CVR Energy Inc. is very bullish about the long-term prospects for fertilizer. “You don’t recover from ending stocks worldwide in one harvest or two,” Stanley Riemann, CVR chief operating officer, told analysts March 3. “I think it is a general opinion of most economists that cover the ag market that 2011 will be a very good year, and 2012 looks very good, too. And it will be several harvests, two or three, before you get the ending stocks back into a reasonable level. So we are looking at a good 18-to-36-month run in my opinion and others as far as strength of fertilizer pricing worldwide.”
As a reflection of the current fertilizer market, John Lipinski, CVR chairman, president, and CEO said March 3 that within the past 24 hours the company had taken orders for June delivery at prices that were higher than end-of-season delivery ones.
CVR said it took $10.5 million to repair its nitrogen complex, which was damaged when a high-pressure vessel ruptured Sept. 30, 2010. The company has a $2.5 million deductible, and by the end of 2010 CVR had recovered $4.5 million in insurance. No one was injured, and damage was localized with no significant outside impacts. CVR noted at the time that it was preparing for its biannual turnaround at the nitrogen plant, and this minimized downtime.
The anhydrous ammonia complex came back up Oct. 29, and UAN followed Nov. 16.
The outage did significantly impact fourth-quarter results, which were detailed last week (GM March 7, p. 10). CVR’s nitrogen business reported a $9.7 million operating loss for the fourth quarter ending Dec. 31, 2010, compared to a year-ago operating income of $7 million. Fourth-quarter nitrogen sales were $39.4 million, versus the year-ago $39.3 million. Fourth-quarter UAN production dropped to 77,800 st, versus the year-ago 176,600 st. Fourth-quarter ammonia production was 37,700 st, down from the year-ago 39,300 st.
The company said it is no longer a controlled company, as both Goldman Sachs and Kelso & Co., the former majority stakeholders, have sold down their stakes. In fact, Goldman Sachs no longer holds shares in the company. The company is in the process of spinning off its nitrogen business as a separate company.
CVR is in the midst of an initial public offering to spin off its nitrogen unit as a separate company (GM Jan. 3, 2011, Nov. 8, 2010). The CVR nitrogen fertilizer manufacturing facility is the only operation in North America that uses a petroleum coke gasification process to produce nitrogen fertilizer, and includes a 1,225 st/d ammonia unit, a 2,025 st/d UAN unit, and a dual-train gasifier complex with a capacity of 84 million standard cubic feet per day of hydrogen.