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7 March 2013 Profercy Phosphates & NPKs www.profercy.com

Phosphates &NPKs

7 March 2013

Page 1

Profercy

DAP, MAP

Americas: Tampa high-end steps up to $510s pt fob as Australia buys more late DAP. Brazil bids intense at $515-520pt fob as sellers pull up sharply to $530pt cfr. NOLA up from recent dip, back into high $460s pst fob.

Europe, Middle East, Africa: NW Europe DAP into upper $550s pt fca; Offers at $575-580pt cfr Atlantic, $560-565spt cfr Med. Kenya DAP award pending.

Asia: India import talks poised; Formal subsidy notice awaited; Sabic sells minor new cargo to Thailand; Bids in Vietnam.

Speciality NPKs: MKP stable; tech MAP soft; Urea phosphate picks up again in Europe

NEWS

OCP, Brazil: OCP is launching a new business model in Brazil, establishing its first direct presence in the internal market via OCP Fertilizantes Ltda, basis its own inland logistics platform from storage centers in ports and agriculture heartland.

PRICING

DAP: US export top hits $4510pt fob; bids at $500-505 fob

MAP: Brazil bids in $520s pt cfr for big April shipment demand

PROFERCY PHOSPHATES & NPKs

Editor: Tom Jago

Tel: + 34 952 83 39 06 Cell: + 34 665 832 954

[email protected] www.profercy.com

GLOBAL PHOSPHATES POSITION

From the 14 February Report: Phosphates markets look to have turned the corner in Europe and in several South American markets.

US export “opportunity” tonnes available at that time in the low/mid $460spt fob Tampa are now well below today’s market at $495-510pt fob for PhosChem spot business to Mexico and a Trammo/MissPhos lot to Australia. The big change into March is parallel demand from spot buyers in Brazil, Argentina, East & West Europe, African (Kenya & Ethiopia), plus hints of US domestic spring interest. As per our earlier calls, all of these markets had been deferring, aiming at 11th hour buying to pre-empt Indian contracts. For many, the last minute is now. News of various DAP producer delegations in India have surfaced; from Russia last week; and Morocco and the US this week. Internal meetings within OCP jv group companies, and at Mosaic India, normally bring courtesy contact on the domestic DAP S&D, maybe not prices yet. For all other spot buyers, Indian DAP import volumes more significant than the price.

One-minute briefing

US export DAP values rise; TA sells Australia at $510pt fob Pascagoula

PhosChem sells $495pt fob minor lot to Mexico; Offers rise to low $505s

US domestic DAP picks up to $465470 pst fob barge; Swaps flat forward

NOLA MAP at $455pst fob sees tentative re-export interest as Tampa firms

Brazil in talks on big OCP DAP/MAP volumes up to 200kt; Offers $530 cfr

As local Brazil import interest builds, OCP unveils local Brazil presence

Several traders pursue next Mexico avails into April; Fertinal holds out

India budget gets luke-warm reception at macro level; Rupee weakens

Delhi rumours suggest higher-than-expected DAP subsidy; Rs12,350pt

Saudi, Jordan still seen ready with a baseload at +/-$500pt cfr India

Sabic inclined to defer on Ethiopia talks; pending India subsidy news

European DAP prices make further moderate gains; NPK offers rise

New USDA report 8 Mar; Dec ‘13 corn/wheat spread still a huge $1.80/bu

200

250

300

350

400

450

500

550

600

650

700

$ pt fob Tampa

DAP $pt fob Tampa: Similar bottom-out 2013 vs 2012 Both 2012 & '13 reversals ended 8-month bear markets

b.

a.

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7 March 2013 Profercy Phosphates & NPKs www.profercy.com Page 2

US exports: Trammo has sold a fresh 30,000t MissPhos DAP cargo for end March shipment to Australia, netting $510pt fob Pascagoula. This is Trammo’s second DAP sale in Q1 for this market, benefitting from last year’s DAFF certification of the MissPhos facilities.

Further fresh PhosChem business to EC Mexico is heard up $10pt from last week, to $495pt fob Tampa, this for 6,000t DAP shipping April.

February program: Total US exports of DAP/MAP look to have topped 400,000t in February (vs 360kt in Jan & 300kt in Dec). PhosChem/Mosaic completed 20,000t DAP & K-Mag for Puerto Cabello, Venezuela against the mid-December IPSL import tender via Nitron. This was followed by 25,000t DAP in two lots ex Tampa for Ecuador, against earlier spot business.

March program: PhosChem/Mosaic have a strong start to March exports from Tampa, with two DAP/MAP/MES handymax combinations to Paranagua, Brazil, completing this week on the MV AP Slano and MV Akili. These will be followed by Indagro’s 45,000t DAP vessel to Thailand is due to complete on the MV Vishva Ekta later this week.

Swaps: March Tampa swaps have risen sharply with bids/offers now at $505-515pt fob; overtaking April at $500-510pt fob.

Tampa DAP/MAP Export Line Up – Feb (kt)

STX Azalea 20 Peru PhosChem 2

Thor Dynamic 15 Chile (+ K2O) PhosChem 3

Atlantic Arrow 20 Japan PhosChem 3

New Glory 33 Australia PhosChem 4

Ocean Neptune 28 Uruguay CF/KT, Nitron 7

Coreleader OL 20 New Zeal & Auz PhosChem 8

UBC Balboa 18 Mexico PhosChem 11

Balsa 81 4 Colombia PhosChem 12

Spring Breeze 20 Colombia PhosChem 13

Bansui 20 Australia (+ MES) PhosChem/Mosaic 15

Medi Osaka 25 Brazil PhosChem 16

CS Crystal 28 Uruguay CF/Keytrade 18

Tundra 30 Argentina (Neco.) Nitron/Phoschem, CF 19

Manizales 7 Honduras PhosChem 20

Satigny 6 Mexico (Altam.) PhosChem 22

Sunlight Lilly 12 C America (+K2O) PhosChem 23

Lennard 14 Mexico (Altam.) Keytrade/CF 24

Xiaoyi C 4 Ecuador PhosChem 25

Promise 3 22 Ecuador PhosChem 25

Bluebill 28 Argentina (Neco.) PhosChem 27

Total 374

3 export lots due in Feb from TA/MissPhos Pascagoula, incl 30,000t to Australia; 6,000t DAP from PotashCorp ex Morehead City. US total seen exceeding 400kt in Feb.

