PotashCorp in 4Q16: Nitrogen Prices Added Salt to the Wound

PotashCorp (POT) sells nitrogen fertilizers such as ammonia, urea, and nitrogen solutions. In 4Q16, sales for its Nitrogen segment fell 33.0%. While nitrogen shipments rose 5.0% that quarter, falling nitrogen prices dampened shipment growth.

Falling nitrogen prices may also be negative for other natural gas–based nitrogen producers such as CF Industries (CF) and Terra Nitrogen (TNH). These companies primarily produce and sell nitrogen fertilizers. Agrium (AGU), which is part of the PowerShares International Dividend Achievers ETF (PID), produces nitrogen fertilizers as well.

In 4Q16, the overall average nitrogen selling price fell 37.0% to $182 per ton, from $288 per ton in 4Q15. Ammonia prices had the steepest fall of 46.0% to $213 per ton, from $397 per ton year-over-year.

Nitrogen solutions prices fell 26.0% to $142 per ton, from $193 per ton year-over-year. Urea prices fell 18.0% to $245 per ton, from $297 per ton year-over-year.

For 2016, overall average nitrogen selling prices fell 33.0% to $217 per ton, from $322 per ton in 2015. Ammonia prices fell 37.0% to $278 per ton, from $439 per ton, and nitrogen solutions prices fell 26.0% to $158 per ton, from $214 per ton. Urea prices also fell 26.0% to $256 per ton, from $346 per ton. Nitrogen fertilizer prices for fertilizer as well as for the industrial market fell about 33.0%.

Next, let’s take a look at PotashCorp’s third segment, the Phosphate segment.