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CVR nitrogen and refinery results off

News, Nitrogen

CVR Energy Inc. reported that nitrogen fertilizer operations had operating income of $3 million on sales of $38.3 million for the first quarter ending March 31, 2010, compared to the year-ago income of $29.3 million on sales of $67.8 million.

CVR President, CEO, and Chairman John “Jack” Lipinski told analysts that the nitrogen results were based on forward book of orders that were taken last summer when prices were lower. He said prices reached their lows last June. “Since we carry a fairly substantial book of forward orders, changes in current prices take time to roll though our financials.” Lipinski said current nitrogen sales are strong and higher prices have been realized on orders taken this year, which will show up on the books next quarter. He said inventories are at seasonal lows, and orders are slightly above historical levels.

CVR put current net-backs to their plant at over $300/st for ammonia and $220/st for UAN. Lipinski added that its biggest markets are Nebraska, Kansas, and northern Texas, but that it moves material to 26-28 states, Mexico, and Canada. For the first quarter, average realized plant gate prices for ammonia and UAN were down significantly to $282/st and $167/st, respectively, versus the year-ago $373/st and $316/st.

CVR sold 31,200 st of ammonia and 155,800 st of UAN in the first quarter, versus the year-ago 48,000 st and 143,000 st, respectively. The nitrogen unit consumed 117,700 st of petroleum coke at an average price of $14/st, versus the year-ago 125,300 st at $35/st. By comparison, CVR said comparable NYMEX gas prices for the quarter were $4.99/mmBtu, versus the year-ago $4.47/mmBtu.

CVR said 105,000 st of ammonia was produced during the first quarter, of which 38,200 st was available for sale, with the rest upgraded to 163,800 st of UAN. This compares with the year-ago 108,000 st, 38,800 st, and 169,700 st, respectively.

The gasification rate for the quarter was 96 percent, ammonia 94.2 percent, and UAN 90.6 percent, compared to the year-ago 100 percent, 100 percent, and 96 percent, respectively.

Company-wide, CVR had a first-quarter net loss of $12.4 million ($.14 per diluted share) on sales of $894.5 million, versus the year-ago net income of $30.7 million ($.36 per diluted share) on sales of $609.4 million.

The refining business reported a first-quarter operating loss of $7.1 million on sales of $856.7 million, compared to year-ago income of $64.7 million on sales of $545.3 million.

Intrepid 1Q K volumes up 145 percent, income off; Trio project moving ahead

Sulfate of Potash Magnesia
Intrepid Potash Inc. reported a 145 percent increase in potash sales volumes in the first quarter ending March 31, 2010. “Our sales of 243,000 tons of potash during the first quarter was our second best quarter ever in terms of sales tons, and is strong evidence of the market reverting to more normal demand patterns,” said Intrepid CEO Bob Jornayvaz. “During the quarter, we substantially reduced the inventory that we had built in 2009, and as the spring planting season has gotten underway, our granular inventories are fully committed in April and will remain tight in May.” Year-ago potash volumes were 99,000.
The company said it is virtually out of red granular product.
Sales of Trio?äó, the company’s langbeinite product, were also up, at 70,000 st from the year-ago 38,000 st.
Despite the increased volumes, Intrepid reported reduced quarterly earnings. The company cited lower average realized sales prices that were adversely impacted by other North American producers, significantly reducing sales prices at the end of 2009, as well as Intrepid’s subsequent decision to compete at the lower pricing level. Jornayvaz reiterated to analysts that the company had brisk sales in November at higher prices ?Çô and then, very unexpectedly, prices fell.
Intrepid’s average potash prices were $354/st for the quarter, compared to the year-ago $727/st. First-quarter net potash sales were $86 million, compared to the year-ago $71.7 million. First-quarter production was 172,000 st, versus the year-ago 137,000 st.
Intrepid said that both potash and Trio prices moved up $15/st during the quarter.
First-quarter Trio prices were $167/st, versus the year-ago $330/st. First-quarter Trio net sales were $11.6 million, versus the year-ago $12.5 million. First-quarter production was 57,000 st, versus the year-ago 42,000 st.
Speaking to analysts, Jornayvaz was upbeat about sales going forward, saying that despite concerns that dealers are reluctant to buy, “they are nowhere near as reluctant as they were last summer. And they were a whole lot less reluctant in the fall and now we’re seeing more normalized patterns.” However, he said the company is still not seeing the robust sales of 2007 and 2008. He said the company is seeing distinct continual steady demand.
Intrepid Senior Vice President for Marketing and Sales R. L. Moore added that the company has seen a good recovery in the livestock market, which is in the company’s backyard. “Grass requires a lot of potash and this isn’t something that you just apply one time a year ?Ǫ our sales are going to continue though the summer months for people that need product right then.”
Moore added that the spring season in the Pacific Northwest is still to kick in, and there has been a late season start in California. “So, we still have some spring season ahead of us.”
Intrepid reports that it is moving forward with the Langbeinite Recovery Improvement Project, which is designed to increase Intrepid’s recovery of langbeinite to approximately 50 percent, while at the same time reducing process water usage and providing the flexibility to allow Intrepid to sell all of the production into the granular market. Langbeinite (sulfate of potash magnesia) is a specialty fertilizer that contains potassium, magnesium, and sulfur, and is low in chlorides.
The final engineering will commence in May 2010, followed by construction, with completion and operation of the project expected by the end of 2011. The total capital investment for this project is expected to be between $85 and $90 million. Included in this range is $3 million that has already been invested in engineering-related services. The project plan estimates are that Intrepid will invest approximately $35 million in the project during the remainder of 2010, and the balance in 2011.
Intrepid said that although it has r