Tampa DAP/MAP Export Line Up – March (kt)

AP Slano 35 Brazil (+MES) PhosChem, Mosaic 2

Akili 30 Brazil (+ MES) PhosChem, Mosaic 3

Vishva Ekta 45 Thailand Indagro, PhosChem 3

Sheila McDevitt 25 NOLA (pt cargo) Mosaic 4

Total 135

45,000t export DAP due in March from TA/MissPhos Pascagoula

US Balance (DAP/MAP)

Exports March

PhosChem Brazil 85

Australia 45

C America 6

Mexico 6

Argentina, Urug 25

Contract/Sys* 105

*Various Japan, Canada, Latin Am

CF KT/C Amer, Mex 12

MissPhos TA/C America 8

TA/Australia 30

Domestic sales

All producers - projected 525

Total 847

Est. Output Kt

Carry from Jan programme +13

Mosaic

510

PCS

115

CF

140

MissPhos

40

Total 818

Stock build/draw (end Mar) -29

Saudi Balance (DAP)

Sales – Jan

Sabic Ethiopia 100

India 35

Thailand 23

Sales – Feb

Ma’aden China 60

India (last ‘12 contr.) 30

Sabic India (last ‘12 contr.) 40

Sales – Mar

Ma’aden Ethiopia 50

Sabic Ethiopia 50

Thailand 15

Kenya (tbc) 25

Total 428

Est. Output

Dec/Jan carryover 115

Jan 150

Feb 2wk turnaround 70

Mar

170

Total avails 505

Stock build/draw (end Mar) +*77

* MPC projected carry at end March has scope for fresh business to Ethiopia, East Africa and potentially India. Both Ma’aden & Sabic are comfortable waiting in this position


US domestic: Reports surfaced late this week of NOLA DAP business marginally higher inland and at NOLA. Last done is now heard back up into the mid/high $460s pst fob barge for March. Some sellers are now heard withdrawing up to $470pst for late March.

Cross-gulf: Mosaic is shipping a large Tampa/NOLA part-cargo of about 25,000t DAP on the MV Sheila McDevitt. As MAP imports build (pricing below), DAP has been tighter through Feb at NOLA

Imports: Russian and Moroccan MAP prices are heard marginally higher to $460pst fob; and Mexican into the low/mid $460s pst fob. Inland activity and pipeline movement continues slow in typical mid-winter weather conditions.

Morocco, Brazil: Talks are in progress face-to-face early this week over Moroccan MAP, DAP and TSP to Brazil, loading from mid March and likely into April depending on volumes finally settled.

Volumes: Buying interest is heard in play for about 200,000t DAP/MAP and over 70,000t TSP across regular contract receivers and seasonal spot buyers. These will be the first big Brazilian import volumes for the 2013 season.

Pricing: While there is no official comment as yet from OCP, the initial MAP target has been heard locally at $530pt cfr according to volume/disport. The MAP-to-TSP premium has typically moved in a range $80-100pt in recent seasons.

Argentina: Several importers are in the market for an estimated 40-50,000t DAP/MAP for April shipment. Russian offers are not yet in play (as Phosagro makes traders wait). There is no Saudi spot material shown for this window. Top bids on Moroccan and US DAP are now heard at $520 pt cfr April/May arrivals.

Last done: Achieved prices for DAP and MAP are still flat at the now-consolidated level of $515pt cfr for trader longs out of Russia and South Africa. Numerous firm bids from buyers coming late to market in the range $510-515pt cfr are making little headway.

OCP Balance (DAP/MAP) Kt

Sales Mar

Koch USA (M/D) 50

Helm USA (M + TSP) 25

Traders West Europe 75

OCP East Europe 20

Brazil (M/D) 110

Kenya (D) 25

Domestic (D) 40

Total sales 345

Est. Output DAP/MAP

Feb/Mar carry 10

OCP* 325

OCP/Bunge jv+ 30

Total avails 365

Stock build/draw (end Mar) +20

* Assumes OCP ramps up to regular rates of 80% load at Jorf by end March. All maintenance is now complete, so all the plants should be in shape for maximized output from April and throughout Q2.

+ Assumes OCP/Bunge Jorf jv operations at approx. 50/50 MAP/DAP & TSP, also back at capacity after some Jan/Feb maintenance

GCT Balance (DAP) Kt

Sales – May, June ‘12

Backlog Q1- all sales to August 256

Sales – Sept, Oct

GCT Italy 15

France, Spain 20

Sales – Nov

GCT Italy 15

Agrium Spain 6

BADC Bangladesh* 25

Sales – Dec

BADC Bangladesh* 25

GCT Italy, Spain (30) 20

Domestic 10

Sales – Jan, Feb

GCT Europe, Local 30

Indagro Uruguay 25

Total sales 447

Est. Output

May, June

55

July, Aug

100

Sep, Oct

110

Nov, Dec

110

Jan, Feb DAP & MAP runs 75

Total 450

Stock build/draw (end Feb) +17

March GCT production at Gabes projected at 50-60,000t DAP

425

475

525

575

625

675

DA

P $

pt

me

tric

fo

b T

amp

a &

me

tric

eq

uiv

fo

b N

OLA

Tampa, NOLA DAP bottom-out coincidence 2012 vs '13 Tampa & NOLA switch places to set market floor - metric equiv basis

DAP fob Tampa DAP fob NOLA (metric equiv)

Dec'11: $425st fob

Mar '12: $495 fob Tampa

Feb '13: $460 fob

Tampa

Feb '13: $460st fob

NOLA


North Africa, South Europe: Sensing higher DAP demand from traders for late March/April shipments, and pressure from long-term Indian importers to allocate phosacid volumes from April, GCT is delaying its release of target prices on fresh prompt and forward DAP.

