All posts by hlancey@bloomberg.net

CF Third-Quarter Results Dip

Ammonia, AN-20, Earnings, U.S., UAN, Urea

CF Industries Holdings Inc. reported third-quarter net earnings attributable to common stockholders of $164 million on sales of $1.27 billion, down from the year-ago $438 million and $2.32 billion, respectively. Adjusted EBITDA was $445 million, down from $983 million. Tons sold were up at 4.75 million st, from 4.41 million st.

“The CF Industries team continues to execute well,” said Tony Will, CF President and CEO. “Global nitrogen industry fundamentals remain favorable and forward energy curves suggest attractive margin opportunities for the foreseeable future. As a result, we expect to continue to drive strong cash generation, underpinning our ability to create long-term shareholder value through disciplined investments in growth opportunities and returning substantial capital to shareholders.”

Going forward, CF expects the global nitrogen supply-demand balance to remain positive, underpinned by resilient agriculture-led demand and forward energy curves that indicate a steep cost curve, with a significant margin opportunity for low-cost North American producers versus those in Europe and Asia.

Nine-month net earnings were $1.25 billion on sales of $5.06 billion, down from the year-ago $2.49 billion and $8.58 billion, respectively. Adjusted EBITDA was $2.17 billion, down from $4.58 billion. Total product sold was 14.22 million st, up from 13.88 million st.

Production (000 st) 3Q-23 3Q-22 YTD-23 YTD-22
Ammonia 2,238 2,28 6,971 7,366
Gran Urea 1,081 1,187 3,414 3,418
UAN-32 1,749 1,381 5,012 4,879
AN 416 358 1,104 1,162
Ammonia 3Q-23 3Q-22 YTD-23 YTD-22
Net Sales ($/M) 235 531 1,184 2,286
Gross Margin ($/M) 21 178 387 1,211
Sales Volumes (000 st) 764 643 2,469 2,405
Avg Selling Price ($/st) 308 826 480 951
Gas Costs ($/mmBtu) 2.53 8.50 3.43 7.36
Gran Urea 3Q-23 3Q-22 YTD-23 YTD-22
Net Sales ($/M) 360 689 1,431 2,287
Gross Margin ($/M) 134 295 656 1,263
Sales Volumes (000 st) 1,062 1,262 3,532 3,539
Avg Selling Price ($/st 339 546 405 646
UAN 3Q-23 3Q-22 YTD-23 YTD-22
Net Sales ($/M) 435 736 1,650 2,727
Gross Margin ($/M) 133 322 713 1,625
Sales Volumes (000 st) 1,954 1,644 5,425 5,098
Avg Selling Price ($/st) 223 448 304 535
AN 3Q-23 3Q-22 YTD-23 YTD-22
Net Sales ($/M) 114 180 377 656
Gross Margin ($/M) 35 44 113 198
Sales Volumes (000 st) 414 363 1,157 1,227
Avg Selling Price ($/st) 275 496 326 535
Other 3Q-23 3Q-22 YTD-23 YTD-22
Net Sales ($/M) 129 185 418 622
Gross Margin ($/M) 54 77 175 308
Sales Volumes (000 st) 551 496 1,635 1,598
Avg Selling Price ($/st) 234 373 256 389

Lower Prices Pressure LSB’s 3Q Sales, EBITDA

Ammonia, AN-20, Earnings, UAN

LSB Industries Inc. reported a third-quarter net loss of $7.73 million on net sales of $114.3 million, down from the year-ago net income of $2.3 million and $184.3 million, respectively. Adjusted EBITDA was a positive $9.2 million, down from the year-ago $49.9 million.

“Our third-quarter results were disappointing relative to our expectations headed into the period,” said Mark Behrman, President and CEO. “We continue to experience a weaker pricing environment relative to last year, but our results were also impacted by lower production volumes versus our expectations.”

“While we hit a speed bump early in the quarter, our manufacturing operations have been performing well since early September, and we expect that to continue, setting us up for improved results in the fourth quarter,” Behrman said. “Additionally, nitrogen pricing has been increasing over the past two months, a trend that should benefit our profitability in 2024 relative to the second half of 2023.”

“Despite the headwinds encountered so far in 2023, we continue to generate positive cash flow and maintain a strong balance sheet, providing us with significant financial flexibility to allocate capital, including the repurchase of equity and debt, and advancing multiple growth initiatives,” he added. “These include several potential capacity expansion projects that we currently have under evaluation. We expect to determine our next steps on these projects in the first quarter of 2024.”

