Ammonia market turbulence shows no sign of easing as supply/demand headwinds trigger fresh price falls
CF Industries net earnings climbed to $397m during 1H 2021, up from $258m during the same period last year. The producer generated $1bn in adjusted EBITDA, a 25% increase compared to the first half of 2020 when its adjusted EDITDA stood at $808m.
Net sales were at $2.64bn during 1H 2021, up from $2.18bn year-on-year. The producer noted that average selling prices for the first half of this year were higher than previously across all segments due to strong global demand, as well as decreased global supply availability as higher energy costs drove lower operating rates. The average cost of natural gas reflected in the producer’s cost of sales was $3.24 per MMBtu in 1H 2021, versus $2.20 per MMBtu during 1H 2020.
Gross ammonia production was around 4.7m tonnes during 1H 2021. CF expects production for the full year to be at the lower end of its previous forecast, at 9.5m. tonnes. This owing to increased maintenance activity this year as a result of the COVID-19 pandemic, as well as maintenance that was related to the plant outages due to natural gas availability issues in parts of the US in February this year. Production of granular urea also declined in 1H 2021 to 2.2m tonnes, from 2.5m tonnes previously, while production of UAN was in line year-on-year, at 3.3m. tonnes. This is in line with market expectations.
CF Industries expects to complete certain maintenance activities that were originally planned for 2022, during the second half of this year.
The producer expects the global nitrogen pricing outlook to remain favourable citing the need to replenish global coarse grains stocks, increased economic activity, and high energy prices in Europe and Asia, as basis for a sustained tighter global nitrogen supply and demand balance into 2023.
As reported previously, on 30 June CF Industries filed petitions with the US Department of Commerce and the US International Trade Commission, requesting the initiation of antidumping and countervailing duty investigations on imports of UAN from Russia and Trinidad.
The ITC is expected to take a preliminary vote on whether there is a reasonable indication that imports are injuring the domestic industry on 13 August. CF Industries notes that it cannot predict the outcome of the proceedings. However, most market participants expect the ITC to proceed with an investigation.
By Neha Popat, Nitrogen Market Reporter
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