OCP is at $540pt fob, with a European programme now exceeding 90,000t DAP/MAP, and likely to carry into April.

Russia: Trader longs for March shipment offers have since risen to $525pt cfr Argentina, Brazil balance MAP positions. Neither Phosagro, Eurochem nor Uralchem are heard ready offer firm against trader enquiries for April. All remain out to end March, and currently working through April allocations to East and West Europe, Brazil, other South America and Thailand between regular trader buyers.

South Africa: A May shipment cargo is still heard available from Foskor, but with pricing as yet pending. The last offers for April positions were said in the high $520s pt cfr Brazil/Argentina

Saudi Arabia: Spot offers are indicative in the mid $490s pt fob RAK. No new business is heard from either Sabic or Ma’aden. Both await developments in Kenya, Ethiopia, and the finalization of subsidy economics in India.

Ethiopia: There has been no movement on the recent government contract approach for 300,000t more of Saudi DAP to ship in Q2.

Kenya: Suppliers are still waiting for award news on the last MoA tender for 25,000t DAP (plus MAP & NPKs). This was competitively offered by MidGulf ex Saudi Arabia at $573pt cfrlo Mombasa, reflecting near $490pt fob Saudi.

Russia Balance (Kt DAP, MAP)

Phosagro sales Feb

Trammo USA (D/MAP)c 50

Brazil (MAP) 30

Gavilon USA (D/MAP)c 35

Helm NW Europe (DAP) 30

Phosagro Local Russia (MAP) 25

Eurochem sales (all MAP Feb)

Ameropa S America 15

Germany 10

Africa, SE Asia 10

Russia 45

East Europe 25

Uralchem sales

Uralchem Est local, East Eur 40

Total sales 315

Estimated Output

Phosagro+ Ammophos DAP 70

Ammophos MAP 55

Balakovo MAP 40

Balakovo DAP 0

Eurochem Belorechnsk MAP 40

Fosforit MAP 40

Uralchem Voskressensk 40

Dec/Jan export carry inc. TA/US* 45

Total avails 330


+Phosagro approx 55/45 granulation split: 16 grades of NP, NPKs vs. DAP/MAP

Lithuania Balance (DAP) Kt

Sales Dec Dec

Eurochem USA (combo MAP) 15

Ameropa Benelux, Germany 31

France 4

Eurochem Poland, Baltic local 5

SE Asia (container) 3

Sales Jan, Feb Jan

Ameropa France 15

Benelux, Germany 38

UK, Ireland 10

Eurochem East Europe 20

SE Asia (container) 5

Total 146

Est. Output Nov/Dec carry 0

Dec, Jan

150

Feb

50

Total avails 150


600

800

1.000

1.200

1.400

1.600

1.800

2.000

400

450

500

550

600

650

700

750

800

850

Soyb

ean

s ce

nts

/bu

DA

P $

/on

ne

t &

CB

OT

Co

rn c

en

ts/b

u

US DAP Tampa, NOLA vs Corn, Soybeans Tampa, NOLA converge (a); Beans firm; Corn off; USDA figs tomorrow

Mid-term trend sees phosphates still lagging crop values (b.)

Soybeans DAP fob Tampa DAP fob NOLA (metric equiv) Corn

a.

b.


India: Speculative price tests from the private sector are still heard in play conditional on various subsidy scenarios from April. The very latest expectations are for the DAP subsidy from Delhi late this week are an interestingly higher-than-expected Rs12,350pt (vs Rs11,850pt heard early in the week) and the local retail price at Rs23,500pt ($422pt, against earlier calls at Rs23,000pt. It is thought DoF planners are initially going to be cautious on the retail price issue, keen to see initial 2013-14 demand build gradually until import volumes are eventually settled. If India is able to achieve contract imports as has been expected at $500-505pt cfr, at least on April-June shipments of DAP, there will be scope for additional retail price cuts.

Pakistan: Local prices remain depressed with a third straight local price cut (this time Rs60pt/50kg bag, or $12pt) posted by Fauji for a new local level at Rs3,630/50 kg. As per our earlier reports, the local S&D guideline estimates show little change in Pakistan’s closing inventory projection at a modest 230,000t by end March.

China domestic: DAP prices in the local market are settling out at a compromise RMB3,200-3,250pt fot bagged ex warehouse ($515pt), a shade below producer targets for early season business. With higher internal freight tariffs, netting around RMB3,050-3,100pt fot ex works ($490pt). MAP prices are also heard softening, at RMB2,300-2,500pt fot bagged ex works according to the various NPK blend-stock grades (11-44 upwards). NPKs are seeing better movement in the early days of the pre-spring market but with little change in prices.

Australia: The latest Trammo US export sale of 30,000t MissPhos DAP reflects thin avails of DAFF-compliant DAP or MAP from other origins (Florida or Mexico). Ma’aden is still pending its DAFF certification.

Vietnam: Traders are working Vietnam import tests with scope for US DAP in trader length en route from Tampa/Thailand, against fresh producer tonnage for late March shipment ex Saudi and Philippines.

PhosRock: Mosaic takes OCP rock into Tampa; N Africa soft

USA rock import: Mosaic is taking an end February import panamax of Moroccan rock (Khouribga material ex Casablanca) into Tampa this week-end. This is part of regular Moroccan shipments to Mosaic, mostly for Uncle Sam, Louisiana as with the last 2 years.

