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September 9, 2011 / Volume 25 / Number 22

September 9, 2011

TOP STORIES FINANCIALS PROJECTS

Shortlist for Burrup assets sale expected this month

Iraq mining conference gives priority to phosphates

PhosAgro posts 156% rise in 1H net

OCI ‘sQ2 net impacted by tax changes

Smaller losses for Phosphate Holdings

Haifa expands MAP capacity

H.J. Baker expands Stockton plant

Confederation & Magna plan Utah MOP mine

Mosaic adding to feed products line

Simplot completes Britz acquisition

PEOPLE FREIGHTS

IFA job for Uralchem’s Nina Khangaldyan.

New GM for CRU Fertilizer business

Capesize overshadow smaller vessels

Freight rates – a change in the air

Divestment

BASF, Yara deal for fertilizer assets may be just weeks away NEITHER PARTY would comment this week, but multiple sources following BASF’s efforts to divest its fertilizer operations in Belgium and France say that an agreement to sell them to Yara may be just weeks away. BASF put the business on the block in March, and Yara is known to have made a bid. Egypt’s Orascom Construction Industries (OCI) is also said to be interested.

The operations to be sold comprise production plants in Antwerp, Belgium and BASF’s 50% share of the joint venture PEC-Rhin in Ottmarsheim, France, The operations being divested have a total annual capacity of about 2.5 million mt/year and annual sales of around €500 million ($701 million), which accounts for less than 1% of the BASF Group’s total sales,

according to the Ludwigshafen, Germany-headquartered group. BASF said it hoped to complete the transaction by the first quarter of 2012.

In Antwerp, the assets up for divestment includes plants for calcium ammonium nitrate/ammonium nitrate (CAN/AN), NitrophoskaR-brand fertilizers and nitrophosphoric acid as well as three related nitric acid plants. The PEC-Rhin joint venture in France produces CAN/AN fertilizers and the respective intermediates, ammonia and nitric acid. The company is a 50-50 joint venture with GPN, a member of the French Total group.

“The assets would be a very good match with Yara,” said Christian Faitz, equity analyst with Macquarie Securities Europe. “The geography is a very good fit, and the product offerings are complimentary, especially on the nitrogen side. Total has not said what it will do with its half of the venture, but I would be surprised if they are not inclined to sell its half to Yara.”

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BASF-YARA NITROGEN CAPACITIES IN BEGIUM & FRANCE Capacity ‘000 mt/year BASF Antwerp, Belgium Ammonia 687 Solid FGAN 250 CAN 750 AS (by product of caprolactam production) 610 Nitrophoska n/a PEC-Rhin, Ottmarshein, France1

Ammonia 256 Solid FGAN capacity 185 CAN 165 Yara, Begium Ammonia (Tertre) 396 FGAN (Tertre) 200 CAN (Tertre) 700 Yara, France Ammonia (Gonfreville/Le Havre) 365 Urea (Gonfreville/Le Havre) 300 FGAN (Ambes) 500 FGAN (Montoir-de-Bretagne) 200 EGAN (Pardies) 130 CAN (Montoir-de-Bretagne) 100 1 The PEC-Rhin capacities shown are total capacities for these products; BASF owns a 50% share through the joint venture Source: CRU

Faitz added that the tricky part of the deal would be the marketing rights that K+S has for the BASF production through 2014. The arrangement can only be terminated by BASF or a potential buyer as of December 31, 2014 at the earliest.

“Yara would have to make an offer to buy out the remainder of the K+S rights,” Faitz said.

K+S in March ruled out a purchase of the BASF plants up for sale, citing its two-pillar strategy calls for growth especially in the Potash and Magnesium Products and Salt business segments, which means concentrating its management and financial resources on this growth.

However, K+S has not ruled out a sale of its nitrogen fertilizer distribution arm, K+S Nitrogen.

Spokesperson for K+S Michael Wudonig confirmed to FERTILIZER WEEK this week that within the framework of BASF's intended sale of its fertilizer activities, a sale of K+S Nitrogen is not ruled out.

