CF Industries reports third quarter loss; Port Neal start-up expected soon

CF Industries reported a third quarter loss for the first time since 2010 this week. The company noted that selling prices have been low due to global oversupply of nitrogen fertilizer and lower industrial demand. Prices in the US fell for much of Q3 and often traded below the international market. Indeed, in July this year Profercy reported Nola granular urea prices well below $170ps ton fob Nola, the lowest level for many years.

The company confirmed in the Q3 earnings release that at the new plant at Port Neal gas has been introduced into the ammonia plant with production expected soon and the urea plant to be commissioned concurrently. The granulation unit was successfully tested in September 2016. Nameplate ammonia and urea capacity at the plant is 900,000t/year and 1.4m. tonnes/year respectively with production scheduled to start late 2016. The total completed cost of all the capacity expansion projects (both at Donaldsonville and Port Neal) is estimated to be approximately $5.2 billion.

The new ammonia plant at Donaldsonville, LA, was started-up in September 2016, and has now achieved consistent, stable operation at the nameplate capacity of approximately 3,600 short tons per day. Through 31 October this year the new plant has produced over 70,000 short tons of ammonia.

The latest release showed:

• Q3 2016 net loss attributable to common stockholders of $30 million and an EBITDA loss of $6 million. These results compare to Q3 2015 net earnings attributable to common stockholders of $90 million, and EBITDA of $256 million.
• For the first nine months of 2016, net earnings attributable to common stockholders were $43 million, and EBITDA was $530 million. These results compare to the first nine months of 2015 net earnings attributable to common stockholders of $673 million, and EBITDA of $1.41 billion.
• Q3 net sales decreased to $680 million from $928 million in Q3 2015 as a consequence of lower average selling prices across all segments. The average selling price for CF products in Q3 2016 was $185 per ton compared to $289 per ton for Q3 2015, a decrease of 36 percent.
• In the third quarter of 2016, the average cost of natural gas in cost of sales for the company was $2.87 per MMBtu, which includes a realized loss of $0.17 per MMBtu on natural gas hedges, totaling $11 million. This compares to the average cost of natural gas in cost of sales of $3.05 per MMBtu for the third quarter of 2015, which included a realized loss of $0.05 per MMBtu on natural gas hedges totaling $3 million.

The full results statement can be found here.

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