Mosaic established a logistical chain for incoming rock to its Florida operations as a contingency during the 2010-11 South Fort Meade mine litigation, and is thought to be maintaining this.

North Africa: Reports are circulating that final Q1 volumes of Algerian export rock have sold near $120pt fob basis 30% P2O5. This confirms a gradual decline from the $130s pt fob in January. This now looks to be a competitive rock source for South American SSP producers. There are reports of knock-on impacts in March rock export executions across North Africa (Morocco, Tunisia, Egypt) with importer reports of a general 5-7% decline in the final Q1 shipments prices. This follows the earlier Jan-Feb down move in downstream product prices. The market awaits N African exporters’ posture on Q2 phosphate rock.

Fertinal Balance (DAP/MAP) Kt

Sales – Oct, Nov ‘12

Fertinal Ecuador, Peru 15

Chile 20

Local, C America 20

Koch USA 30

Fertinal Australia 40

Sales – Dec & Q1 2013

Ameropa US, NOLA (M) 20

Fertinal Australia (M) 260

Local, C America 55

South America 30

Total 490

Est. Output

Q4

235

Q1

210

April

80

Total 525

Stock build/draw (end Apr) +35

Speciality NPs, NPKs NP+S: US phosphates price strength in the last few weeks is lifting NP12-40-0 (+10S, 1Zn) back into the $510-515pst fot/fob C Florida, NOLA price range from the early February dip.

MKP (0-54-32): China factory prices are flat at the early 2013 headline levels at RMB7,700 ($1,225) pt fot bagged ex works. The intended price increase for the coming season appears not to have been achieved as yet.

Technical MAP (12-61-0): Prices are firming gradually in West Europe. Chinese and Russian product is understood quoted in a narrower range $1,175-1,120pt bagged in containers cfr West Europe.

Urea Phosphate (17-44-0): European imports from China are heard marginally firmer, assessed at $940-950 cfr West Europe bagged containerized.


Company News: OCP launches Brazil domestic channel OCP Fertilizantes Ltda Morocco, Brazil: OCP is launching a new business model in Brazil, establishing the Moroccan company’s first direct presence in the internal market, with an inland logistics channel.

Our view: This looks similar to the approach of several other major phosphates & compounds producers worldwide, such as Mosaic (in Brazil, India & China), Acron for NPKs in China, Yara across Europe and Africa, and EuroChem in North America.

One stand-out point that OCP underlines in its official not (see below) is OCP Fertilizantes Ltda’s ability to respond to just-in-time local buying, now the norm in Brazil.

The full Press Release text is as below; continuing to page 6:

The OCP Group is launching a new business model in Brazil, designed to further enhance the reliability and affordability of phosphate fertilizer to farmers across Brazil. OCP is building on its successful marketing presence in Brazil, through “OCP do Brasil”, by launching “OCP Fertilizantes Ltda”, a first-of-its-kind single nutrient distribution channel in Brazil.

Through “OCP Fertilizantes,” OCP products will be sold locally and distributed from several logistical platforms and storage centers in ports and agriculture heartland in Brazil. OCP Fertilizantes will commercialize OCP's phosphates products including its new Performance fertilizer Products and animal feed products. OCP's existing local entity “OCP do Brasil” will continue its efforts to enhance knowledge and engagement with the Brazilian market through market intelligence, agronomic research and public affairs and public relations activities. OCP Fertilizantes Ltda is intended to help distributors across Brazil address logistical constraints that have previously limited the market’s capacity to provide adequate supplies at times of peak demand. OCP Fertilizantes Ltda will thus help OCP’s customers secure a reliable source of supply for phosphate fertilizers in a market where supply sources have been more unpredictable. “We are very excited about OCP Fertilizantes Ltda since it will allow us to be closer to our customers”, said Mhamed Ibnabdeljalil, OCP's Executive Vice President for Sales, Marketing and Raw Materials Procurement. “The single nutrient distribution model is new in Brazil and is designed to provide a reliable and flexible source of phosphate products for a just-in-time procurement by our customers and partners. This distribution mechanism, along with innovative contractual tools, should help grow the market by encouraging more participation among distributors who have previously been reluctant to enter the market.”

PUBLISHER Profercy Phosphates SC

[email protected]

All rights reserved. No part of this publication may be reproduced. stored in a retrieval system or transmitted in any form or by any means, without the Copyright owner’s prior written permission.

Copyright 2013

Profercy Phosphates SC

Brazil SSP: New import business is heard for 20,000t Spanish SSP from Asturiana to Fitco at $190pt fob Aviles for early May shipment, committing Spanish export avails for the next 2 months.

This fob level is up from the last round of comparative Spanish and Egyptian SSP positions through the low/mid $180s pt fob both origins. These supported the last round of delivered business at $210-215pt cfr Brazil. As the European campaign builds, there is no competitive offer detected for Italian SSP exports as yet.

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DAP $ BULK 7 Mar 28 Feb

Tampa. US Gulf fob 495-510 484-486

KSA fob 485-490 485-490

Baltic, Black Sea fob 480-530 480-510

Morocco fob 500-540 500-540

India netbacks1 Tampa fob 530-536 530-536

(2012-13 contr) Morocco fob 545-546 545-546

KSA fob 560-565 560-565

Tunisia fob 520-530 500-530

North Africa fob 500-540 500-540

China fob (expt tax 80% 1/1-14/5 2) n.m. n.m.