Agrium K volumes soar; Wholesale sets records; expenses keep AGU in loss column

News

Agrium Inc. reported a net loss of $7 million ($.04 diluted loss per share) for the first quarter ending March 31, 2010, compared with a net loss of $60 million ($.38 diluted loss per share) in the first quarter of 2009.

The 2010 first-quarter results included pre-tax losses of $68 million ($.30 per share) on gas and other hedge positions, and a $33 million pre-tax expense ($.15 per share) for stock-based compensation. Excluding these two items, net earnings were $64 million ($.41 per share) for the first quarter of 2010.

“A significant rebound in North American and international nutrient demand supported strong results for our Wholesale business. Activity in our Retail operations focused on positioning us to benefit from a very strong spring season for crop inputs. An unusually cold and wet March held U.S. growers back from fieldwork in the first quarter; however, the weather in April has been excellent and growers responded quickly by applying significant levels of crop inputs and making rapid progress in seeding the 2010 crop,” said Agrium President & CEO Mike Wilson.

“The fundamentals for agriculture and the nutrient markets continue to be robust. This year’s significant increase in acreage devoted to input intensive crops such as corn and cotton will benefit all three of our business units. Furthermore, we believe industry fundamentals will remain strong in both the short and medium-term.”

First-quarter sales were $1.85 billion, versus the year-ago $1.79 billion.

Wilson told analysts that the first quarter is typically the company’s least profitable, as it builds inventories across all three business units in preparation for the spring season. “That being said, our Wholesale business unit delivered the strongest first quarter ever from a net sales and volumes perspective, and its second best ever first quarter gross profit and EBIT.” The unit had positive EBIT of $140 million on sales of $789 million, versus the year-ago $57 million on sales of $695 million. Potash sales saw the biggest increase at $181 million, up from $42 million the previous year. Volumes soared to 534,000 mt, up from the year-ago 76,000 mt. Tons to North America were 349,000 mt, up from the year-ago 19,000 mt, while international were 185,000 mt, up from 57,000 mt.

The average potash price was $339/mt, down from $553/mt in last year’s first quarter. The North American price was down to $387/mt from the previous year’s $751/mt, while the international price was $250/mt, down from $479/mt.

Like other potash producers, Agrium said it was able to achieve half of its recent North American $30/st price increase.

Wholesale nitrogen sales were $239 million, up from 1Q09’s $229 million. Nitrogen volumes moved up to 732,000 mt from the year-ago 673,000 mt. The average first-quarter nitrogen price was $327/mt, down from the year-ago $340/mt.

Domestic urea and ammonia prices were similar to last year’s levels, while UAN prices were lower. Agrium expects second-quarter ammonia sales to increase significantly in the higher-return agricultural ammonia markets.

First-quarter overall natural gas costs were $5.21/mmBtu, versus the year-ago $5.64/mmBtu.