“K+S is considering all available options,” he said. “Right now we are waiting for the outcome of BASF's selling process. Supply of K+S Nitrogen is not affected as the existing contract with BASF is terminable no earlier than by 31 December 2014.”

“The very synergies that make the BASF assets a good fit for Yara might actually raise regulatory questions,” said Marina Simonova, senior consultant in the fertilizer group at CRU. “Looking at it from a combined capacities’ point of view in Belgium, it is clear that a BASF-Yara deal would give Yara a monopoly position in ammonia and FGAN/CAN business in that country, which might mean some regulatory clearance would be needed.”

Whilst profitable, the fertilizer activities that are being divested by BASF do not belong to the group’s strategic core business, BASF said. BASF’s plants in Ludwigshafen are not included in the sale as they have an essential function for important value chains within the Verbund site.

Australia

Shortlist for Burrup assets sale expected this month BY THE end of September it is expected that a short list of final bidders for a majority stake in Australia’s only merchant ammonia plant will be released by the receivers handling the transaction, according to local sources. That timetable is just about the only clear detail in the blizzard of litigation and investigation surrounding the sale of the 65% controlling stake in Burrup Holdings Ltd. (BHL) formerly owned by Indian entrepreneur Pankaj Oswal and his wife Radhika before it passed into receivership late last year.

BHL’s wholly-owned subsidiary Burrup Fertiliser Pty Ltd. operates the 760,000 mt/year capacity ammonia plant just outside of Karrratha on Western Australia’s Burrup Pensinsula. The facility can run at up to around 850,000 mt/year but is still ramping up again following a fire in its purifier section on June 28. Norwegian fertilizer major Yara International holds the remaining 35% stake in BHL and has a 20-year offtake deal for the entire output of the plant.

The receivers, PPB Advisory, would not confirm the names of the companies that had been admitted to the data room for the Burrup assets, which include an interest in a proposed industrial grade ammonium nitrate project to be

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September 9, 2011 / Volume 25 / Number 22

built adjacent to the ammonia plant. But it has been widely reported that they include Australia’s Orica, Incitec Pivot and Wesfarmers, as well as the US oil and gas company Apache Corp. Australia and New Zealand Banking group (ANZ) brought in PPB last December, foreclosing on over AUD 860 million ($912 million) owed to it by the Oswal couple.

“There are more than 15 major pieces of litigation surrounding the Burrup plant,” a local source told FERTILIZER WEEK. “It is quite a mess. The Western Australian courts are just clogged up with this.”

The Oswals, who fled to their native India and are now operating out of Abu Dhabi, are suing the receivers for excessive fees and disputing the bank’s foreclosure. The plant’s natural gas suppliers are threatening to void their contract claiming that details of their secret pricing structure were disclosed in the data room.

That last complication struck legal experts in Australia as very odd, because one of the most basic pieces of information to a prospective buyer would be feedstock costs.

“It is a standard part of any due diligence,” one observer told FERTILIZER WEEK. “And even by the standards of this business, it is a strange claim to be making.”

If the shortlist is issued in the next few weeks, there is some hope that the entire business could be concluded within a year from the original foreclosure, but most observers acknowledge the process could drag on for years. But all are hopeful that the shortlist will bring some clarity. Once the shortlist companies have made their bids for the Oswals’ stake, Yara, owner of the other 35%, has a pre-emptive right to match the final bid.

Investment

Iraq mining conference gives priority to phosphates AT THE Iraq Mining 2011 conference held in London on September 7-8, the rehabilitation of the country’s phosphate industry was given top priority in the plan to rebuild Iraqi’s mineral and mining industries. The meeting was held in conjunction with the National Investment Commission of Iraq (NIC), which offers incentives for foreign investors, including ten years’ tax exemptions.

Geological surveys have indicated usable deposits of iron ore, copper, gypsum, dolomite and marble which have yet to be exploited, while output from other mineral resource-based industries, including sulphur and phosphates, has been at very low levels for the past three decades in the aftermath of wars, economic sanctions and the degradation of infrastructure.

