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Was Last Week Positive for Fertilizer Companies?

PART:
1 2 3 4 5 6 7 8
Part 5
Was Last Week Positive for Fertilizer Companies? PART 5 OF 8

Coal Prices Keep Rising: Positive for Gas-Based Fertilizers

Coal-based nitrogen

Producers in China primarily use coal as an input material to produce nitrogen, especially urea-based fertilizers. In contrast, natural gas–based fertilizer producers in North America (MXI) have been benefiting from lower-cost natural gas. China is the world’s biggest urea exporter. As a result, it’s impacted by price movements in coal.

Coal Prices Keep Rising: Positive for Gas-Based Fertilizers

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Coal prices rising

Among the different categories of coal, anthracite coal is used to produce nitrogen fertilizers. For the week ending October 21, average weekly anthracite coal prices in China rose sharply by 8.6%—compared to the previous week. The prices rose to $97.3 per metric ton.

Remember, any rise in coal prices is positive for natural gas–based producers, especially when natural gas prices fall. Natural gas producers include CF Industries (CF), Terra Nitrogen (TNH), and Agrium (AGU).

Last week, the Chinese yuan fell by 39 basis points compared to the US dollar. Due to this fall, Chinese coal prices seem to have changed when converted to the dollar.

CVR Partners (UAN) is based in North America. It uses pet coke, a coal-like substance, to produce nitrogen fertilizers. Weekly pet coke prices for the week ending October 21 stood at $41.45—unchanged from the previous week.

In the next part, we’ll discuss phosphorus fertilizers such as diammonium phosphates and monoammonium phosphates.

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