Wholesale phosphate sales were up slightly, at $115 million from the year-ago $113 million. Phosphate volumes were 250,000 mt, up from 202,000 mt a year ago, with the average price at $460/mt, down from $559/mt.

“The cold wet weather in March significantly impacted our first quarter results for retail products and services, pushing sales into the second quarter,” said Wilson. However, he said the weather in April was near perfect and may have been the most active on record. Retail posted a first-quarter EBIT loss of $72 million on sales of $1.06 billion, versus the year-ago loss of $94 million on sales of $1.05 billion. While crop nutrient volumes were above year-ago levels, they were below anticipated volumes due to the late start of the spring season. Crop nutrient sales for the quarter were $371 million, down from 1Q09’s $437 million. Crop protection and seeds both saw increases in the first quarter with sales of $462 million and $191 million, respectively, up from the year-ago $426 million and $148 million.

The Advanced Technology unit had a negative EBIT of
$1 million on sales of $63 million, down from the year-ago
positive $1 million on sales of $67 million. Agrium expects
strong ESN movement in the second quarter as the season
progresses, as well as the start-up of its new ESN plant in
New Madrid, Mo. (GM May 3, p. 12).

Agrium is providing guidance for the second quarter of
2010 of $2.50 to $3.00 diluted earnings per share.
As of May 5, Wilson said the Canadian grower is just getting
started with the application and seeding season, while
the U.S. grower is well on his way, with retailers trying to
catch their breath when and where they can. Wilson said he
expects both Retail and Wholesale bins to be virtually empty
at the end of the spring season, and this will be positive news
for everyone in the ag supply chain. Expectations are that
buyers will fill mid-to-late summer for the fall, and then be
empty at the end of that season.
On the phosphate side, Agrium said it has just unloaded
a phosphate rock vessel from Morocco in the Gulf, with the
product to be railed to its plant in Redwater, Alberta. This
will supplement product from the company’s Kapuskasing,
Ont., mine. Agrium is looking at 2013 as the end of that
mine’s economic life. Currently, rock from the mine has
higher aluminum levels, which has cut back production at
Redwater. The company is working on the problem in order
to get back to full rates.
Moving forward, Agrium is not deterred by its inability to
acquire CF Industries Holdings Inc., saying it is working on
a number of opportunities. Retail acquisitions remain a good
bet as the company has a goal to reach $1 billion in annual
Retail EBIT by 2014.

Wind-whipped fire hits Illinois fertilizer plant

News Briefs

Wyoming, Ill.-A fire that swept through an equipment shed late last month is not having any serious impact on operations at Kraft Fertilizer Inc. southeast of Wyoming, even though reports are that losses may run as high as $500,000. No fertilizer or pesticides were involved, and there were no injuries. A short circuit in one of the loaders is being blamed, along with gusty 40 mph winds that served to fan the flames. No one at Kraft was available to return phone calls, but Denny Rewerts, Stark County economic development director, told Green Markets that the impact was minimal. He said the company was back in operation the next day, April 30. “Also as far as farmers are concerned, there are three or four fertilizer suppliers in the area farmers can turn to for their needs,” Rewerts added. According to press reports, at least 50 to 60 firefighters responded from several surrounding departments. “I’ve been on the department for 20 years, and I’ve never seen fire move that fast,” Wyoming Fire Chief Ed Foglesonger reported. Firefighters soaked nearby gasoline and diesel tanks with thousands of gallons of water and also kept the blaze from reaching a nearby office building or any other structures at the site, he added. Kraft operations manager Jeff Gehrig told the local press that the equipment lost in the fire was probably worth “well over half a million dollars,” but was covered by insurance. He said the company was making arrangements to replace the losses.

Industry closely watching oil spill

News Briefs

New Orleans-Industry players polled by Green Markets last week said that while they are closely monitoring the oil spill situation in the Gulf of Mexico, so far they have seen no significant impact and that it is business as usual. Most fertilizer imports were already safely nestled onto the Mississippi River System prior to the spill. For those vessels on the water, sources say they are being asked to avoid the spill and to go to one of two decontamination stations at Venice and Boothville, La., should they go through the oil. Early in the week, no vessels entering the Gulf’s Southwest Pass had reported oiling problems.