Behrman said the company continues to make progress with its portfolio of clean energy initiatives as evidenced by the recently reported Houston Ship Channel project with INPEX Corp., Air Liquide Group, and Vopak Moda Houston LLC (GM Oct. 6, p. 1). “We believe these opportunities position us to deliver incremental profitability and increased shareholder value in the future,” he said.

Nine-month net income was $33.3 million on sales of $461.1 million, down from the year-ago $164.5 million and $668.1 million, respectively. Adjusted EBITDA was $107.3 million, down from $309.2 million.

Product (Gross Sales $)) 3Q-23 3Q-22 % Change
AN & Nitric Acid 46,026 66,161 (30)
UAN 30,090 50,459 (40)
Ammonia 26,823 52,075 (48)
Other 11,348 15,578 (27)
Total 114,287 184,273 (38)
Sales Volumes st 3Q-23 3Q-22 % Change
AN & Nitric Acid 119,468 125,446 (5)
UAN 118,135 115,352 2
Ammonia 88,986 55,825 59
Total 326,589 296,623 10
Avg Selling Price $/st 3Q-23 3Q-22 % Change
AN & Nitric Acid 327 458 (29)
UAN 217 417 (48)
Ammonia 269 906 (70)
Other Factors 3Q-23 3Q-22 % Change
Avg Nat Gas ($/mmBtu) 3.61 7.65 (53)
Tampa NH3 $/mt 343 1,093 (69)
NOLA UAN $/st 228 459 (50)

CVR 3Q Income Moves into Plus Column

Ammonia, Earnings, Natural Gas, Nitrogen, UAN

Nitrogen producer CVR Partners LP reported third-quarter net income of $731,000 mt on net sales of $130.6 million, up from the year-ago net loss of $19.8 million and $156.5 million, respectively. EBITDA was $32.4 million, up from the year-ago $10.2 million.

While the current quarter reflected a 99% ammonia utilization rate, the year-ago was only 52% due to turnarounds. Ammonia prices were off 56% and UAN 48% compared to the year-ago quarter.

“CVR Partners posted solid operating results for the 2023 third quarter driven by safe, reliable operations with a combined ammonia production rate of 99%,” said Mark Pytosh, CEO of CVR Partners’ general partner. “Harvest is nearly complete and demand for fall ammonia application has been strong.”

“Nitrogen fertilizer prices reset this summer and we have seen rising prices into the fourth quarter,” he said. “With attractive farmer economics, we expect nitrogen fertilizer demand to be strong through the end of 2023 and into the spring of 2024.”

CVR has declared a third-quarter cash distribution of $1.55 per common unit, which will be paid Nov. 20, 2023, to unitholders of record as of Nov. 15, 2023.

Nine-month net income was $162.5 million on sales of $539.9 million, down from the year-ago $191.4 million and $623.4 million, respectively. EBITDA was $243.2 million versus $280.9 million.

Sales (000 st) 3Q-23 3Q-22 YTD-23 YTD-22
Ammonia 62 27 183 118
UAN 387 275 1,075 884
Plant Gate Price $/st 3Q-23 3Q-22 YTD-23 YTD-22
Ammonia 365 837 633 1,062
UAN 223 433 330 496
Production (000 st) 3Q-23 3Q-22 YTD-23 YTD-22
Ammonia – gross 217 114 660 494
Ammonia – net 68 36 200 137
UAN 358 184 1,063 832
Feedstock 3Q-23 3Q-22 YTD-23 YTD-22
Petroleum Coke 84.09 51.54 78.49 52.68
Natural Gas ($/mmBtu) 2.67 7.19 3.57 6.65

Ma’aden Swings to Loss Column in 3Q

Earnings, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden) swung to a net loss after Zakat and tax of SAR83.4 million (approximately $22.2 million at current exchange rates) for the third quarter ended Sept. 30, down from a net profit of SAR2.1 billion for last year’s third quarter, the company said in a filing to the country’s Tadawul exchange on Oct. 31.

Ma’aden attributed the profit downturn primarily to a decline in sales by SAR3.8 billion on the back of declining commodity market prices in all business segments, except the base metals and new minerals segment. This was partially offset by a decrease in cost of sales, largely attributable to lower raw material prices.

