Nitrogen in 2018
Nitrogen prices remained weak for most of 2017, falling as much as 27% YoY (year-over-year). Ammonia, a fundamental nitrogen input, is further upgraded to nitrogen fertilizers such as urea and urea ammonium nitrate.
As shown in the above chart, ammonia capacity saw a net addition of five million metric tons, or 3% growth YoY. This capacity addition came mostly from the US market (XLB), where CF Industries (CF), Terra Nitrogen (TNH), CVR Partners (UAN), and PotashCorp (POT) are active. Whereas the Middle East and Russia added significantly to capacity in 2017, Black Sea nitrogen exports fell ~17%, and China’s operating rate fell 15%. While nitrogen capacity was added in 2017, there was also curtailment in some regions, which eased price pressure.
PotashCorp CEO Jochen Tilk expects production weakness in China to continue. Whereas nitrogen prices are forecast to remain volatile due to new capacity additions until the second half of 2018, PotashCorp expects new capacity to be absorbed and the nitrogen environment to improve in the second half of 2018 and 2019. Next, we’ll discuss phosphate fertilizers’ outlook.