At the meeting, Dr. Rowsch N. Shaways, deputy prime minister, declared that each mineral sector represents an important building block in the reconstruction of the Iraqi economy. The minerals and mining sector contributed just 6% to the country’s GDP in 2008 but has the potential to play a more significant role, reducing dependency on the hydrocarbon sector.

Mohammed Abdullah, deputy minister of industry and minerals, observed that Iraq uniquely has the four primary fertilizer feedstocks, giving it the potential to produce the entire range of N, P, K and sulphur fertilizers. It is already producing TSP, DAP and MAP, but the plant at Akashat, in Anbar province, western Iraq is only operating at 10% of capacity. Similarly, Al-Mishraq Sulphur Co. (MSSC) is only operating at around 20% of its design capacity of 820,000 mt/year, using the Frasch extraction process.

Listing the priority projects for investment, Dr. Khaldoun al-Bassam, director general of the state-owned Geosurv agency placed the rehabilitation of the phosphoric acid plant at Akashat at the top. The downstream production site is close to two open-cast phosphate rock mines. At full production, the 1 million mt/year P2O5 phosphoric acid plant would have a requirement for 6 million mt/year phosphate rock and 1.2 million mt/year of sulphur. The Akashat site is served by rail and paved road, is connected to the Iraqi electric supply grid and has good water available. There are

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September 9, 2011 / Volume 25 / Number 22

no significant environmental issues regarding phosphogypsum disposal.

The estimated cost of rehabilitating the Akashat facilities is $280 million: in addition to the estimated $130 million cost of the phosphoric acid plant, this comprises the beneficiation unit ($30 million), the 600,000 mt/year TSP plant ($50 million), the 280,000 mt/year MAP plant ($40 million) and the 655,000 mt/year NPK facility ($30 million). Output from the rehabilitated Akashat complex would be targeted for markets in the Indian sub-continent and elsewhere in Asia. The cost of rebuilding the Mishraq sulphur facility is estimated at $110 million.

Iraq can potentially play a very high-profile role in global phosphate markets in the longer term. Greg Fernette of the US Geological Survey (USGS) outlined Iraq world-scale reserves of phosphate rock, with the four largest deposits holding 5.75 billion mt, or 9% of the world total. The Akashat deposit holds an estimated 1.7 billion mt at an average 21% P2O5, while the H3 deposit holds 332 million mt at an average 17.9% P2O5. Other promising discoveries are at Ethna (218.7 million mt at 18.1% P2O5) and Swab (3.5 billion mt at 21.7% P2O5).

“These are world class deposits,” Fernette said. Beneficiation could raise the average P2O5 content to 25%. The Swab deposits also contain 4.29 billion mt of limestone, which could be used in cement manufacture.

However, several issues cast a long shadow regarding investing in Iraq, not least the issues of security and corruption. While local sources report security in the country is much improved, Iraq ranks third from the bottom in Transparency International’s global corruption listings.

FINANCIALS

PhosAgro posts 156% rise in 1H net RUSSIAN PHOSPHATE fertilizer group PhosAgro this week reported a 156% rise in net income for the group to RUB 12.3 billion ($429 million) for the first half of 2011 ended June 30, compared with the same prior year period when it made RUB 4.8 billion, basis IFRS financial statements.

Revenue for the period was 35% higher year-on-year at RUB 48.8 billion compared to RUB 36.1 billion for the first six months of 2010.

Operating profit came in at RUB 14.9 billion, up 142% from the first six months of last year. EBITDA increased 106.4% year-on-year to RUB 17.8 billion, representing an EBITDA margin of 36.4%, compared to an EBITDA margin of 23.8% on a RUB 8.6 billion result in first half of 2010.

PhosAgro said its strong financial performance in the first six months of 2011 was influenced primarily by higher fertilizer prices compared to the same period in 2010.

Cash flow from operations amounted to RUB 17.9 billion in the latest reporting period, compared to RUB 4.3 billion a year earlier. The group said its capital expenditure (capex) during the same period was RUB 5.9 billion compared to RUB 3.3 billion in the first six months of 2010. Investments in the construction of ore shaft № 2 at the Kirovsky underground mine (which PhosAgro said is expected to enable the group to increase production to 14 million mt/year in two-to-three years), as well as construction of new urea capacity and a 32 Mw gas-powered electricity generation facility at Cherepovetsky Azot, were the main sources of capex in the first half of 2011.