Revenues were down by 38% year-over-year, to SAR6.23 billion from SAR10 billion, which the company said was due to lower realized prices in its phosphates business segment, which includes ammonia production and sales.

Price Declines Impact SABIC Agri-Nutrients

Earnings, Middle East, Saudi Arabia

Riyadh-based SABIC Agri-Nutrients Co. Ltd. posted a 55% drop in third-quarter profit after Zakat and tax, to SAR1.05 billion (approximately $279.7 million at current exchange rates) from the year-earlier SAR2.33 billion, according to a company filing to Saudi’s Tadawul exchange on Oct. 31.

SABIC Agri-Nutrients cited a 43% decline in the average selling prices of the company’s products during the quarter as driving the profit decline, which was partially offset by a 6% increase in sales volumes. Third-quarter revenue fell 40% year-over-year, to SAR2.67 billion from SAR4.42 billion.

For the nine months to Sept. 30, the company reported a 66% decline in profit after Zakat and tax, to SAR2.68 billion from SAR7.87 billion, driven by a 46% slide in product average selling prices. Nine-months revenue fell by 45%, to SAR8.06 billion from SAR14.77 billion.

Looking ahead, SABIC Agri-Nutrients – as cited by Middle East news portal Zawya – sees resilient global demand and higher-cost wintertime energy supply with lower-than-expected Chinese export volumes as supporting the urea market in the fourth quarter.

The company also pointed to healthy demand from major importers in the Americas, Africa, and Europe ahead of the new crop-planting season, and an estimated 1.5-2 million mt in Indian urea tenders as supporting global trade through the end of this year.

SABIC Agri-Nutrients Co. is 50.1% owned by Saudi Basic Industries Corp. (SABIC). Its fully owned subsidiaries include National Chemical Fertilizer Co. and SABIC Agri-Nutrients Investments Co. It also owns a 50% stake in Al-Jubail Fertilizer Co. and a 33.33% holding in Bahrain-based nitrogen fertilizer producer Gulf Petrochemicals Industries Co. Its product portfolio includes ammonia, urea, DAP, and specialized fertilizer.

The company also owns minority interests in Yanbu National Petrochemical Co. (1.69%) and Arabian Industrial Fibers Co. (3.87%).

Louisiana Approves APF, CF Tax Breaks for Projects, Nutrien’s Request for Three-Year Delay at Geismar

Ammonia, Ammonium Sulfate, Featured, Louisiana, Sulfuric Acid

The Louisiana Board of Commerce and Industry on Oct. 25 approved significant tax breaks for American Plant Food (APF) and CF Industries Holdings Inc. for new projects, and a request by Nutrien Ltd. to push back the date of its Geismar expansion by three years.

APF will receive a first-year break of $3.66 million under the Industrial Tax Exemption Program (ITEP). The investment in the 420,000 st/y ammonium sulfate complex was put at $228 million. The project will be sited in Jefferson Parish at Cornerstone Chemical Co.’s 800-acre Cornerstone Energy Park at Waggaman, La. (GM April 7, p. 1; Oct. 28, 2022). APF will source ammonia for the plant from Incitec Pivot Ltd.’s (IPL) Waggaman ammonia plant, which CF is seeking to purchase, and sulfuric acid from Cornerstone.

The Board unanimously approved APF’s request despite opposition from some local residents who had complained that the number of employees for the project had varied over time, according to nola.com, having gone from 100 at the time the project was announced, then down to 13 and now the current 28. However, APF explained the project would be built in phases and the company believed it would eventually move up to 100.

CF received a first-year exemption of $29.4 million on its $2 billion investment in Ascension Parish (GM Aug. 19, 2022). The project is expected to employ 50 and produce 1.7 million t/y of blue ammonia.

The Board also approved Nutrien’s request to move the commencement of operations for its proposed Geismar expansion from March 31, 2027, to March 31, 2030. Nutrien said in August that it was suspending work on the 1.2 million mt/y Geismar clean ammonia project (GM Aug. 4, p. 1).

Nutrien told the Board that it has encountered unanticipated challenges during the project resulting from supply chain delays, higher inflation, interest rates, and anticipated resource availability, as well as market downturns that have forced it to reevaluate the initial timeline.

