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How Do Low Ammonia Prices Affect Fertilizer Companies?



Ammonia prices

In the week ended May 20, 2016, the US domestic market (XLB) saw mixed price movements for ammonia. Companies that sell ammonia to the market include Terra Nitrogen (TNH), CF Industries Holdings (CF), CVR Partners (UAN), and PotashCorp (POT).

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North America

At $320 per metric ton, Tampa CFR (cost and freight) ammonia prices continued to move sideways from the previous week’s price. Corn Belt prices also moved sideways, at $467 per metric ton (or $515 per short ton).

However, US Gulf NOLA (New Orleans) ammonia prices fell by 4.1% to settle at $254 per metric ton, down from $265 per metric ton. Similarly, Southern Plains ammonia prices fell by 3.3% to $394 per metric ton from $408 per metric ton a week ago.

International markets

In the international market, ammonia in the Black Sea region, Ukraine, stood unchanged from the previous week at $280 per metric ton FOB (free on board). Prices in the Middle East stood at $355 per metric ton FOB, which also remained unchanged from the previous week. However, in Western Europe, ammonia prices stood at $340 per metric ton CFR, declining by 1.4% from $345 per metric ton the previous week.

While the low ammonia prices are negative for companies selling ammonia, they also create an expectation among buyers that prices will fall further. This leads to delayed purchase decisions, which drive the prices even lower. As most ammonia is converted into urea, we’ll look at urea price trends in the next part.


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