Mexico fob 490-495 490-495

Jordan fob 493-498 493-498

Brazil, Argentina cfr 520-530 508-512

Pakistan cfr 525-530 520-525

Benelux, N France fob/fot 556-560 555-560

NOLA fob barge (st) 465-470 460-465

Florida fot (st) 470 470

China fot bgd ex wks ($ equ.) 505-510 505-510 1Old 2012-13 contracts at $580pt cfr India 22013 China tax policy

MAP $ BULK 7 Mar 28 Feb

Baltic, Black Sea fob 480-510 480-510

Tampa fob 495-500 485-490

Morocco fob 500-540 500-540

Brazil cfr 515-520 512-515

Brazil fot ex-store inland 120d 710-720 720-730

Benelux. N France fob/fot 570-575 570-575

TSP $ BULK 7 Mar 28 Feb

Morocco fob 395-415 395-415

Tunisia fob 395-415 395-415

Mexico fob 400-405 400-405

Lebanon fob 400-405 400-405

Brazil cfr 410-420 410-420

Benelux. N France € fob/fot 350-365 350-365

SSP $ BULK 7 Mar 28 Feb

Egypt fob 185-190 185-190

Spain fob ($ equiv) 188-192 180-185

Italy € fot bgd ex store 225-230 225-230

Brazil fot ex store inland 360-365 360-365

NPK. NP $ BULK 7 Mar 28 Feb

16-16-16 fob FSU 400-405 400-405

16-16-16 fob FSU China netbk. 390-395 390-395

10-26-26 fob FSU 430-450 430-450

20-20-0 fob East Europe 310-315 310-315

10-26-26 cfr India 538-542 538-542

16-16-16 cfr China 450-460 450-460

16-16-16 cfr SE Asia 460-470 460-470

16-20-0 cfr SE Asia 330-340 330-340

0-30-10 fot ex store Brazil 490-510 490-510

15-15-15 fot ex wks China 385-395 387-397

15-15-15(SOP) fot ex wks China 422-425 422-425

25-13-7 fot ex wks N China 360-365 360-365

10-10-20 fot ex wks S China 355-365 355-365

Speciality NPK, NP+S Mar Feb

MKP fob China 1225-1230 1225-1230

MKP fot ex wks China RMB 7700 7700

MKP cfr West Europe 1390-1400 1390-1400

MKP cfr Brazil 1375-1390 1375-1390

Tech MAP 12-61-0 cfr EU 1110-1115 1110-1125

UP 17-44 cfr West Europe 945-950 935-950

12-40-0 10S 1Zn fot Florida 510-515 505-510 MKP 0-54-32; UP = Urea Phosphate

EU NPK, NP (inland €) 7 Mar 28 Feb

15-15-15 cif bulk Benelux 360-375 360-375

17-17-17 cif bulk France 447-452 447-452

0-25-25 cif France 395-400 395-400

8-24-24 del bgd Italy 430-440 430-440

20-10-10 del bgd Italy 380-390 380-390

8-24-8 del bgd Spain 370-380 370-380

20-10-10 del bgd UK £ 310-312 310-312

PHOSPHATE ROCK $ P2O5 Q1 ‘13

Morocco fob 31-33% 160-170

China fot 29-31% 90-95

Syria fob 29-30% 110-115

Peru fob 30% 115-120

Algeria fob 29-30% 120-125

Tunisia fob 27-28% 105-110

Egypt fob 30-31% 110-115

Jordan fob 34-36% 160-180

Togo fob 35-36% 140-150

Russia fob 38-39% 275-280

Russia domestic del ($ equ.) 38-39% 165-170

India cfr 29-30% 140-150

India cfr 33-34% 180-185

PHOSACID MGA $pt P2O5 Q1 ‘13 Q4 ‘12

Morocco fob 710-900 830-1100

India cfr 30d 770 855

West Europe cfr 980-1100 1025-1145

Brazil cfr 980-1050 1000-1100

INPUTS (+/- $pt of DAP) Mar (Feb) +/-

Ammonia cfr Tampa 625 (655) -6

Ammonia cfr Morocco 565 (575) -2

Ammonia del wks China 490 (495) -1

Sulphur plt cfr Tampa Q1/Q4 150 (160) -4

Sulphur cfr N Africa 1H ‘13/2H 150 (190) -16

Sulphur ex-warehouse China 200 (192) -3

International Prices $ per tonne bulk

Profercy Phosphates SC pricing represents last known spot or contract sales. Absent new trades, competitive indications will apply; i.e. top bid in rising market or low offer in a falling market. Netbacks on contract sales, formula or otherwise, may feature. International quotes are for 4kt lots & above, rounded up to nearest US$. Italics = no recent business; n.m. = no market

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Forecast

the PROFERCY PHOSPHATES

6 March 2013

Page 1

Last Quarter Forecast (12 December): Current bear-market gravity will continue to undermine prices for all phosphate fertilizers …. For DAP, the near-term downside could stretch to $25-30pt at most export points…to see prices down into the $470s pt fob Tampa/US Gulf and Russia. We expect no significant output cutbacks from any key producers. January/February rebound seen; Q1 pick-up to gather pace.

Market outcome & Current position: Slow-motion rebound so far; Exporters holding back The market eventually bottomed out a shade under our December predictions, but demand since then has been enough only for a marginal lift in March load prices. We think the recovery is about to steepen as Northern Hemisphere buyers sense 11th-hour replacement pressure. North America, China and North and East Europe are still in heavy winter conditions. Moisture availability is improving, and there is faith that under-used logistics chains will respond under last-minute through-put pressure.

