We track natural gas prices since they can have a significant impact on the prices of nitrogen fertilizers for companies (XLB) such as CF Industries (CF), Mosaic (MOS), CVR Partners (UAN), and Nutrien (NTR). Fortunately, these companies have enjoyed low natural gas prices in the United States compared to energy prices in Europe and China.
Last week, the EIA (U.S. Energy Information Administration) reported that natural gas prices overall were mixed. That means that some places in the United States saw an increase, and some saw a decline week-over-week. Henry Hub, the most heavily traded natural gas point in the United States, saw natural gas prices fall to $2.94 per MMBtu (million British thermal unit) from $2.96 per MMBtu last week, which ended September 5.
According to the EIA, natural gas prices declined in the week ended September 5 due to cooler temperatures, which lowered the need for cooling, easing the demand for natural gas.
The weakness in natural gas continues to be positive for nitrogen companies. The outlook shows that low prices may extend well into next year.
In its recent Short-Term Energy Outlook report, the EIA estimated that natural gas prices will average $2.96 per MMBtu in 2018 and $3.10 per MMBtu in 2019.
Next, let’s look at phosphate fertilizer prices.