Modernisation of №4 MAP/DAP line at Ammophos and urea capacity increase at Cherepovetsky Azot on track for launch in 2012, the group said.

Net debt stood at RUB 19.8 billion ($705 million), up by RUB 16.1 billion from December 31, 2010. PhosAgro said this puts its net debt/annualised EBITDA at a “very comfortable” level of 0.56x.

PHOSAGRO: FINANCIAL & OPERATIONAL HIGHLIGHTS 1H 2011 1H 2010 Year-on-

year change

$ RUB $ RUB % Revenue 1,704m 48,764m 1,200m 36,086m +35.1% EBITDA* 620m 17,752m 286m 8,602m +106.4% Net income 429m 12,921m 160m 4,798m +156.2%

‘000 mt ‘000 mt Phosphate fertilizer and MCP sales

1,992 1,920 +3.8%

Phosphate rock sales

1,588 1,933 -17.8%

Nitrogen fertilizer sales

491 404 +21.5%

Rates: average 6M 2010: 30.07 USD/RUB; 6M 2011: 28.62 USD/RUB

As of 30 June 2010: 31.20 USD/RUB; as of 30 June 2011: 28.08 USD/RUB

*EBITDA is calculated as Operating Profit adjusted for Depreciation and Amortisation. Source: PhosAgro

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PHOSAGRO: 1H 2011 PRODUCTION Product ‘000 mt Phosphate rock 3,861 Nepheline concentrate 478 Phosphate-based fertilizers and feed phosphate 2,041 Ammonium nitrate 239 Urea 252

Source: PhosAgro PhosAgro CEO Maxim Volkov commenting on the

results said: that the group sees continued tightness in soft commodities markets at least through the end of the year, supporting fertilizer prices and volumes globally as farmers invest in maximising crop output.

Volkov noted that the new capacity from Ma’aden in Saudi Arabia has not to date caused disruptions to the market, and he believes that demand will at least match capacity going forward.

OCI ‘s Q2 net impacted by tax changes EGYPT’S ORASCOM Construction Industries Limited (OCI) this week reported a 14.7% increase in net income to $165.2 million for the second quarter ended June 30, 2011, against $144.0 million for the same prior year period. The company said net income during the second quarter of 2011 was impacted as a result of an increase to the Egyptian corporate income tax from a previous 20% to 25%.

EBITDA came in 33.9% higher at $360.6 million, up from $269.3 million a year earlier. The company reported a consolidated EBITDA margin of 24.5% for this latest reporting period, down two percentage points from a year earlier. Fertilizer business in the second quarter of 2011 contributed 68.7% to the OCI group’s EBITDA while construction business accounted for the balance 31.3%, excluding intercompany and corporate contributions.

Consolidated revenues increased 9.8% to $1.47 billion, up from $1.34 billion in the second quarter of 2010.

For the six months to June 30, 2011, OCI posted a 42.4% rise in net income to $371.3 million from $260.7 million in the first half of last year. EBITDA for the latest half year increased by 38.2% to $695.3 million, up from $503.0 million a year earlier. The company achieved a consolidated EBITDA margin of 25.4% for the six months to 30 June, 2011, an increase of 3.8 percentage points from the first half of 2010.

Half year consolidated revenues grew 17.5% to $2.74 billion from $ 2.33 billion in the first half of 2010.