March & Q2 2013 Outlook: DAP, MAP seen firm through Q2; Upside ranging $40-50pt A busy pre-season for the 3 heavy-weight North Hemisphere markets: North America, China & Europe) is now likely, coinciding with early contract and spot buying in India, Latin America, Pakistan, Bangladesh, and Ethiopia. With significant length apparent only in the Middle East, we see scope for $40-50pt spot increases at the main load points through into Q2. The Top 5 S&D issues for Q2 are:

● India will need DAP imports by June arrival latest. It likely recognises price climate is softer today

than in April/May ● South America, other Asia buyers now working to pre-empt India ● Morocco

nears completion on new Jorf unit; more DAP, MAP; less MGA ● China export offers on dark colour

64-unit DAP may be “rationed” in multi-tier price climate ● US domestic balance is still a close call

net falling local DAP/MAP output, higher imports, the NP+S “offset” and Canada imports yet to show

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DAP/MAP trade trend: 55-60% of world imports in Q2-Q3 (a); 60%+ in Apr-Sept '13? Q4 '12/Q1 '13 deferral (b) implies busy mid 2013 (c); Most of this is priced April-July

MAP DAP

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World DAP Trade Balance: Two chart views; Same underlying S&D data

*Figures include all US prodn & local demand; All other supply = export avails; All other demand = imports, seagoing & cross-border

*Same data as p1 chart; Incl all US prodn & local demand; All other supply = export avails; All other demand =imports, vessel & cross-border

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DAP Supply, Demand & Trade Balance Projection 2012-13

Surplus from late 2012 (a.) moves to deficit in late Q1 and through Q2 (b); Assuming India keeps subsidy cut priority over N:P ratio, and that Saudi & China exports rise, Q4 trade surplus likely big

Supply Demand Trade balance month/month Trade balance cumulative

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DAP Trade Balance & Price Forecast

Return of earlier deferred import demand to create Q2 '13 deficit & price recovery; Emerging Q3 surplus (a) assumes 5.3mt India imports; 2H 2013 of course still exposed to any switch in India P2O5 priorities

Trade Balance surplus/deficit Spot DAP fob Tampa

Earlier Profercy DAP Forecasts (2010-13) DAP price (Current Forecast)

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Trade tends chart: Already-compressed world DAP/MAP trade gets looks more intense The existing global DAP/MAP trade trend for heavy deferral in Q4-Q1 appears to be intensifying, with a poor Q4 2012 spilling into a similarly a risk-averse Q1. This suggests demand “compression” in the mid-year months of 2013 may be even more intense than in the last few years. This is related both to macro-

related risk-aversion (minimising inventory turn-over & conservative supply chain management) and to credit squeezes. On the supply side meantime, apart from Saudi Arabia and Jordan, most producers will end March with comfortable inventory levels.

In addition, this buyer behaviour is partly a response to the Chinese export tax window system, which encourages import deferral until the window is open (15 May – 15 October 2013). Buyers typically assume that Chinese on-spec DAP/MAP will undermine price goals of the established majors, and that sufficient volumes of Chinese NPs, MAP equivalent and SSP will provide other P2O5 to those buyers in blend-stock markets (esp Brazil). For this reason, spot DAP prices in recent years have followed their “counter-intuitive” trend of falling during Chinese high-tax periods and falling in the low tax.

S&D Briefs 2013: Supply changes in Saudi, Morocco; Demand deferral/destruction tests

India: By buying no imports deep into Q2 or later, as is often projected by Indian buyers, we estimate a local DAP supply crunch would bite in late July/early August. In this no-imports scenario, we project DAP inventories would fall to about 1m tonnes, just under one month’s typical demand in Q3.

Latest DAP import purchase date: We project the latest DAP import price settlement date on prospective US imports is in early April, to complete loads by 15 May, in turn to meet latest arrival dates in mid June. This situation is illustrated in the chart (below). For Saudi Arabia, the latest date, basis arrival security argument, would be one month later (ie in May). Continues p4

Profercy Phosphates &FAI: Assumes ave. 23 units P2O5 in NPK sales in calculation of total P2O5 sales

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India local DAP S&D: Stocks falling from peak; No new imports suggests crunch July/Aug With no further imports, and asuming local output & sales flat with 2012; DAP stocks would fall to 1months'

demand at end July/early August (a); To avert this, imports needed landing mid June latest

DAP stocks DAP Imports Local DAP Output DAP Sales Local DAP price Sales total P₂O₅

Local DAP price

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Upside exposure, as in 2012: but we think Indian buyers are concerned not to risk a late purchase, and exposure to higher prices buying at the same time as South America and the North American spot peak, as last year. From China, exporters will discuss allocations but not prices until the local campaign is over, by mid April. Deferring purchases in the hope of Chinese export price “opportunities” is historically not an India tactic (more in China section below).

China price floor: We believe there is acceptance in India that cash costs in China’s large non-integrated sector will floor DAP values near $470pt fob China, reflecting $495-500pt cfr India.

Saudi Arabia: Ma’aden is seen lifting output to capacity from Q2, towards 200,000tpm of DAP. Ethiopia demand could provide key bridge Ma’aden through comfortably until the likely big-volume movements to India. Colouration is key question, potentially opening more scope in South & Southeast Asian markets (Pakistan, Bangladesh, Thailand & Vietnam).

China: One extra low-tax export month in 2013 could theoretically give scope for an additional 1-1.5m tonnes of DAP/MAP exports. It is clear many other markets will continue defer until the China window opens. This is the main reason for price increases in the early months of the low tax window.

Export timing: Chinese exporters are unlikely to address exports until the inventory situation after the local season is clear (likely known by early April). Non-integrated sector cash cost are still assessed around $470pt fob China export tax paid. Like the $530s pt fob last year, this is likely to be a firm floor; suggesting India can hope for DAP at no lower than $495pt cfr.

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Spot DAP prices & China DAP Export Taxation

Once again, spot DAP prices fall at start of Chinese high tax period (a, b, c); Just one high-tax period in last 4 years started with higher DAP prices (1), due to big Indian demand; Tax bands 80% & 5% in 2013.

Big, unexpected increase in India interest (unlikely) seen needed break these pricing trends

Export tax (from mid 2011 flexi-tax) Export tax (top rate falls to 80% 2013) DAP fob Tampa

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North America: US DAP/MAP production is down 6% year on year (as NP+S output rises), with about 450,000t less DAP/MAP on the US industry output slate in calendar 1H 2013. Although this is so far offset by falling exports, we think off-shore demand for US DAP/MAP is about to accelerate from Canada (too late for other origins to reach this market in time) and across Latin America.