“We have currently invested more than $100 million in the project and are actively pursuing permits required to commence construction,” Nutrien said. “At the conclusion of our project, using current estimates, we will have spent over $2 billion, created more than 35 new jobs, and expanded our annual payroll and state spend by millions of dollars. The project is still expected to meet our investment amount, new job, and new payroll ITEP compliance requirements.”

Strike Shuts Down St. Lawrence Seaway; Mediation Ordered

Canada, Eastern Canada, Featured, Grains, U.S.

The St. Lawrence Seaway, a major maritime trade route between Montreal and the Great Lakes, shut down early Sunday morning, Oct. 22, after union workers walked off the job. There are an estimated 360 workers on strike, according to the Associated Press.

The strike is expected to affect the movement of grain, fertilizer, and other goods along the Seaway, a trade artery jointly managed by Canada and the US that stretches between Lake Erie and Montreal.

Fertilizer Canada quickly called for St. Lawrence Seaway Management Co. (SLSMC) and Unifor, Canada’s largest union, to promptly come to an agreement to end the strike, saying that the fall is a crucial time in Eastern Canada for the import of fertilizer shipments in preparation for spring.

SLSMC said on Oct. 24 that it is receiving ongoing communication from various groups voicing their concern about delays in getting essential cargoes delivered. “This impasse is extremely unfortunate but our members remain committed to getting a fair agreement,” said Unifor President Lana Payne.

Under what’s known as “pattern bargaining,” Unifor recently won wage increases for its members who work for Ford Motor Co. and General Motors Co. SLSMC, the not-for-profit corporation responsible for Canadian Seaway facilities, which consist of 13 of the 15 locks between Montreal and Lake Erie, said the union is now seeking a similar deal for its workers there. SLSMC said the union is looking for “wage increases inspired by automotive-type negotiations” and has “minimally moved” from initial demands.

The company said there are no ships currently waiting to exit the Seaway “but there are over 100 vessels outside the system, which are impacted by the situation.”

“In these economically and geopolitically critical times, it is important that the Seaway remains a reliable transportation route for the efficient movement of essential cargoes between North America and the remainder of the world,” said SLSM President and CEO Terence Bowles.

SLSMC is seeking a ruling under the Canada Labor Code that would force the union to provide workers to ensure the movement of grain along the route. The ruling has not been issued. However, the Canadian government did order both sides to return to the bargaining table on Oct. 27 with a federal mediator. Both said they would comply.

Business groups, including the Canadian Federation of Independent Business (CFIB), were pleased with the resumption of negotiations. However, if they fail on Oct. 27, CFIB said the federal government should enact back-to-work legislation.

“Ottawa must resolve this situation as quickly as possible to minimize the impact and not wait for the strike to drag on like it happened during the strike at British Columbia ports earlier this year,” said CFIB.

Potential Liner Tear Investigated at Mosaic Phosphogypsum Stack

Featured, Florida, Tampa

The Florida Department of Environmental Protection (DEP) and The Mosaic Co. are keeping a close eye out for a possible liner tear at Mosaic’s New Wales south phosphogypsum stack.

The DEP said that Mosaic notified it on Oct. 20 that a review of site monitoring data and results from a piezometers indicated a change in water pressure within a limited area of the stack. DEP said this could be indicative of a potential liner tear. As of Oct. 26, DEP told Green Markets that the investigation is ongoing and the cause has not been confirmed.

DEP said that inspections and data submitted by Mosaic to date indicate there is no breach of the walls of the gypstack and no discharges to surface water. DEP also said there is no process water storage atop the gypstack system in the vicinity of the area with the reported change in pressure. It said Mosaic ceased stacking and process water storage operations in this area in 2022.

DEP said Mosaic is required to perform an investigation, which includes confirmation of the prior piezometer readings and whether there is a liner tear or other potential cause of the observed changes in gypstack water pressure readings in this area. Mosaic’s investigation is ongoing and DEP inspectors have been onsite to observe and monitor these operations.

In addition, DEP is requiring Mosaic to provide daily reports on any piezometer monitoring data at the site and status reports on the ongoing follow-up investigations. According to DEP, Mosaic planned to begin drilling operations to investigate the anomaly during the week of Oct. 23-28.

DEP said its regulatory investigation into this matter is also underway. DEP said it is reviewing all information to determine if there are any violations or necessary penalties or enforcement actions. This review includes all permit, rule, and reporting requirements.

