Why Selling Prices for CF Industries Rose in 4Q17

Perhaps one of the most positive takeaways from CF Industries’ (CF) 4Q17 earnings was the growth in selling prices year-over-year. The selling prices have been subdued and have suppressed the earnings of companies (MOO) such as Nutrien (NTR), which previously operated as PotashCorp (POT) and Agrium (AGU).

CF’s Ammonium Nitrate segment saw the steepest increase in selling prices during the quarter by 26.0% year-over-year to $217.00 per metric ton from $172.00 per metric ton. This segment’s selling prices increased due to tighter supply and demand balance globally as well as the supply agreement that commenced in 2017.

CF’s Granular Urea segment’s selling price increased 14.0% year-over-year to $244.00 per metric ton. The Other segment’s average selling prices increased 10.0% year-over-year to $168.00 per metric ton.

Similarly, the Ammonia segment’s average selling prices increased 3.0% year-over-year to $285.00 per metric ton. The UAN (urea ammonium nitrate) segment’s average selling price increased 1.0% over the same period to $150.00 per metric ton.

Except for the UAN segment, which didn’t see any large changes in selling prices, the average prices for most of the segments increased due to a tighter supply-demand balance.

Next, we’ll see how the increase in selling prices translated into per-ton margins.