During the second quarter, OCI’s Fertilizer Group sold approximately 1.17 million mt of nitrogen-based fertilizers. FERTILIZER GROUP: TONNAGE SOLD BY SUBSIDIARY ‘ 000 mt Ownership Q1 2011 Q2 2010 EFC 100% Urea 332.8 347.4 Ammonium sulphate 13.4 0.5 Urea ammonium sulphate 8.9 0.0 EBIC 60% Ammonia 174.5 184.2 OCI Nitrogen 100% Calcium ammonium nitrate 294.3 294.8 Urea ammonium nitrate 64.0 62.3 Ammonia 119.8 122.5 Urea 66.0 104.2 Nitric acid 8.7 12.7 Melamine 38.0 41.4 EFT* 100% Urea 27.0 2.8

EFT’s traded volume is not included in EFC’s reported volumes Source: OCI

The OCI Fertilizer Group is currently focused on its

organic initiatives and major capacity additions in Egypt, Algeria, the Netherlands and the US. OCI noted that all major capital expenditures related to these initiatives have been spent and all the projects are currently in commissioning phases to start contributing to earnings during the coming six months.

The company said commissioning of its Sorfert Algeria ammonia and urea plant at Arzew continues to progress on-track and the plant is scheduled to enter commercial production before the end of the year. Sorfert, in which OCI holds a controlling 51% stake, will add 1.2 million mt of urea and 0.8 million mt of ammonia to OCI’s annual production capability.

In the Netherlands, OCI reported that OCI Nitrogen is on track with the expansion of its CAN line which is expected to increase capacity by 300,000 mt/year or approximately 25%. The capacity increase will be complete in early 2012. OCI Nitrogen is also restarting a 30,000 mt/year melamine plant in Geleen which has been shutdown since 2008. The melamine plant is expected to

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start operations by year end. OCI Nitrogen is also debottlenecking its ammonium nitrate (AN) liquor capacity which will maximise production capacity of its urea ammonium nitrate (UAN) line.

In the US, OCI said, turnaround of Pandora Methanol LLC, which the Egyptian company acquired via a joint venture in May, is on-track with the ammonia and methanol production lines scheduled to start during the fourth quarter of 2011 and second quarter of 2012 respectively. OCI owns a 50% stake plus one share in Pandora and is partnered by Janus Methanol AG. The Pandora facility, which is located at Beaumont, Texas, will add 250,000 mt/year of ammonia and 750,000 mt/year of methanol production capacities to the OCI group.

In addition, the Pandora plant has an ammonia tank with a capacity of 18,000 mt and two methanol storage tanks with a capacity of 22,000 mt each. The plant has pipeline connections to adjacent customers and port access with dedicated methanol and ammonia import/export jetties and will ship both products along the Gulf Coast. OCI’s 100% owned subsidiary Egyptian Fertilizer Company (EFC) is expected to complete its debottlenecking initiatives at EFC Line II and EFC Line I before the end of the first quarter of 2012. The debottlenecking at EFC will increase capacity by 250,000 mt/year or approximately 20% to an annual capacity of 1.55 million mt

OCI is commencing a process to change its legal status into a Law 95 Holding Company. The company said the proposal will be shortly put forward to the shareholders in an Extraordinary General Meeting (EGM). Post EGM approval, the proposal will require the approval of the Egyptian Financial Services Authority (EFSA) and the Investment Authority. The primary aim of this move is to reorganise the two operating businesses in to two separate legal structures under the umbrella of the proposed holding company, said OCI.

Smaller losses for Phosphate Holdings PHOSPHATE HOLDINGS, Inc., parent company of US DAP producer Mississippi Phosphates, reported a second quarter 2011 loss of $1.8 million, or $0.21 per diluted share of common stock, compared to a loss of $4.9 million, or $0.58 per diluted share of common stock for the same period in 2010. Earnings before interest, taxes,

depreciation and amortisation (EBITDA) for the second quarter ended June 30, 2011 were $2.0 million, compared to negative EBITDA of $4.6 million for the second quarter of 2010. Total net sales for the second quarter of 2011 were $80.5 million, a 30 percent increase from total net sales of $62.1 million for the second quarter of 2010.

“The primary factors negatively impacting our production included phosphate rock shortages due to logistical issues in Morocco which idled our phosphoric acid and DAP plants for nine days,” said Robert E. Jones, Phosphate Holdings CEO. He also cited damaged heat exchangers which limited instantaneous rates to approximately 1,000 to 1,200 st/day in both sulphuric acid plants; and a scheduled maintenance turnaround of one sulphuric acid plant, which required 19 days.

