Calendar 2Q17 remained subdued for the nitrogen fertilizer pricing environment. Cheap energy costs have driven capacity buildups and flattened the cost curve, putting further pressure on the margins of low-cost North American producers (MXI) like CF Industries (CF), PotashCorp (POT), CVR Partners (UAN), and Terra Nitrogen (TNH).
Below, we’ll look at the overall price movements for nitrogen fertilizers in 2Q17.
Nitrogen fertilizer prices extended their losses in 2Q17. On average, all three nitrogen fertilizers fell by double digits YoY (year-over-year) for the five major fertilizer companies. Ammonia prices fell 18% YoY to a median of $333 per short ton, while urea prices fell 14% YoY to a median of $260 per short ton. UAN (urea ammonia nitrate) fell 13% YoY to a median of $174 per short ton.
Company-wise price realizations
Of the five companies in the above chart, CVR Partners saw the steepest decline in price realization YoY—by 20% for ammonia. CF Industries and Terra Nitrogen each saw an 18% YoY price decline in ammonia prices in 2Q17, while PotashCorp and Agrium each saw a 7% YoY price decline for ammonia.
Meanwhile, PotashCorp and CF Industries each saw a 14% YoY decline in urea prices, while Agrium’s urea prices fell only 7% YoY.
For UAN prices, Terra Nitrogen saw the steepest YoY decline, falling 19%, followed by CF Industries and CVR Partners, which each saw a 13% YoY fall in prices.
In the next part, we’ll discuss the gross margin performances of the nitrogen segment players.