Fertilizer Markets and Finance

OAO EuroChem, a Russian producer of fertilizer, is seeking a loan of as much as $800 million to help fund investment in potash projects, according to two people with knowledge of the matter.

Lenders have been asked to propose terms for the facility which may include secured and unsecured portions, said the people, who asked not to be identified because the terms are private. The company is seeking a debt maturity of more than five years and the deal may complete in the second half of the year, the people said.

EuroChem, owned by billionaire Andrey Melnichenko, is planning to invest $3.2 billion in its potash business in the next four years, it said in its 2012 annual report. The Moscow- based company currently generates most of its revenues from nitrogen and phosphate operations, according to the report.

Read more at Bloomberg

K + S Potash Canada, a subsidiary of K + S Group, has been awarded a major contract valued at several hundred million to Veolia Water Solutions & Technologies to supply the evaporation and crystallization equipment for the new project “Legacy” that K + S Potash is taking place in the Canadian province of Saskatchewan. It is the largest North American mining plant, designed to reach a production capacity of more than 2 million tonnes of potassium chloride in 2017.

The plant with HPD of Veolia technology -which will become operational in 2015 - will allow evaporation and crystallization at lower cost of operation. Furthermore, K + S Potash Canada has decided to partner with Veolia because of its ability to execute large projects and for his commitment to the efficient use of water and energy.

In this project, Veolia is responsible for the engineering and supply of equipment that make up the core of the process of evaporation and crystallization. The process involves the evaporation of the brine, then performing the crystallization of sodium chloride and potassium chloride (potash). As a final stage, the brine is separated from potash and this is refined to achieve a high quality end product.

The K + S Group is one of the leading global suppliers of standard and specialty fertilizers. In the salt business, K + S Group is the leading producer by production capacity, with plants in Europe, North and South.

Read more at iagua.es

• It is the largest North American mining plant, designed to reach a production capacity of more than 2 million tonnes of potassium chloride in 2017.
• The HPD technology plant of Veolia , which will become operational in 2015 - will allow evaporation and crystallization at lower cost of operation.
•  K + S Potash Canada has decided to partner with Veolia because of its ability to execute large projects and for his commitment to the efficient use of water and energy.

The European Union looked set for another wave of zero-duty imports despite member states remaining undecided on the plans, after Brussels acted to protect livestock farmers in the face of expectations of a declining grains harvest.

The European Commission is expected by the end of the month to permit a further 1.2m tonnes of feed wheat to enter the EU without the tariff of E12 a tonne that usually applies.

The ruling came despite a failure of a vote of farm representatives from EU countries to decide for or against the commission’s proposals.

While many states were broadly in favour of permitting the imports, which will ensure easier feed supplies for livestock producers, Poland, the bloc’s fourth-ranked grain producer, voted against the move, a source told Agrimoney.com.

Under EU rules, the hanging result of the vote empowered Brussels to follow through with its proposals.

Read more at Agrimoney

Strategie Grains called time on the long-running downward trend in forecasts for European Union wheat production, citing better hopes for harvests, including the disputed German crop.

The influential analysis group lifted by 1.5m tonnes to 124.2m tonnes its estimate of the region’s soft wheat harvest.

While still well below the groups early-season hopes of a harvest above 133m tonnes, the upgrade contrasted with a succession of lowered hopes for the crop – including four successive monthly downgrades from Strategie Grains itself.

The US Department of Agriculture on Tuesday lowered its estimate for the EU wheat harvest, including the durum variety used to make pasta, by 1.0m tonnes to 131.0m tonnes.

Strategie Grains’ lifted its forecast including durum by some 1.8m tonnes to 132.1m tonnes.

Read more at Agrimoney

Belarus opposes the politicization of the country’s relations with the European Bank for Reconstruction and Development. This was stated by spokesman for the Foreign Ministry of Belarus Andrei Savinykh on May 17. According to him, Belarus has been actively cooperating with the EBRD in private sector development and implementation of projects on environmental protection and improvement of environmental standards.

