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Why PotashCorp’s Nitrogen Price Realization Fell in 3Q17

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Nitrogen prices

Overall, PotashCorp’s (POT) nitrogen prices in 3Q17 indicated no positive momentum, which is a trend we’ve observed in recent years. Excess capacity has put downward pressure on nitrogen prices, and PotashCorp’s nitrogen realized prices show that the same declining trend has extended through 3Q17.

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Prices fall

On average, the company’s nitrogen prices fell 16% YoY (year-over-year) to $168 per metric ton in 3Q17, down from $200 per metric ton in 3Q16.

Ammonia prices fell ~24% YoY to $192 per metric ton, down from $252 per metric ton in 3Q16. Similarly, prices for nitrogen solutions also fell ~14% YoY to $127 per metric ton, down from $148 per metric ton in 3Q16.

In contrast to the movements in ammonia and nitrogen, prices for urea rose slightly in 3Q17. Both prices stood 2% higher YoY, reaching $230 per metric ton from $226 per metric ton in 3Q16.

The weakness in price realization for POT’s Nitrogen segment impacted this segment’s margins in 3Q17. Notably, peers (MOO) CF Industries (CF), CVR Partners (UAN), and Agrium (AGU) have also seen the negative impact of falling nitrogen prices in recent quarters. (We’ll have more details on CF, UAN, and AGU when they release their 3Q17 results.)

Now let’s discuss phosphate shipments.

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