CHEMICAL & ENGINEERING
NEWS VOLUME 39, NUMBER 33
The Chemical World This Week
AUGUST 14, 1961
Ammonia Producers Set for More Capacity Current round of expansion includes 1.1 million tons of capacity already announced and still more expected The anhydrous ammonia industry expects several more expansions to be announced before its current round of capacity build-up tapers off. These will be in addition to the 1.1 million tons of annual capacity completed or under construction so far this year. Capacity operation of existing plants this past spring and the continuing growth of nitrogen fertilizer demand make it plain that the industry is ready for another big upsurge in capacity. Among the ammonia expansions
announced this spring and summer are:
pacity (to 140,000 tons a year) at Pascagoula, Miss.
• Armour's 360 ton-per-day ammonia plant to be built at Cherokee, Ala. The plant will also have units to make nitrogen solutions, nitric acid, ammonium nitrate, and ammonium phosphate. • W. R. Grace's 60,000 ton-per-year plant at Big Spring, Tex. •American Cyanamid's 40% expansion of capacity at Fortier, La. • Coastal Chemical's doubling of ca-
• Southern Nitrogen's addition of 50,000 tons a year of capacity to its 100,000 ton-per-year plant at Savannah, Ga. Also this spring, W. R. Grace put on stream an additional 60,000 tons per year of capacity at its Woodstock, Tenn., plant. Texaco went into operation about the same time with an additional 40 tons a day at Lockport, 111. In May, Solar Nitrogen's new 300
SPRING AMMONIA DEMAND STRAINS U.S. CAPACITY (Monthly ammonia production in thousands of short tons)
500
400
300
200
100
JULY * C&EN estimate Source; U.S. Department of Commerce
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STRAINING CAPACITY. During peak demand this spring, ammonia plants such as this one of Phillips Chemical on the
ton-per-day ammonia unit at Joplin, Mo., started producing. A number of other expansions announced earlier are under construction now. California Chemical is putting up a 300 ton-per-day ammonia unit at a new fertilizer plant at Fort Madison, Iowa. U.S. Phosphoric Products is building a 350 ton-per-day plant at Tampa, Fla. Consumers Cooperative Association is building a 150 ton-perday unit at Hastings, Neb. Diamond Alkali will bring in a 100 ton-per-day plant at Deer Park, Tex., early next year. Monsanto will market Diamond's ammonia output. Other ammonia expansions are being built by Dow (at Plaquemine, La.), Shamrock, and Rohm & Haas. To help meet the peaks of ammonia demand, such producers as Phillips, Monsanto, and U.S. Industrial Chemicals have been adding to storage capacity. Much of the new storage is of the atmospheric type, which offers savings in construction and operating costs (C&EN, May 22, page 2 9 ) . In addition, producers have been adding capacity for such ammoniabased products as nitric acid, urea, nitrogen solutions, ammonium nitrate, and diammonium phosphate. Record Production. The anhydrous ammonia industry finished another year of record production in June. Output was about 5 million tons, compared with about 4.7 million in 1959-60. Plants were operating full tilt during March, April, and May, 34
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Houston Ship Channel were operating at or over capacity. New capacity won't affect the market seriously until 1963
producing at over 100 % of rated capacity during those months. U.S. anhydrous ammonia capacity at the beginning of 1961 was about 5.4 million tons a year. When already announced expansions are completed, capacity will reach about 6.5 million tons a year. Meanwhile, producers expect use of nitrogen in fertilizers (biggest outlet for ammonia) to continue to grow by about 4.5 to 6% a year. Final figures on nitrogen fertilizer use in the year ended June 30 won't be out for another year, but ipost observers feel consumption this year was about the same as, or slightly ahead of, 1959-60's 2.8 million tons (in terms of N ) . That was 3.6% ahead of consumption in the previous year. A cool, wet spring probably kept consumption down below expectations this year. In some areas, sales and application were delayed to the extent that some of the fertilizer that went on this year's crops probably won't show up in consumption statistics until the following year. In the Midwest, for instance, there was still a lot of business in July, when fertilizer dealers usually begin to relax and plan ahead to the next season. Prices Higher. Most manufacturers of ammonia finished up the season with nearly empty storage tanks and warehouses and only a normal carry-over on hand. With plants operating at or above rated capacity and sales keeping pace, there was less
