Natural gas prices
We’re looking at natural gas prices in this series, primarily because they make up about two-thirds of the input costs for nitrogen-based fertilizers. Low natural US gas prices have proved beneficial to companies (NANR) such as CF Industries (CF), Mosaic (MOS), Nutrien (NTR), and CVR Partners (UAN). Let’s see how natural gas performed last week, which ended August 31.
From August 22–29, natural gas spot prices at most of the locations declined according to the EIA (U.S. Energy Information Administration). At Henry Hub, which is one of the most heavily traded locations for natural gas in the United States, natural gas spot prices declined from $2.99 per MMBtu (million British thermal unit) t0 $2.96 per MMBtu.
In the Midwest, prices declined from $2.85 per MMBtu to $2.72 per MMBtu as a result of cooler temperatures, which eased the demand for natural gas. On the other hand, natural gas prices in California rose from $4.92 per MMBtu to $5.56 per MMBtu as a result of a supply-demand imbalance.
The outlook for natural gas remained positive for fertilizer players, with the EIA expecting natural gas prices in 2018 to average $2.96 per MMBtu and increase slightly in 2019 to $3.10 per MMBtu.
Next, we’ll look at phosphate price movements.