Environmentalists told the Tampa Bay Times that a liner tear was believed to be the cause of the leaks at the phosphogypsum stack at the long-idled Piney Point plant in 2021 (GM April 2, 2021). At that time, DEP agreed to allow an emergency release of wastewater from the phosphogypsum stack after being warned by the site manager that process water was bypassing the wastewater management system and making its way into Piney Point Creek, which runs into Tampa Bay.

The 2021 leak made national news, and the controlled release of water was believed to have averted a potential breach that could have caused a major disaster (GM April 9, 2021). Thereafter, the state of Florida budgeted funds to permanently close the site (GM April 16, 2021). DEP announced on Sept. 23, 2023, that the first phase of the Piney Point gypstack closure was complete.

Uruguay Developer Courts Energy Firms for Hydrogen/Ammonia Port

Ammonia, Argentina, Brazil, Featured, Green Hydrogen, Hydrogen, South America

Infrastructure developer Corredor Logistico Multimodal (CLM) is in talks with three international energy companies interested in making hydrogen-based fuels and chemicals at a $1.6 billion deepwater port it wants to build on Uruguay’s sparsely populated Atlantic Coast, according to a Bloomberg report.

The project, dubbed La Paloma Hub, would power hydrogen plants and would reportedly be located close to offshore wind-energy blocs that state-run oil company Ancap is preparing to auction as soon as this year, CLM Vice President and shareholder Jorge Carcova Munilla told Bloomberg in an interview.

“We have pre-agreements with European companies for the development of green hydrogen, synthetic fuels and ammonia,” he said.

Uruguay’s treacherous Atlantic Coast is a graveyard of shipwrecks and grandiose port projects that foundered on the shoals of poor planning and wishful thinking. Montevideo-based CLM is betting it can succeed by building a multipurpose port that handles bulk cargo including fuels and farm products from Uruguay, Brazil, and other South American nations. 

The project involves expanding the existing port in the beach town of La Paloma by filling in 220 hectares (543 acres) of ocean and building breakwaters to handle Capsize vessels that draw too much water to dock at Uruguay’s main riverine ports of Montevideo and Nueva Palmira.

CLM, whose shareholders are Argentine and Uruguayan investors, is in separate negotiations with two international companies to finance, build, and possibly operate the port, Carcova Munilla said.

CLM needs the government of Uruguay to approve the project before it prepares feasibility and environmental impact studies, he said. Local regulations also require the government to hold a competitive bidding process to build the port, though CLM would have preferred status as the project sponsor.

Construction could start in 2025 if regulatory approvals are forthcoming and CLM wins the contract bid, Carcova Munilla said. “We think it will take five or six years for the port to be totally operational,” he said.

CLM will seek free-trade-zone and free-port status for La Paloma Hub. Carcova Munilla said a desalinization plant powered by land-based wind, solar farms would supply fresh water to the port. The facility would also have facilities for yachts and naval, fishing, and cruise ships.

Brazil’s Ceará State Signs MOU for Green Ammonia Plant

Brazil, Featured, Green Ammonia, Green Hydrogen

Brazil’s Ceará state government on Oct. 25 reported that it has signed a Memorandum of Understanding (MOU) with São Paulo-based engineering firm GoVerde Energia & Apollo Asset, with the aim to produce solar energy and green ammonia at the port of Pecem.

The $597.6 million project will be implemented in the state’s Pecem Industrial and Port Complex (CIPP), which the government plans to turn into a green hydrogen hub. GoVerde’s New Business Director, Ricardo Junqueira, estimates that the planned facility will be capable of producing 40 mt/d of green ammonia in the first phase of the project, with another 250 mt/d in the second and another 200 mt/d in the third phase.

Another major green project was announced for CIPP in February. Casa dos Ventos, São Paulo, a renewable energy company, and Comerc Eficiência, an energy efficiency company of the Comerc Energia Group, São Paulo, on Feb. 2 announced a partnership with the TransHydrogen Alliance (THA), whose objective is to create new supply chains for the energy transition of European countries (GM Feb. 10, p. 30).

The parties signed an MOU to jointly develop a viable partnership targeting production of the first phase for export to Europe through the Port of Rotterdam in the Netherlands in 2026. Casa and Comerc said they had already signed a pre-contract with CIPP.

The plant is to be built on a 60-hectare site with a capacity of up to 2.4 GW of electrolysis, producing 960 mt/d of hydrogen. When all phases are implemented, green ammonia production of 2.2 million mt/y is expected.