The Moody’s rating agency has downgraded the debt rating of 26 Italian banks, including the giant UniCredit, as the country struggles with recession, tough austerity measures and 1.9 trillion euros of outstanding public debt.

The agency said Monday that Italy is back in a recession, and government measures are cutting demand for loans, resulting in more loan losses and weaker bank profits. The outlook for all 26 banks is negative.

“The ratings for Italian banks are now amongst the lowest within advanced European countries, reflecting these banks’ susceptibility to the adverse operating environments in Italy and Europe,” Moody’s said in a statement.

It however noted that the support from the European Central Bank lowered the default risk for many of the banks. Italian banks received 116 billion euros from the ECB’s long-term refinancing operation in December and another 139 billion euros in February.

The long-term debt and deposit rating of 10 of the banks were lowered by one notch, another eight banks were lowered by two notches, six banks by three notches and two banks by four.

Italy’s largest banks UniCredit and Intesa Sanpaolo were both given deposit ratings of A3 and a standalone bank financial strength rating of C-. UniCredit’s credit assessment was baa2, while that of Intesa Sanpaolo was baa1.

The world wheat harvest is to fall by 17m tonnes, led by a slump in Ukraine’s production to an eight-year low, and with Europe’s crop – the world’s biggest – pegged at its weakest in four years.

Global wheat production in 2012-13 will drop to 677.6m tonnes, the US Department of Agriculture said in a much-anticipated report giving initial estimates for crop supply and demand for the season.

The most marked decline will be seen in Ukraine, which will reap 13.0m tonnes of the grain, a 41% decline year on year, reflecting “severe fall drought” that hampered crop development and winter frosts which “further damaged the already-weakened plants” in southern and eastern areas.

A USDA crop tour had revealed that overall crop condition was “not good”.

Read more at Agrimoney

French nitrogen-fertilizer shipments fell 17 percent from July through February to the lowest level in at least four years, industry association Unifa said.

Nitrogen sales in France declined to 1.33 million metric tons in the first eight months of the year that started July 1 from 1.61 million tons a year earlier, Paris-based Unifa wrote in an e-mailed statement today.

France is the largest crop grower in the European Union, and the bloc’s biggest user of crop nutrients, according to the International Fertilizer Industry Association. Nitrogen is applied to plants to boost yields.

Potassium-fertilizer shipments in France fell 16 percent to 391,000 tons in May through February, while phosphate deliveries declined 20 percent to 328,000 tons, Unifa said.

The association tracks nitrogen sales on the basis of a year that starts July 1, while the marketing year for potassium and phosphorus begins May 1.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter atccarpenter2@bloomberg.net.

European grain supplies have little scope to absorb a “supply shock” if harvest hopes, sapped by crop damage from frost and dryness, erode further, US officials said, flagging the start of a “critical period” for wheat yields.

This year’s European Union grains harvest will come in at 284m tonnes, a figure in line with the 2011 result, as losses of winter grains to poor weather are made up in part by higher sowings of spring crops, a report from US Department of Agriculture staff across the region said.

However, with last year’s result not sufficient to meet demand, and set to result in a 1m-tonne drop to “just” 25m tonnes in inventories at the close of 2011-12, “there will be much focus on the crop as it develops over the coming months”.

“There is little room in the balance [sheet] for a supply shock, should the current grain harvest forecast not be achieved,” the briefing said.

Read more at Agrimoney 

Lithuania’s port of Klaipeda may lose 14 percent of its traffic as a result of European Union sanctions against Belarus, according to Eligijus Masiulis, Lithuania’s transportation minister, Lietuvos Rytas reported.

Belarus transported 5 million metric tons of fertilizer through Klaipeda last year, one seventh of the port’s total cargo volume, and EU sanctions may force Belarus to divert exports from Lithuania to Russia or the Black Sea, the newspaper cited the minister as saying.

The EU widened its sanctions against Belarus in March, banning more than 240 people from entering member-countries and freezing the assets of 32 Belarus-based companies.

To contact the reporter on this story: Aliaksandr Kudrytski in Minsk, Belarus atakudrytski@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net