory – product will be sold as it is produced, (3) any price reversals will be temporary, and (4) prices will continue to trend upwards.

The general conclusion is that there appears to be no mitigating circumstances that could reverse these price trends, at least over the short term. 

                             UREA PRICE TRENDS

Nett Technologies Inc. has received US-EPA verification of its BlueMAX 100 Selective Catalytic Reduction (SCR) system for controlling NO_x emissions from mobile nonroad medium and heavy duty diesel engines. The verification is a first of its kind issued for retrofit device under EPA ETV program.

Nett’s BlueMAX™ SCR system is designed to control nitrogen oxides (NO_x) emissions. The system uses a urea control strategy that relies on a NOx concentration measurement by a sensor positioned upstream of the SCR catalyst. Based on the NO_x sensor signal, in combination with an engine mass air flow sensor and temperature sensor, the necessary urea dosing rate is calculated by the control algorithm.

Feed forward NO_x sensor-based control strategy, enables the system to be ideal for retrofit applications. The system can be installed on a wide range of diesel engines and no additional engine calibration is necessary. The Nett BlueMAX™ SCR system also controls diesel particulate matter (DPM), hydrocarbons (HC) and carbon monoxide (CO).

Verification testing, over two test protocols; NRTC and 8-mode steady test cycles conducted at the Southwest Research Institute proved that the system reduced NO<SUB<X< sub> by 68-70%, PM by 12-30%. CO emissions were reduced by 87-94% and HC by 99-100%.

Nett’s BlueMAX 100 opens new opportunities to nonroad equipment users operating in nonattainment areas or where specified regulations exist for reducing NO_x.

Nett is known for its ability to provide direct retrofit (catalyst assembly replaces the equipment’s original muffler) solutions in some of the most challenging configurations where the catalyst may be nearly four times the size of the original muffler through an integrated approach of design engineering and manufacturing. The Nett BlueMAX™ SCR system is offered as a direct-fit design. This simplifies the installation and offers a customized cost-effective solution to a sophisticated emission control problem.

Reducing emissions from diesel engines is one of the most important air quality challenges facing the country. Even with EPA’s more stringent heavy-duty highway and off-road engine standards set to take effect over the next decade, millions of diesel engines already in use will continue to emit large amounts of nitrogen oxides, particulate matter and air toxics, which contribute to serious public health problems.

The Sylvite Group of Companies has reached a distribution agreement with Cervantes-Delgado, Inc. to distribute AirBlueFluids Diesel Exhaust Fluid in Canada, supplying this new product to fuel and transportation industries.

Diesel exhaust fluid (DEF) is required in new diesel engines that utilize Selective Catalytic Reduction (SCR) technology to reduce NOx emissions.  In addition to the environmental benefits, users will experience up to a 5% improvement in fuel efficiency, optimized power and less cleaning of the diesel particulate filter.  Diesel exhaust fluid is a non-toxic, non-polluting and nonflammable high-quality urea solution which treats exhaust gas downstream of the engine to convert NOx into harmless nitrogen and water.

“Sylvite is very excited to launch API-certified AirBlueFluids Diesel Exhaust Fluid to the market.  As many customers seek practical solutions for the challenges of the new SCR technology, Sylvite is proud to serve them by leveraging our extensive fuel and chemical experience” assures Sylvite Vice-President Jeremy Goodfellow.

The Sylvite Group of Companies (www.sylvite.ca) is a strategic partner in providing supply chain value-added products and services to agricultural, industrial and government customers in targeted geographic markets.  The Company has international access to a variety of products and three decades of experience in bringing these items to Canada and delivering them in a value-added manner to our customers.  The Sylvite Group continues to systematically expand these core product and service competencies and increase both the geographic reach and the market segments served by the business.

Cervantes-Delgado, Inc. (CDI) was incorporated in 2001 for the primary purpose of marketing and distributing urea solutions for SCR and SNCR NOx systems.  With a management team that has over 100 years of experience in the marketing, distribution and engineering of urea systems plus over 30 years in catalyst manufacturing, CDI is proud to have the capabilities to service their customers from 31 different locations across the United States and Canada and continues to evaluate market conditions to strategically locate additional production facilities as near as possible to evolving markets.

For further information, please contact Jeremy Goodfellow, Vice President, Sylvite Group of Companies (1-800-229-0602 or jgoodfellow@sylvite.ca).