US imports, calendar 1H balance: US imports total 535,000t MAP booked from all sources July 2012 to March 2013, and 215,000t DAP. Of this 750,000t total, some 160,000t arrived by the end of October from Morocco, Mexico & Lithuania, featuring in fall usage. So, net a significant MES offset (see below) the question is, “Will the 590,000t import balance be too much for the US to digest in Spring?”

MES offset: It is hard to quantify the US offset by way of higher MES production, however we estimate about 450,000t of new NPs + S & Z will be in the local US market 1H 2013 vs 1H 2012 as a Mosaic continues to ramp up to capacity. Assuming about of 150,000t of these new MES are exported, the remaining 300,000t MES would give an offset of about 230,000t MAP equivalent.

US exports to Canada: Also key in the North American S&D mix are deferred Canadian imports (mainly MAP). US cross border and vessel shipments to Canada so far this season (July ’12-Jan ’13) are about 18% down year on year, with just one lot each ex Morocco & Russia providing little cushion. So, we estimate there is scope for March-June US exports to Canada to surpass 200,000t MAP/DAP, in a window during which other suppliers are already too far away hit the Spring market in time.

US bottom line: Netting out the above points, and independently of export pick-up to other markets, the US looks in near balance for 1H 2013; equation below DAP/MAP combined.

Net +590,000t imports – 450,000t output loss = +140,000t Less 1H exports to Canada = -220,000t Add MAP equiv of new MES avails = +230,000t Provision on NOLA MAP re-export risk = -25,000t (from earlier import barges taken low end $455pst fob NOLA ------------------- US bottom line = +125,000t DAP/MAP in surplus *

*Close call: This estimated surplus is about 4% of regular US local supply Jan-June (roughly 3.0m tonnes local output & imports). With US industry inventories still under control close to 1 month’s output, plus all-time high 2013 corn plant calls, and all crop futures still strong, this puts the US closer to balanced rather than long.

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US DAP/MAP exporting "too much" mid year 2010-12? Stocks dip opens way for imports

Where blue/red bars break above grey mountain area (a. b. c), US DAP/MAP exporters had to dig into stocks to meet export commitments; This was common in PhosChem's 3-year contracts (expiring now)

MAP production light grey area) DAP production dark grey area) Export MAP

Export DAP Domestic MAP Domestic DAP

Black line: producer stocks & outlook DAP/MAP combined

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South America: The main motors of South American import demand, Brazil and Argentina are going into the main import season April – October with moderate inventory, strong local prices and firm farm economics. The key points of our view on Brazil and Argentina is in line with the last Forecast.

Brazil: The 2012 Vale increase in TSP/MAP production at Uberaba III is now established with total domestic output up 168,000t P2O5 all products (up 8% vs 2011). However, this is outweighed by an increase of 465,000t P2O5 in local sales (all products), while calendar 2012 imports were up a negligible 10,000t P2O5. The shortfall was made up from inventory depletion during the long period of import deferral in 2H 2012 (see shaded area in chart below). DAP imports are powering forward, to 700,000t in 2012, and probably near 800,000t this year with corn plant seen at an all-time high of 15.5m hectares, up 2% on last year and yields seen up 12% over the 5-year average (USDA). Beans area is seen up by a firm 10% to 27.5m ha.

Argentina: Similar to Brazil, the local Argentine market sold more than it imported (no local concentrated phosphates production, just SSP). This left a moderate carry-over of 125,000t MAP/DAP, a slim 25,000t TSP and 150,000t SSP. Argentina beans area is seen up strongly (as in Brazil), growing 7% to 19.5m ha, and USDA calling soy yields up 19% from last year. Imports of all phosphate fertilizers in Argentina in 2013 could regain the 2011 volumes at 750,000t MAP, 320,000t DAP and 150,000t TSP. Imports in 2012 slumped to 525,000t MAP, 300,000t DAP and 65,000t TSP.

1Mainly 14-34+S, but increasingly 12-40; 12-48; 13-33 (all +S), plus Chinese 20-20 & 16-20

Africa: There is good scope for Ethiopia to take more DAP, probably up to 200,000t more (from a 300,000t contract enquiry) to load in Q2. In East Africa, Kenya and Tanzania still have scope to take more DAP pre the Chinese export window opens. Growth West Africa is being partially met by Moroccan DAP but growing volumes of Russian and Spanish NPKs (mainly cotton formulations).

North Africa domestic: The Moroccan domestic market is looking like a 475-500,000t DAP market for 2012-13. This extends the firm 15-20% annual growth rates seen here for a4th year. However Moroccan growth has been offset by a slowdown in Tunisia and Libya (in step with Tunisian production under-performance).

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Brazil P₂O₅ S&D: Early 2013 supply fits demand; 2H 12 import deferral (a) depleted stocks

Late 2012 import deferral opened up big gap (a) in the local position; covered from stocks depletion; Local output boost means production ave. 170kt/m P2O5; vs local Q2 demand 300-400kt/m P2O5

NP/NPK¹ SSP DAP TSP MAP Local prodn (all grades) Local deliveries (all P₂O₅)

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Morocco: OCP is due to commission its first of two new granulations trains (ie not new P2O5) at Jorf during Q2, boosting DAP/MAP, but cutting phosacid commensurately. We see OCP tactics based on an anticipated pick-up in South America for more DAP/MAP; while markets likely to see less OCP

phosacid would be India (5-6 importers not aligned in the OCP jv group), plus SE Asia and the EU.

Tunisia: GCT continues to run DAP production below capacity, holding the system at a moderate 50% first to establish this as a sustainable output level. We forecast this will not change toward higher level DAP loads until late 2012, with heavy Q3 phosacid priorities expected to be seen for India.