Terra Nitrogen income off in 1Q

News Briefs

Deerfield, Ill.-Terra Nitrogen Co. LP, now majority owned by CF Industries Holdings Inc., reported net income of $33.9 million ($1.78 per unit) on sales of $118.7 million for the first quarter ending March 31, 2010, versus the year-ago $43.3 million ($1.49 per unit) on sales of $165.3 million. UAN sales volumes were up during the quarter, to 471,000 st at a lower average price of $186/st, versus the year-ago 367,000 st and $289/st. Ammonia volumes sank to 52,000 st at an average price of $308/st, versus the year-ago 105,000 st and $437/st. The average natural gas price was $5.28/mmBtu, down from 1Q09’s $7.07/mmBtu.

Scotts sees 2Q surge, income up 53 percent

News Briefs

Marysville, Ohio-The Scotts Miracle-Gro Co. reported a 53 percent increase in net income and a 19 percent increase in sales for the second quarter ending April 3, 2010. Net income was $118.5 million ($1.76 per diluted share) on sales of $1.12 billion, up from the year-ago $77.4 million ($1.18 per diluted share) on sales of $940.7 million. Six-month net income was $60.8 million ($.90 per share) on sales of $1.42 billion, up from the year-ago $20.4 million ($.31 per share) on sales of $1.22 billion.

Martin acid outage impacts 1Q results

News Briefs, Sulfuric Acid

Kilgore, Tx.-An outage at Martin Midstream Partners LP’s sulfuric acid plant during the first quarter negatively impacted distributable cash flow by $2.4 million. The company said it was able to fully incorporate a scheduled maintenance turnaround, previously slated for fourth quarter 2010, into the unplanned outage. It said this should improve cash flow later in the year. The plant has been operational since March 5 and is currently at full production. Despite the outage, Sulfur Services revenues were up for the first quarter ending March 31, 2010, to $34.4 million from the year-ago $26.6 million. However, expenses were also up, at $24.7 million from $18.4 million a year ago. Company-wide, Martin reported a drop in net income, to $1.8 million ($.04 per diluted unit) on revenues of $242.7 million, compared to the year-ago $5.2 million ($.28 per unit) on revenues of $163 million.

NH3 volumes, margins up at Magellan pipeline

News Briefs

Tulsa-Anhydrous ammonia volumes on Magellan Midstream Partners LP’s pipeline were up 35 percent during the first quarter ending March 31, 2010, to 167,000 st compared to the year-ago 124,000 st. Pipeline operating margins were $1.1 million on sales of $5.1 million, versus the year-ago $116,000 on sales of $3.2 million. Magellan said revenues increased primarily due to higher volumes, as the 2009 period was negatively impacted by operational issues at customer production facilities. Expenses increased during the recent quarter to $4 million due to additional environmental accruals, versus the year-ago $3.1 million. Magellan-wide, net income was up 57 percent, to $64.5 million ($.60 per diluted share) on sales of $329.7 million, versus the year-ago $41.2 million ($.30 per diluted share) on sales of $212.9 million.

LSB income off in 1Q; Pryor UAN still an issue

News Briefs

Oklahoma City-LSB Industries Inc. reported a drop in net income, to $1.7 million ($.07 per diluted share) on sales of $130.4 million for the first quarter ending March 31, 2010, compared to the year-ago $11.7 million ($.51 per diluted share) on sales of $150.2 million. Both company units, Climate Control and Chemicals, saw decreased operating income. Chemical income was $1.9 million on sales of $74.8 million, compared to the year-ago $12.6 million and $74.5 million. In terms of tons shipped, sales of industrial chemical products increased, while sales of agricultural and mining products were lower. Ag ammonium nitrate sales were significantly lower due to a late start in the spring fertilizer season. The company reported that while UAN production began at its Pryor, Okla., nitrogen plant during the quarter, mechanical issues have delayed its ability to maintain a meaningful, sustained rate. Ammonia production began in January and continues to hit the market. The company incurred $6 million of expenses during the quarter, primarily consisting of Pryor start-up costs. Despite the late spring, the company said it saw strong fertilizer demand in April, as well as better demand for industrial acid and mining products. Climate Control income was $5.5 million on sales of $53.7 million, down from the year-ago $9 million and $72 million. The unit suffered from weakness in commercial and institutional construction markets.