CF expects higher nitrogen prices in 1H 2018
Houston, 14 February (Argus) — Leading US nitrogen producer CF Industries expects higher prices in the first half of 2018 because of reduced Chinese output and projected steady demand.
The producer said US prices will need to rise in order to attract necessary imports for the spring application season, even with its own production near record highs in the fourth quarter of 2017. CF also expects a further reduction in Chinese urea exports in 2018 because of environmental regulations, high feedstock prices and currency impacts, all factors that have supported global nitrogen prices since late 2017.
On the supply side, CF produced 2.6mn st of gross ammonia in the fourth quarter, up by 14pc year-over-year and the second highest ever for the company. Granular urea production reached 1.1mn st, a 23pc year-over-year rise, on increased output from its Port Neal, Iowa, plant. UAN production climbed by 5pc to 1.9mn st.
Sales volumes and prices increased for most CF products in the fourth quarter from the same time in 2016 on a combination of tighter global nitrogen market and expanded production capacity.
CF sold 1.2mn st of ammonia, a 58pc increase year-over-year. Average ammonia sales prices increased by $8/st year-over-year to $285/st, in part because of its supply contract with phosphate producer Mosaic.
Granular urea sales volumes climbed by 14pc year-over-year to 1mn st in the quarter on higher production from Port Neal. Average sales prices rose by $30/st to $244/st.
UAN sales volumes for the quarter declined by 6pc year-over-year to 1.9mn st because of fewer export sales. US vessel exports of UAN, nearly all of which comes from CF, in the fourth quarter fell by 14pc year-over-year to 322,000st, according to customs data. CF's average UAN sales prices ticked up by $1/st to $150/st for the quarter.
CF also saw growth in its other nitrogen products segment, driven primarily by higher sales of diesel exhaust fluid (DEF). Other sales volumes increased by 27pc year-over-year to 573,000st,
CF said it will take more plant turnarounds in 2018 than it did last year, contributing to $400mn-450mn in expected new capital expenditures.