Russia, East Europe: Calendar Q2 is normally a heavy demand period on MAP across Europe, especially within FSU countries, plus increasingly in cross-border trade to markets such as Belarus and to the EU eastern frontier countries.

Total volumes for April-June in this area are near 180,000t Russian export MAP and up to 150,000t in the local Russian market. This will allow Russian producers a gradual move back to MAP (from NPKs) and to take a more selective approach on long-haul MAP business to South America, or DAP to Asia.

West Europe: We estimate that over half of the 2012-13 season DAP imports have been deferred into the last-minute shipment window March-April/June. If true, there is scope for a strong pick-up among western European importers for about 650,000t DAP (MAP is small for Q2) in this 4 month period.

This is enough to keep a strong draw on Moroccan and Lithuanian exports through June. As Tunisia under performs on DAP production (MGA priorities to India – see above), the role of EU demand on global phosphates markets will be significant in this window.

This scenario thus foresees a firm DAP output slate in Morocco through to end May, which would in turn maintain a cap on Moroccan MAP avails. If this plays out, there will be good scope during Q2 for US MAP exports into Atlantic Coast South America, and Mexican DAP/MAP to Pacific markets.

Other Asia: This is becoming a fragmented market area with the growth of Russian NPKs making strong headway in capturing market share in Thailand, likely displacing DAP interest later in the year. This is not the case in Pakistan, Bangladesh or Vietnam, which continue to focus on waiting until the Chinese export window opens, to secure preferred China origins (18-46 and dark colour).

South Asia: Neither Pakistan nor Bangladesh (together 1.2m tonnes DAP import demand April-November) have done much to pre-empt Indian buying in the Nov-Feb international bear market, and are now exposed to a demand concentration competing vs India and other regions in the West. Both of these markets have moderate carry-overs. Like in many markets globally Pakistan off-take was stymied during the risk averse late 2012 season, despite sporadic local price competition between local produced and imported DAP.

South East Asia: Vietnam domestic production is solid, and DAP imports are projected sub 400,000t in 2013. Thailand, as above, in Q1 has taken some 110,000t Russian NKPs & 125,000t DAP.

Producer margins, tactics: Cash margins in the integrated phosphates producer sector are still very healthy. North African and Florida returns today still ranging $165-175pt on DAP, and more in Saudi Arabia and Russia. In this climate, it was always unlikely even during the DAP price downturn of late 2012 that any substantial cutbacks would take place, perhaps not even turnaround rescheduling.


Profercy Phosphates & Swap settlements: a. $460spt fob Tampa for US exports into local China DAP market b. Tampa equiv ($440pt fob) on Chinese 100% non-integrated DAP sector costs estimated at $470pt fob tax paid, in turn implying lowest possible $495pt cfr India; c. Mosaic Louisiana cost basis imported rock, market sulphur, & captive NH3

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DAP $pt fob Tampa: Cash Cost & Arbitrage Thresholds +/- $450pt fob Tampa

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Current Forecast position

December Forecast position


PUBLISHER

Tom Jago Profercy Phosphates SC [email protected]

Tel: +34 952 833 906 +34 951 40 40 73 Cell: +34 665 832 954

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the Copyright owner’s prior written permission.

Copyright 2013 - Profercy Phosphates SC

Phosphates &NPKs

Profercy Phosphates & NPKs [email protected] www.profercy.com © Copyright 2013

8 March 2013

Page 1

Profercy

Phosphates firm: Brazil MAP in $530s pt cfr; $550 cfr next Morocco, Brazil: Fresh sales for a relatively limited volume of 25-30,000t Moroccan MAP have emerged settled in the low $530s pt cfr Brazil, for end March shipment. There is a busy programme pending at Jorf for the rest of this month as heavy weather continues to disrupt current dispatches.

New MAP price target: Rather than $530pt cfr being the target as previously expected into April, OCP has since revised this upwards to $550pt cfr, and for a lower-than-expected volume near 130-140,000t MAP and 10-20,0000t DAP. There is a claim of some sales achieved at this new top level, pending verification.

So, to summarise the various price tiers and load windows that OCP has laid out for March/April, the following picture is emerging (dates & volumes approximate):

1-20 March loads, $510-515 cfr: Business for about 150,000t MAP/DAP to load through late March has been done in the last two weeks at $510-515pt cfr Brazil. TSP has been settled in parallel, for about 60,000t at $415-420pt cfr.

End March loads, low $530s pt cfr: A further 30,000t MAP has been sold between a small number of buyers in the low $530s pt cfr.

1-25 April loads, $550pt cfr: After achieving business into the $530spt cfr, OCP has since raised its price for fresh business for most of April to $550pt cfr.

End April loads: OCP has indicated to those remaining under offer at $550pt cfr, that any surplus of MAP ultimately available to load in the last days of April will be in the $550s pt cfr.

Jorf Lasfar delays: The reason for these discreet shipment windows is ongoing heavy weather at Jorf from a storm system bringing heavy rains across North Africa, southern Spain & Portugal this week. This is creating delays that are having a knock-on impact through March with a strong OCP program to Europe, Asia, North America, Africa as well as Brazil.

Northwest Europe: DAP is variously reported closing the week in Europe at $555-557pt fca Gent/Antwerp for March but with seller determination building for $560-562pt fot/fca. A Russian import MAP cargo is identified at $564pt cfr, against supplier claims of $570-572pt cfr.

PUBLISHER

Profercy Phosphates SC www.profercy.com

Copyright 2013

Editor: Tom Jago

Tel: +34 952 83 39 06 +34 951 40 40 73 Cell: +34 665 832 954

Sri Lanka TSP: Dragon Asia’s competitive offers in this week’s 12,000t TSP tender at $380/$385pt cfr (basis respective 180-day and 270-day terms) were down $6-8pt on the previous tender in late January. At that time, competitive levels were $386 / $393.40pt cfr same terms from Golden Barley – all for Chinese export product.

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