The Integer View 18 December 2017 – The impact of China gas shortages on urea supply and Integer visit Sirius’s Woodsmith site - Integer
manage you subscriptions
OR
stay where you are
Close
Please note: the downloads on this page may not work on your browser (Internet Explorer 7 or 8 from Microsoft) as we use encryption technology (to make your browsing experience as safe and secure as possible) which is newer than IE7 or IE8 supports.

Rather than downgrade our security, we apologise and request that you update to the latest version – IE11 – or alternatively download Google Chrome or Firefox – which work without issues.

Alternatively, please email
info@integer-research.com
and let us know which download you require so we can send it to you directly.
Your login details:






Read the terms and conditions*




Your interests* - select more than one if necessary
Environment & Emissions
DEF/AdBlue/ARLA 32
Emissions Control Technologies
Marine Emissions
On-Road - Light Duty Vehicles/Passenger car
Non-Road/Off-Highway
LNG/CNG/Alternative fuels
On-Road - Heavy Duty Vehicles
Engine/Vehicle Manufacture
Fertilizers & Chemicals
Ammonium Sulphate
Nitrogen
Phosphate
UAN
Sulphur
Ammonium Nitrate
Phosphate Rock
Potash (SOP)
Potash (MOP)
NPK
Sulphuric Acid
Urea
Value Added and Specialty Fertilizers
Wire & Cable
Data, signal & control
Enamelled/magnet wire
Fibre optic cable
Fire performance cable
Power cable
Specialty cable
Automotive Cable

REGISTER
Your login details:
Remember me?
forgot password?
?>
[]
Translate Click here to read this in:
Translate
Click here to read this in:

The Integer View 18 December 2017 – The impact of China gas shortages on urea supply and Integer visit Sirius’s Woodsmith site

Posted On: 18-12-2017 By: Alicia Bennett

How China gas shortages will affect domestic urea supply

By Lynn Wang, China Research Manager lynn.wang@integer-research.com

China’s gas demand is set to hit record highs this winter, driven by a major switch from coal to gas for heating in North China, as the government of China seeks to reduce pollution.  According to PetroChina, China’s total gas demand this year will reach 230 bcm in 2017, up 17% or 33 bcm year-on-year, with the policy driven switch from coal to gas alone will generating 20 bcm of additional demand.

It is said that PetroChina and Sinopec have suspended gas supply to fertilizer and chemical plants in Sichuan and Chongqing in order to guarantee gas supply in North China. Almost all gas based urea producers in Southwest China stopped production from 8-10 December. Meanwhile, because of gas shortages across the country, a majority of gas based urea producers in Gansu, Xinjiang and Inner Mongolia also reduced operation rate or shut down temporarily.

Although gas based urea production will decline in the next 2-3 months, we don’t expect that the move will significantly affect local market supply. Gas based urea plants commonly stop or reduce production in winter when gas demand is at a seasonal peak. According to Integer’s calculation, the operation rate of gas-based urea is 18.8% in December of 2017, down from 27% in December 2016. The urea output reduction is estimated to be about 135,000 tonnes per month between December 2017and February 2018 compared to the same period a year previous, representing about 3% of Chinese average monthly production.

It’s likely that the impact on the whole market will be limited, and is unlikely to make a significant difference to China FOB prices.  However, it is likely to have a significant local effect. Given that most closed gas based urea plants are located in Southwest China, hat urea supply will be tighter in southwestern region than the rest of the country, when the demand for spring planting season comes.

Sirius hosts polyhalite mine site tour at Woodsmith

By Rebecca Hayward, Potash Research Manager rebecca.hayward@integer-research.com

This week, the Integer team made a snowy trip to Scarborough to see and hear the latest developments at Sirius Minerals, and their plans to construct the world’s largest polyhalite mine in the North York Moors national park.

It’s safe to say the company has come a long way since we first visited the farm at Dove’s Nest two years’ ago. With Stage 1 project financing now in place totalling US$1.2 billion and approval from the National Park Authority, Sirius has made great strides in the development of the 10-20 million tpy Woodsmith polyhalite mine.

At the main mine site, construction preparations are well underway with a growing team engaged in building the various shaft pads, civil works and site office facilities. Diaphragm walling (D-walling) equipment has been assembled and construction of the underground retaining walls which are being built down to the 120m level, has started. Once the retaining walls are in place, the ground in the middle portion is excavated and positioned as screening around the circumference of the mine site. After the D-walling process, the mine shaft will be sunk to a depth of 1,500m making it the deepest mine in the UK. Stage 1 financing is expected to cover construction of the mine shafts.

To minimise the volume of large trucks on the North York Moors national park, Sirius plans to construct a 4.3m diameter underground tunnel for a conveyor belt, or Mineral Transport System (MTS) which will run for 37km from the mine site to the materials handling site and deep-water harbour facilities at Teesside. We understand that construction of this will be covered under the Stage 2 financing plan.

From a market perspective, the key question is how the product can be integrated to the fertilizer market, given that there is currently limited volume and no reliable polyhalite price, and how its nutrient components will be valued. For example, it is unclear how it will be valued as a substitute in the various K2O markets given the lower potassium content relative to MOP and SOP . Sirius has ambitious plans for product substitution by targeting a broad range of products, including kieserite, SOPM, SOP, SSP, AS, MOP-NPK, and straight MOP.

A key part of the company’s success to date is attributed to it securing take or pay offtake agreements in North America, Latin America, southeast Asia and China. So far, these total 4.6 million tpy of committed volumes at a weighted average price of US$145/tonne (an approximate price, over the lifetime of the agreements), with options for a further 1.15 million tpy and Sirius will look to expand on these.

Sirius is confident that it will be producing polyhalite from the mine by the end of 2021. In order to reach this stage, the company must secure Stage 2 financing which will be 100% debt funded. The company is targeting commitments in late 2018 and to its favour, has received a letter of interest from HM Treasury UK Guarantee Scheme. The scheme guarantees the principal and interest payments on infrastructure debt issued by the borrower to banks or investors, which for Sirius could reduce the risk and make it more attractive to investors.