Summarising the quarter Jones added: “We simply failed to achieve the production levels of sulphuric acid and DAP necessary for a positive quarter. For the quarter, DAP and sulphuric acid production was 134,445 st and 146,043 st, respectively. We relied heavily on purchased sulphuric acid to supplement DAP production. However, the cost of DAP produced with purchased sulphuric acid is substantially higher than the cost of DAP manufactured using produced acid.”

The average sales price per short ton of DAP during the second quarter of 2011 was $542.54, a 36% increase from the prior-year period average sales price of $400.26. During the second quarter, the company sold 146,213 st of DAP, with 74,361 st moving into export markets and 71,852 st moving into domestic markets. That compares with 152,434 st of DAP sold in the second quarter of 2010. The company had an operating loss of $2.6 million for the second quarter of 2011, compared to an operating loss of $7.1 million for the prior-year period.

“Phosphate market underpinnings were strong during the second quarter of 2011,” Jones noted. “Posted DAP prices ranged from $530 to $590 per st, NOLA, and $600 to $645 per mt, FOB, US Gulf. Sulphur prices in the quarter were posted at $220 per long ton, CFR, Tampa. Ammonia prices averaged $563 per mt, CFR, Tampa, during the quarter.”

Looking ahead, Jones said global phosphate markets should remain strong.

“The compromised heat exchanger will continue to constrain production from the No. 3 plant, and we will again seek to augment DAP production with purchased sulphuric acid. We currently project that total DAP production in the

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third quarter of 2011 will be approximately 155,000 to 165,000 st, and that 15% to 20% of that total will be produced with purchased sulphuric acid.”

At the end of 2010, the board of directors appointed a special committee of independent directors to initiate a comprehensive review of strategic options. The company says it will suspend quarterly earnings calls until the review process is complete.

PROJECTS

Haifa Chemicals expands MAP capacity ISRAEL’S HAIFA Chemicals, a global supplier of potassium nitrate for agriculture and industry, speciality plant nutrients and food phosphates, is building a new production facility for MAP.

Construction of the facility, located at the company’s existing Mishor Rotem production site in southern Israel, has already started and it will be completed in 2012, Haifa Chemicals reported in a September 5 statement.

“The plant's building marks another important step in the execution of Haifa's strategic plan to extend and diversify its production facilities,” the company’s vice president Sales and Marketing, Natan Feldman, said. "The new plant fits the growing demand for Haifa's products, with an emphasis on MAP.

Haifa Chemicals’ vice president Operations, Raoul Ronen, said the establishment of the new plant will not only increase production capacity but will also improve the stability of supply, enhancing the company’s ability to respond to changing market situations.

H.J. Baker expands its Stockton plant H.J. BAKER & Bro., Inc. recently completed a planned expansion of its Stockton, California plant where it manufacturers Tiger-Sul’s TIGER 90CR® and TIGER MICRONUTRIENTS® sulphur fertilizers. A second pastillation belt has been added.

This will allow for expanded production to meet increased customer demand, the Westport, Connecticut-headquartered company said this week.

Stockton is one of three H.J. Baker’s Tiger-Sul manufacturing facilities in North America and produces pastillated sulphur-based fertilizer products for agriculture and other applications.

H.J Baker president and CEO, Christopher Smith, said: “This new expansion will permit us to double the amount of TIGER 90CR® and TIGER MICRONUTRIENTS® sulphur fertilizers available to our customers in the western United States and allow us to meet the demands of our rapidly growing customer base. H.J. Baker is committed to responding to customer demands.”

According to the company, using TIGER 90CR® sulphur allows the farmer to spread one-third the amount of product versus traditional soil sulphur application to his crop while maintaining appropriate coverage and saving valuable resources. By adding a second pastillation belt, the company said, it is committed to the expansion of bentonite sulphur throughout the western states.

H. J Baker said the Tiger-Sul pastillation process produces an especially uniform product that is an excellent fit for California soils. These products encompass environmentally friendly features such as a season-long release of nutrients that minimises nutrient loss to the environment while improving plant availability. Many of H.J. Baker’s Tiger-Sul products are also listed for use in organic farming systems.

