OCI-Produced Fertilizer Volumes up 13.3 percent in 1Q, Traded off 25 percent

OCI NV reports that its first-quarter own-produced fertilizer volumes were up 13.3 percent to 1.3 million from the year-ago 1.15 million mt. However, the company said consolidated first-quarter revenues were approximately the same as last year as the increased fertilizer production was offset by lower margin third-party traded volumes, which were off 25 percent to 348,300 mt from 464,500 mt, as well as by lower prices.

OCI said adjusted EBITDA was slightly lower than year-ago levels, reflecting higher natural gas costs and start-up costs for the Iowa Fertilizer Co. plant. In the U.S. Henry Hub spot gas prices increased to $3.00/mmBtu, up from $2.00/mmBtu, while the Europe TFF spot gas prices increased to $5.8/mmBtu from $4.1/mmBtu.

OCI reported higher fertilizer utilization rates in North Africa and a return to normalized production in The Netherlands after a year-ago outage prompted by a fire (GM March 18, 2016), which particularly impacted calcium ammonium nitrate production. Ammonia volumes were up at Sorfert in Algeria and are expected to resume at normal levels at Egypt Basic Industries (EBIC) in July once the company regains access to its export jetty in June.

Urea was at full rates at Egyptian Fertilizers Co. and OCI said it is encouraged by new gas production coming on line in the country as well as new discoveries.

Company-produced fertilizer volumes are expected to increase in the second quarter as they will include Iowa Fertilizer Co. plant in Wever, Iowa, which opened in April (GM April 21, p. 1). OCI says that plant is now producing and selling ammonia and downstream products.

As for third-party traded fertilizer, ammonium sulfate volumes were down 49 percent to 205,600 mt from the year-ago 405,200 mt. UAN saw a boost at 82,200 mt, up from 4,000 mt.

As for market conditions, OCI cited the volatile urea market and the late application seasons in the U.S. and Europe, lower import demand from India and the reconciliation of additional capacity. It said it believes current low prices are not sustainable and below break-even costs of marginal producers in China and elsewhere.

In the medium term, OCI believes the supply-demand balance to be more positive with global urea expansions slowing to below trend demand growth over at least the next four years, even before taking into account Chinese capacity closures. It believes potential rebounds in Chinese urea exports to be capped by environmental curtailments and increased focus on profitability of the industry.

In the Industrial Chemicals, OCI says its Natgasoline methanol project in Texas was 81.1 percent complete at the end of the March and the company’s board has agreed to refurbish and restart the second methanol plant at BioMCN in The Netherlands with this expected to add another 430,000 mt/y.

Overall, OCI-produced volumes, both fertilizer and industrial chemicals, were up 12 percent during the quarter.