Producers in China primarily use coal as an input material to produce nitrogen fertilizers, especially urea—unlike natural gas–based nitrogen fertilizer producers in North America (MOO) that benefit from low-cost natural gas within the region. China is the world’s biggest urea exporter—it’s impacted by price movements in coal. Let’s look at how coal prices traded for the week ending September 16.
Among the different categories of coal, anthracite coal is used to produce nitrogen fertilizers. For the week ending September 16, average weekly anthracite coal prices in China rose by 2.8% to $83.9 per metric ton—compared to the previous week. On average, anthracite coal prices in China have fallen by 1.1% year-over-year. This isn’t as steep as the price decline at Henry Hub.
While the rise in coal prices is positive for natural-gas based producers, keep in mind that natural gas prices also rose last week. Natural gas producers include CF Industries (CF), Terra Nitrogen (TNH), and Agrium (AGU).
During this week, the Chinese yuan weakened by 7 basis points—compared to the US dollar. Due to this change, Chinese coal prices seem to have changed when converted to the dollar.
CVR Partners (UAN) is based in North America (MOO). It uses pet coke—a coal-like substance—to produce nitrogen fertilizers. Weekly pet coke prices for the week ending September 16 stood at $40.5—unchanged from the previous week.
In the next part, we’ll discuss phosphorous fertilizers.