sábado, 28 de fevereiro de 2015

Crude prices to have marginal US sulphur impact

Houston, 17 February (Argus) — The North American sulphur market is likely to be affected more by the direction of the phosphate market than by falling crude prices, though crude supply will impact fundamentals.
While crude prices have fallen by about 50pc since June, US benchmark sulphur prices have increased. The first quarter Tampa molten sulphur benchmark increased by $18/lt over the prior quarter to $147/lt del in late January/early February because of firming in the global market and temporary tightening of local supply related to seasonal refinery turnarounds. Sulphur is a byproduct of oil refining and a key phosphate fertilizer feedstock. Historically, sulphur has shown a much stronger positive correlation with phosphate prices than oil.
Sulphur pricing will remain under the primary influence of end-user market dynamics. But supply-side factors could limit the scale of future price increases. Planned and expected shutdowns could reduce US average sulphur demand by around 500,000 lt/yr from its current level of just over 9mn lt/yr. The closures include PotashCorp's Suwannee River chemical plant in Florida, the second quarter shutdown of its Geismar, Louisiana, sulphur-based acid plant, and Mississippi Phosphates' bankruptcy and shutdown late last year.
These demand reductions could be offset some by US phosphate giant Mosaic operating at higher production rates early this year to meet market demand and take advantage of lower ammonia prices, despite the increased cost in the first quarter sulphur price. Some sulphur-burned acid producers are also aiming to ramp up utilization rates to meet customer requirements.
But by year's end, Mosaic should be operating its 1mn t/yr sulphur melter in Florida for which it will import offshore formed sulphur and remelt it for its own consumption, representing a shift away from regionally-recovered molten sulphur. Depending on the facility's utilization, this could further disrupt US demand prospects, regardless of the price of crude oil.
Amid drastically lower oil prices, large oil and service companies have announced layoffs and capex cuts. Interest in investing in new infrastructure and projects focused on byproduct sulphur could be limited while the market negotiates these changes. Syncrude has paused its planning of a potential sulphur remelt facility to turn formed sulphur blocks in Canada back into molten form for regional shipments. Still, several Canadian entities are also weighing new sulphur forming projects to increase exports of byproduct sulphur because its primary trade partner, the US, has been increasing its own production and importing less.
Since sulphur is the unintentional byproduct of oil refining and natural gas processing and North America is a net-exporter of sulphur, refining and upgrading activities have dictated North American sulphur supply fundamentals.
US refiners have more than tripled their exports since 2005 amid healthy margins, which has kept US refinery utilization rates high. At the same time, the sulphur content of the overall US crude slate has risen to 1.46pc from 1.42pc, according to the Energy Information Administration (EIA). The increased pipeline availability of higher sulphur Canadian crudes has driven the trend.
EIA data show refinery sulphur production capacity increased by 33pc from 2005-2014 to over 41,300 st/d. US refiners have boosted desulphurization capacity to comply with the Environmental Protection Agency's (EPA) Tier 2 Gasoline Sulfur program which in 2005 reduced average sulphur levels to 30ppm from 120ppm.
US refiners' sulphur recovery has increased even as domestic grades have trended lighter and sweeter. For example, BP upgraded its 410,000 b/d refinery in Whiting, Indiana, specifically to run heavy Canadian crude. Rising supply of Canadian and US domestic grades have displaced heavy, sour waterborne imports. Canadian heavy crude accounts for 40pc of foreign imports to the US and has room to grow.
Complex US refineries could see ample incentives to process discounted heavy, sour crudes despite a flood of domestic sweet supply. Those incentives could only grow if the discount of US benchmark West Texas Intermediate (WTI) widens against the global Brent marker. Valero recently said it expects this price trend to occur and will revert to a more medium, heavy crude slate at its US Gulf coast refineries, probably starting from March. In January Alon USA said it increased West Texas Sour crude runs in Big Spring, Texas, despite making investments to run more light, sweet on attractive asphalt margins.
Some refiners closer to tight oil supply continue to favor light, sweet including Marathon's refinery in Robinson, Illinois, which has easier access by rail to Bakken supply from North Dakota. Even so, some refiners' demand for Canadian crude will hold steady because they have the coking capacity to run it.
Legislative developments have also encouraged increased sulphur recovery because of demand for lower-sulphur products. From 1 January, vessels traveling within the US Emissions Control Area (ECA) are now required to switch from 1pc to 0.1pc sulphur bunker fuel. By 2017, the EPA Tier 3 Gasoline Sulfur program aims to reduce sulphur content of traditional gasoline to 10ppm sulphur from the prevailing 30ppm level. Industry estimates suggest this would be a net increase of 20 st/d sulphur production for refiners. It is unclear how many refiners have already begun producing product to this specification, well in advance of the new mandates, making the increased sulphur recovery volumes in the coming years difficult to quantify. (From: http://www.argusmedia.com/pages/NewsBody.aspx?id=994231&menu=no)

sexta-feira, 20 de fevereiro de 2015

Yara and BASF to build ammonia plant in Freeport, Texas

The ammonia plant will be owned 68 percent by Yara and 32 percent by BASF and located on BASF's site in Freeport. The plant will have a capacity of about 750,000 metric tons per year. Each party will off-take ammonia from the plant in accordance with its equity share. Total capital investment for the plant is estimated at USD 600 million. Yara will in addition build an ammonia tank at the BASF terminal bringing Yara's total investment to USD 490 million. BASF will in addition upgrade its current terminal and pipeline assets.
The hydrogen technology reduces capex and maintenance significantly compared to a traditional natural gas based ammonia plant. The technology also allows for lower carbon dioxide emissions. A long-term supply agreement for nitrogen and hydrogen has been signed with Praxair Inc, the largest industrial gases company in North America, linking the feedstock variable cost to the advantageous natural gas prices available at the U.S. Gulf coast.
KBR, Inc, Houston, Texas, has been awarded a fixed price turnkey contract for the engineering, procurement and construction. The plant is expected to be completed by the end of 2017. Yara will manage construction of the plant while BASF will operate the plant and the export terminal.

terça-feira, 10 de fevereiro de 2015

Mosaic raised at Morgan Stanley, which cites undervalued phosphate assets

   from:  http://seekingalpha.com/news/2283636-mosaic-raised-at-morgan-stanley-which-cites-undervalued-phosphate-assets         

  • Mosaic (MOS +0.9%) is upgraded to Overweight from Equal Weight with a $56 price target at Morgan Stanley, which believes the company's phosphate assets are undervalued on an absolute basis.
  • The firm also cites MOS' relative valuation relative to key peer Potash Corp. (NYSE:POT) as "too severe," and a balance sheet with spare capacity on both an absolute and relative basis.
  • A key risk to the bullish thesis would be another large U.S. corn crop, Stanley says.