Confederation & Magna plan Utah MOP mine CONFEDERATION MINERALS and Magna Resources, both based in Vancouver, Canada, report their joint venture has acquired an additional 960 acres of potash and lithium leases as part of the Green River potash project in the Paradox Basin, southeast Utah. The new lease includes two state sections that were acquired via a competitive bid and are north of and contiguous with the north end of American Potash’s existing Green River project area. That comprises 7,050 acres of state leases and is contiguous with 63,241 acres of pending potash prospect permits. The company says there are four potential in-situ solution mineable target salt sites. One is already being solution mined at the Cane Creek site in the central part of the Paradox Basin, southeast of the Green River project area.

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PEOPLE

IFA job for Uralchem’s Nina Khangaldyan HEAD OF Russian fertilizer group Uralchem’s Market Research and Trade Policy Department, and Foreign Affairs adviser, Nina Khangaldyan, has been appointed senior adviser to the Director General of the International Fertilizer Industry Association (IFA) for Eastern Europe and Central Asia.

In her new post, Khangaldyan will carry out a number of functions, Uralchem said. A key function will be the organisation of information exchange in the fields of agrochemical industry and agricultural production between IFA and all producers of mineral fertilizers in the CIS countries. Other important functions will include coordination of IFA contacts, mentoring conferences and other events in Eastern Europe and Central Asia, and the development of other spheres of mutually beneficial cooperation.

Khangaldyan, commenting on her appointment, said "To represent a reputable international organisation like IFA in the region is an honour but also a responsibility for Uralchem Holding, as well as for me personally."

When announcing Khangaldyan’s appointment, IFA’s director general, Luc Maene, emphasised the particular importance of further cooperation with countries in Eastern Europe and Central Asia, especially in light of the IFA Secretariat’s regional initiative to deepen two-way interaction.

New GM for CRU Fertilizer business NICK EDWARDS has joined CRU Group as general manager of its fertilizers business, which includes CRU’s 10 Year Outlook reports, Multi-client studies, Cost Curves as well as FERTILIZER WEEK and the FW+ Short

Term Forecasts. He was previously director of the construction and building services market at London-based business media company Emap Inform and has worked in business information for 20 years covering a range of industries including healthcare, polymers, supply chain management, freight and technology. Edwards can be contacted on:

Tel: +44 207 903 2174; Mobile:+44 7976 558081; Email: nick.edwards@crugroup.com; Skype: NickEdwardsCRU.

OTHER NEWS

Mosaic adding to feed products line MOSAIC FEED Ingredients, a division of The Mosaic Co., recently received patent approval for Nexfos™, a granulated feed-grade monodicalcium phosphate for use in animal and poultry feed. Production of Nexfos will begin during the fall of 2011.

“Nexfos is the first innovation in feed-grade phosphate in 40 years,” Eddy Fontana, regional feed sales manager for Mosaic said. “At Mosaic, we’ve taken a commodity – phosphorous - and added value to create an improved feed-grade phosphate.”

According to the company, Nexfos features increased efficiency, enhanced bioavailability and a higher, more sustainable concentration of phosphate.

“Commercial trials showed Nexfos enhanced throughput and improved energy efficiency in the milling process,” Mosaic said. “The unique Nexfos formulation also results in superior pelleting and physical qualities for ease of handling and uniform dispersion in mixed feeds and minerals.”

Simplot completes Britz acquisition US FIRM, JR Simplot Co., has completed its scheduled acquisition of the minority interest of Britz-Simplot Grower Solutions, LLC, a distributor of seed, crop nutrition and crop protection products to growers in California’s San Joaquin Valley.

The LLC was formed in October 2008 as a transitional step in Simplot’s acquisition of Britz Fertilizer, Inc.

The 10 former Britz Fertilizer locations, which employ more than 400 people, will now operate within the Simplot Grower Solutions distribution network, comprised of nearly 100 stores from California toMinnesota and Washington to Texas, the company said.

Peter Niboli, former sales manager for Britz Fertilizer, will serve as director of California Retail for the newly consolidated Simplot locations.

