CF Industries to begin building $4 billion blue ammonia plant JV this month, posts strong Q2 results

US fertilizer major CF Industries Holdings will start construction of the $4 billion Blue Point One joint venture this month after receiving the green light for civil building activities for the 1.4m. tonne/year plant and common infrastructure.

Work on the huge low-carbon project, in which CF Industries will hold 40% ownership – and invest around $2 billion – and Japanese duo JERA and Mitsui 35% and 25%, respectively, is due to start shortly after the necessary permits were secured last month. The Louisiana project's launch is earmarked for 2029.

CF shared the update on the world-scale project in notes accompanying its Q2 financial performance. Net earnings almost doubled year-on-year to $727 million, while net sales came in at $2.22 billion compared to $1.89 billion in the same period of 2025.

Average selling prices were higher for all segments year-on-year “due to a tight global nitrogen supply-demand balance, which was further tightened by supply disruptions related to the conflict with Iran”, CF said.

“Sales volumes were 15% lower in Q2 2026 compared to Q2 2025 due primarily to lower UAN, AN and ammonia sales, partially offset by higher granular urea and other sales,” it explained.

“Excluding the impact of lost product availability from the company’s Yazoo City complex, sales volumes in Q2 2026 were approximately 9% lower than Q2 2025.

“Ammonia sales volumes for 2026 were lower than 2025 due primarily to lower global demand for ammonia in the production of phosphate fertilizers and lower supply availability due to planned maintenance.”

Gross ammonia production for H1 and Q2 2026 was approximately 4.9m. short tons and 2.4m. short tons, respectively. Year-to-date, the company has operated at a 98% utilisation rate of available ammonia capacity.

CF expects gross ammonia production for 2026 to be approximately 9.5m. short tons, which includes the impact of the ongoing outage at the Yazoo City, Mississippi, site as a result of an incident last November.

Management expects that complex to resume ammonia, ammonium nitrate solution, nitric acid, UAN and urea liquor production during H1 2027, with “a substantial portion of the [as yet undetermined] cost” likely covered by insurance.

Cost of sales for the latest reporting period was lower year-on-year due primarily to the impact of lower sales volumes, partially offset by higher maintenance costs, including the extended outage at Yazoo City.

The average cost of natural gas, including the impact of realised derivatives, reflected in the firm’s cost of sales was $3.37/MMBtu compared to $3.36/MMBtu in Q2 2025, CF noted.

Granular urea production volumes for the April-June period were 2.40m. short tons versus 2.56m. short tons in the year-ago period. UAN output of 1.64m. short tons was down on the 1.73m. short tons made in the same period of last year.

AN production more than halved year-on-year to 135,000 short tons from 341,000 short tons.

Favourable market enviroment seen for late 2026/early 2027 

In its nitrogen market outlook, the company said that based on global production disruptions in 2026 and supportive grain stocks-to-use ratios, management expects nitrogen supply to remain constrained and demand to remain constructive through the end of 2026 and into 2027.

“CF Industries estimates that the conflict with Iran has reduced Middle East traded nitrogen supply by approximately 4-4.5m. tonnes of urea and approximately 1.0m. tonnes of ammonia to date.

“Management expects supply from the region, which typically accounts for 25-30% of globally traded ammonia and 35-40% of globally traded urea, to remain below pre-conflict levels due to continued hostilities, uncertainty around transit through the Strait of Hormuz, and the time required to restore production facilities.

“The company also expects higher shipping costs from the region to persist over the longer term. Production from nitrogen facilities in Russia also remains at risk from the ongoing Russia-Ukraine war.

“Management believes nitrogen producers in the Middle East and Russia will face an enduring geopolitical risk premium that adds cost and uncertainty to product distribution.”

Senior executives see European production economics as challenging due to the significant hike in regional natgas prices amid “LNG supply uncertainty, persistent heat waves and gas storage levels below the five-year average”.

“The company believes current natural gas prices will further pressure marginal European nitrogen production and support the global clearing price needed to meet demand.

In the Far East, “management expects steady Chinese urea exports from July through October 2026. Export quotas and price floors introduced in May 2026 remain in effect, although they have been revised.

“The company projects 4-6m. tonnes of Chinese urea exports in 2026, with actual volumes dependent on government policy, domestic pricing, and the strength of fall restocking demand.”

Turning to downstream fundamentals, the company expects lower nitrogen prices over the next few months to support strong demand into 2027.

“India, Southeast Asia and other regions that may have deferred purchases earlier in the year are expected to import urea at or above second-half 2025 levels,” it continued.

“Brazilian urea imports are also projected to be robust in H2 2026 following lower urea import demand in H1 2026 due to operating domestic capacity, product substitution and local credit constraints.”

Closer to home, CF said that based on “strong uptake” of its ammonia and UAN fill programs last months, as well as inventory in the North American nitrogen channel projected to be lower than average, “nitrogen demand in North America for the 2027 growing season will be firm”.

Commenting on the strong set of financial results, CF President and CEO, Chris Bohn, said the company is “positioned extremely well in the near- and longer-term, with our premium-grade North American asset base, disciplined strategic growth opportunities, including Blue Point, and strong balance sheet”.

“As a result, we believe CF Industries will continue to generate substantial free cash flow, enabling us to build on our strong track record of investing in high-return initiatives and returning capital to shareholders through share repurchases and our increased quarterly dividend,” he concluded.