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Why CF Industries’ Realized Prices Kept Trending Lower in 3Q17

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Realized prices

In the previous part of this series, we saw that the 3Q17 shipments for CF Industries (CF) saw meaningful growth year-over-year. However, realized prices remained a weak spot for most of the company’s segments. The Ammonia segment, which topped shipment growth, experienced the worst price decline.

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Prices decline

Year-over-year, ammonia prices fell 18% to $235 per metric ton from $287 per metric ton in 3Q16. The UAN (Urea Ammonium Nitrate) segment’s realized prices fell year-over-year by 8% to $144 per metric ton from $157 per metric ton. Granular urea prices fell 4% year-over-year to $195 per metric ton from $203 per metric ton in 3Q16, followed by the Other segment, which saw prices fall 1% year-over-year to $135 per metric ton from $136 per metric ton.

In contrast to the above four segments, the Ammonium Nitrate segment’s realized prices grew as much as 17% year-over-year to $201 per metric ton from $172 per metric ton in 3Q16.

Why prices fell

Overall, prices fell 4% year-over-year, which reduced CF Industries’ sales by 62 million during the quarter. According to the company, prices were lower year-over-year as a result of excess capacity. However, the company stated that nitrogen prices saw an improvement through the third quarter due to lower exports from China, higher energy costs outside the United States (MOO), and weakness in the US dollar. These factors also helped PotashCorp (POT), Mosaic (MOS), and Terra Nitrogen (TNH).

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