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How Nitrogen Fertilizer Companies Competed on Prices in 1Q16

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Nitrogen products

Previously, we looked at the shipment growth for nitrogen producers. Here, we’ll look at the average realized prices, which are critical to driving revenue for the producers but have been falling over the past few quarters.

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Ammonia prices

Ammonia is the primary nitrogen product that is further upgraded to other fertilizers such as urea, UAN (urea ammonium nitrate), DAP (diammonium phosphate), and MAP (mono ammonium phosphate). Therefore, prices of ammonia may have a significant impact on prices of other fertilizers as well.

PotashCorp (POT) and CF Industries (CF) had the lowest ammonia prices during the quarter at $344 per short ton and $362 per short ton, respectively. CVR Partners (UAN) was next with average realized prices for ammonia at $367 per short ton, followed by Terra Nitrogen’s (TNH) $373 per ton during the quarter. Agrium (AGU) had the highest average realized prices for ammonia at $438 per short ton.

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Urea

Most of the ammonia is upgraded to urea. Once again, CF Industries and PotashCorp had the lowest average realized prices of urea at $256 and $308 per short ton, respectively.

This may explain why both these companies had the highest nitrogen segment growth during 1Q16. Agrium had the highest average realized prices for urea at $372 per short ton.

UAN

Terra Nitrogen had the lowest UAN prices at $203 per short ton, followed by CVR Partners’s (UAN) $209 per ton and CF Industries’s (CF) $213 per ton.

Next, we’ll look at gross margins for the nitrogen segment during the quarter for the above companies.

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