uploads///Nitrogen Segments Average Selling Prices

Why Nitrogen Prices Continue to Face Pressures

By

Dec. 4 2020, Updated 10:43 a.m. ET

Nitrogen prices

About 52% of the nitrogen segment’s net sales come from ammonia, 30% come from nitrogen solutions, and the remaining 18% come from urea products. Therefore, ammonia and nitrogen prices can have a significant impact on this segment.

  • Overall, the nitrogen segment’s average selling prices have weakened in 3Q15, falling to $319 per metric ton from $356 per metric ton in 3Q14.
  • Prices of all three nitrogen products fell, with ammonia prices falling by 14.7% to $434 per metric ton, urea prices falling by 12.4% to $352 per metric ton, and nitrogen solutions’ prices falling by 10% to $212 per metric ton.
Article continues below advertisement

Increased supply

  • Nitrogen fertilizer has taken a hit as a result of increased market supply coming from China, North Africa, and the Middle East.
  • China has added capacity, benefiting from lower energy prices for coal, which is the key raw material used to produce nitrogen fertilizers in China.

Outlook

  • PotashCorp’s nitrogen segment has been under pressure due to excess and low-cost supply from Chinese players. Nitrogen fertilizer prices have become depressed because of increased production in China. China is the largest producer of nitrogen fertilizers and its position is strengthened by lower coal prices.
  • The declining price for natural gas, which is used as an input by CF Industries Holdings (CF), PotashCorp (POT), Terra Nitrogen Company (TNH), and Agrium (AGU), has encouraged companies to expand their nitrogen production as well. However, this has led to excess capacity, which has further driven down nitrogen prices.

The VanEck Vectors Agribusiness ETF (MOO) invests 11.5% of its portfolio in CF Industries Holdings, The Mosaic Company (MOS), and Agrium (AGU).

PotashCorp also has nitrogen operations in Trinidad. Natural gas prices in Trinidad have actually increased, offsetting the US natural gas price decrease. Next, we’ll discuss the phosphates segment.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.