price cutting this year. According to the U.S. Department of Agriculture, farmers were paying slightly higher prices this spring for most nitrogenous fertilizers than they paid in 1960. The average U.S. retail price per ton of ammonia, according to USDA, was $142, $1.00 more than in the spring of 1960. In Arkansas and Mississippi, farmers paid only $115 a ton. Prices also dipped again in the Pacific states. Ammonium nitrate prices were also up about a dollar, and ammonium sulfate was selling a little higher. Most mixed fertilizers were moving at about the same or slightly higher prices than in the previous spring. Although prices are up somewhat, most producers complain that prices don't reflect the rising costs of doing business and are still far too low to make ammonia a really profitable business. As the new fertilizer year starts, however, pricing is confused. Allied Chemical, in its new price schedule, abandoned off-season discounts on ammonia, and other producers are wondering if Allied can make it stick. Apparently Allied feels that a lower price out of season will not increase total annual ammonia sales and prefers to store off-season production rather than jeopardize spring fertilizer prices by offering fall discounts. The industry is also watching closely the extra $2.00 to $3.00 that Grace tacked on the price of urea, at the same time switching from an f.o.b. to a delivered basis. Spencer's new
policy of pricing urea according to zones is also causing comment—in one zone, price is quoted f.o.b., freight equalized, and in another on a delivered basis. West of the Rockies, where there is still overcapacity, producers are attempting to raise prices. Shell, for instance, raised ammonia from S66 to $74 a ton on Aug. 1, and raised by $2.00 a ton the price of ammonium sulfate and diammonium phosphate. Collier's listed price of $92 a ton for ammonia, announced a year ago, still stands. With the West's supplydemand gap slowly narrowing, it's possible these higher prices will survive the year. Producers aren't sure how acreage cutbacks affected sales. The cool, wet spring delayed the whole agricultural cycle and any effect acreage cutbacks might have had was partially hidden and confused by the weather. Fertilizer makers theorize that acreage cutbacks seldom cut deeply into plant food sales anyway, for growers simply farm the fewer acres more intensively. That usually means more plant food per acre, so the total effect on fertilizer sales is minimized. Bright Picture. The long-range picture for ammonia and nitrogen fertilizer is still bright. Rising population, the trend to high analysis plant foods, the decrease in farm land as acres give way to roads, housing developments, and country clubs—all point toward more need for fertilizer as farmers use more modern technology to keep city cousins in food and fiber. Even the fact that each year more and more farmers pack up and leave for the city doesn't detract from the
AMMONIA TO UREA. High pressure reciprocating pumps made by Aldrich Pump transfer anhydrous, around the clock, to Southern Nitrogen's urea plant in Savannah
long-range picture. On the contrary, the industry's market forecasters see this trend as a favorable one. The abandoned farms, as they see it, are taken over by more enterprising farmers who are alert to modern agricultural technology and tend to fertilize those acres up to the maximum in order to produce more bushels or bales per acre and keep the cost per unit of harvest as low as possible.
BIGGEST MARKET. A Mississippi chemical truck delivers ammonia to a cotton farm. Tractor in the foreground is equipped to apply anhydrous. Nitrogen use in fertilizer, biggest outlet for ammonia, is expected to grow by about 4.5 to 6% a year
These long-range expectations, added to the fact that ammonia sales this year were nudging capacity during the peak season, are behind the current expansions. It usually takes a year and a half or two years to build an ammonia plant, so producers are looking ahead, building now to be ready for the expanded market of the mid-sixties. Some observers feel that even with expansion already announced, capacity won't be sufficient for the 1965 demand. That's why they expect several more expansions to be announced before the end of the year. This view isn't shared universally, although it does seem to be the majority one. A minority says these expansions are coming too soon, will give the industry another attack of overcapacity such as it suffered in the late fifties. They figure current expansions won't be in production soon enough to affect the fertilizer season that ends next June, but they foresee problems of oversupply hitting the industry in the season that will end with June 1963. To the more optimistic producers such dire predictions sound like attempts to discourage potential competitors. AUG. 14, 1 9 6 1 C&EN
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