In this part of the series, we’ll look at weekly price movements for natural gas in the US (SOIL) at Henry Hub. In the United Kingdom, heavy natural gas trading takes place at the NBP (National Balancing Point).
Natural gas is key to nitrogen fertilizers. It can account for as much as two-thirds of the total production cost for natural gas–based nitrogen fertilizer producers such as CF Industries (CF), Terra Nitrogen (TNH), PotashCorp (POT), and Agrium (AGU).
Natural gas prices
Based on data provided by the EIA (U.S. Energy Information Administration) last week, average weekly natural gas prices at Henry Hub fell 9% to $2.62 per MMBtu (million British thermal units)—compared to $2.87 per MMBtu the previous week. Similarly, front-month (expiring in April 2017) futures rose 1% to $2.83 per MMBtu from $2.79 per MMBtu the previous week. Last week, NBP front-month futures fell 6% week-over-week.
In its Short-Term Energy Outlook report for February, the EIA estimated an average price of $3.43 per MMBtu in 2017 at Henry Hub. For 2018, it expects an average price of $3.70 per MMBtu. In 2016, the average natural gas price was $2.51 per MMBtu, while the average price was $2.63 per MMBtu in 2015. In the next few parts of this series, we’ll look at the prices of phosphate fertilizers including diammonium phosphate and monoammonium phosphate.