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Weekly Fertilizer Performance: Terra Nitrogen, the Top Loser

PART:
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Part 4
Weekly Fertilizer Performance: Terra Nitrogen, the Top Loser PART 4 OF 9

Your Weekly Natural Gas Price Update for Nitrogen Fertilizers

Natural gas prices

Previously in this series, we discussed how natural gas is the key raw material for gas-based nitrogen producers like CF Industries (CF), Terra Nitrogen (TNH), PotashCorp (POT), and Agrium (AGU). Now we’ll discuss the weekly price movements for natural gas at the Henry Hub in the US (MXI) and the NBP (National Balancing Point) in the UK—two locations where heavy natural gas trading takes place.

Your Weekly Natural Gas Price Update for Nitrogen Fertilizers

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Prices rise

For the week ending October 7, the natural gas average weekly spot prices at Henry Hub fell ~3% to $2.9 per MMBtu (million British thermal units), as compared to one week previously. But the one-month forward contract prices at Henry Hub remained unchanged at $2.68 MMBtu.

The one-month forward prices of natural gas at the NBP continued its upward momentum, rising as much as 18% over the previous week to $5.6 per MMBtu.

Natural gas can account for almost two-thirds of the cost of production for nitrogen fertilizers such as ammonia, urea, and UAN.

Forecast

In its latest short-term energy outlook, the EIA (US Energy Information Administration) maintained its 2016 forecast for average natural gas prices at Henry Hub at ~$2.42 per MMBtu. For 2017, the EIA maintained its forecast of $2.87 per MMBtu. In 2015, the average price of natural gas at Henry Hub stood at $2.63 per MMBtu.

In the next part of this series, we’ll take a closer look at coal, an alternative input material for nitrogen fertilizer production.

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