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September 9, 2011 / Volume 25 / Number 22

FREIGHT SECTION

Capesize overshadow smaller vessels ALTHOUGH THE last month has seen a sudden jump in Capesize charter rates (with the average spot rate leaping from around $10,000/day to a year-to-date high of $24,748/day on September 8), charter rates for ships carrying fertilizers, however, remained relatively stable.

Average spot charter rates for Supramaxes increased just over 10% over the past month to $14,538/day, while the equivalent rate for Panamaxes climbed 14%. Upward movement in the Panamax market can be traced to an improvement in the Pacific Round Voyage rate, which rose 64% over this period to $13,598/day, the same as the corresponding rate in the Atlantic.

Despite these recent modest gains, all markets are currently well below the year-ago level (in the case of Panamaxes the drop is 50%). This demonstrates the impact of the historically high influx of newbuildings this year on ship supply/demand balances. Since the turn of the year the Panamax fleet has expanded by 7%, whereas year-to-date growth in the Handymax/Supramax fleet has already exceeded 10%.

The freight derivatives market shows that market sentiment for next week has remained weak. The 2012 calendar year for the four Panamax timecharter routes is currently trading around $12,100/day (still at a discount to the physical spot rate of $13,410/day). This article was provided by SSY Consultancy & Research While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. SSY can accept no responsibility for any errors or any consequence arising therefrom.

Freight rates – a change in the air EVERY TWO weeks we take a look at freight markets, trying to work out what may lie around the corner. We use freight derivatives as a guide for market sentiment, always knowing that they are not a forecast of themselves. Markets have been moribund for months now, but we are beginning to see a different picture emerging. Is this ‘change in the air’ a temporary phenomenon, or are we in new waters?

We start by looking at Capesizes which are useful as a

guide to the general market sentiment. What we see from the graph above is how September spot numbers have started out significantly higher than August, and higher than anything we have seen since November last year. In absolute terms, the difference is still relatively small (less than $2/mt), but it represents a step change away from the $9/mt - $10/mt range we have become used to. The rise in spot numbers has dragged all the front months in the Forward Curve higher, with September surpassing the spot market itself. This suggests that the market does not believe that fundamentals have changed, but we are in for a bit of a spike.

The short-term curve shows how dramatic the rise has

been and that October FFAs have been keeping pace. We are currently just above the 50% retracement point heading back to the highs seen in October last year. We look set for higher numbers, but we are still a long way from the previous highs at above $14/mt.

$8

$10

$12

$14

Capesize - Spot History & Forward Curve

Mon average

As At 18-Aug

As At 25-Aug

As At 01-Sep

As At 08-Sep

$6

$8

$10

$12

$14

$16

Capesize - Spot Market & Next Month FFA

Spot

Next Month

10

September 9, 2011 / Volume 25 / Number 22

For Panamaxes, the picture is the same as for

Capesizes, only it appears to be running in a slightly delayed manner. The spot market in September has risen sharply, but the forward curve numbers are climbing even faster. With headroom to the FFA line, we should expect further market increases. However, the overall picture remains unchanged, with players believing that we will be back to ‘normal’ levels by the year end.

When we try to assess how much higher spot numbers

could go, we note that our last ‘strong’ market peaked out at $15,000/day. This should represent strong resistance. We look set for higher numbers in the short term, but we would not be surprised to see the market top out within the next 10 days.

So, to answer our own question at the start of this analysis, we conclude that this ‘change’ is a temporary phenomenon, and that ‘normal service’ will be resumed as soon as possible. It could be a good time for those parties holding long freighting positions to take a little profit and see what happens next.

The above article was provided by Tau Shipping Consultants, London with data supplied by Freight Investor Services, London.

$5,000

$10,000

$15,000

$20,000

$25,000

US$/

day

Date

Panamax - Spot Market & Forward Curve

Monthly Average

As At 18-Aug

As At 25-Aug

As At 01-Sep

As At 08-Sep

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

US$/

day

Date

Panamax - Spot Market & Next Month FFA

Spot Market

Next Month

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