OCI NV, Amsterdam, told analysts on May 24 that it expects a record second quarter, with first-half adjusted EBITDA surpassing year-ago levels. This comes after a 45 percent drop in first-quarter adjusted EBITDA to $129.3 million from the year-ago $235.1 million (GM May 24, p. 32).
OCI CEO Nassef Sawiris said the company’s confidence is based on good visibility due to a solid order book and locked-in natural gas prices.
“Crop planting is behind where it has been in recent years and wet weather has delayed some corn planting, but the poor ammonia application last fall and this spring means we are confident that we can continue to move urea and UAN into late June and possibly July,” said Sawiris.
“We are shipping record volumes as we benefit from a shift of ammonia to urea or UAN. But despite this shift and the weak ammonia application season, attractive ammonia prepay has resulted in record ammonia deliveries at strong prices,” Sawiris continued. He added that the company has also shipped record CAN volumes in Europe.
Sawiris said that OCI has placed urea tons at more than $125/st above NOLA levels in recent weeks.
With good weather predicted for the week starting May 27, Sawiris said there can be a quick catch-up in planting and fertilizer movement during a very time sensitive period. He noted that a lot of corn can be planted in a week’s time, and that OCI has already sold a lot of tons for June. Distribution-wise, he said the company is shipping out of six or seven storage sites in both the U.S. and Europe.
Sawiris expects the off season, which begins in July, to see very little carry-over product in both the U.S. and Europe. Already in Europe, he said, recently announced July CAN prices are 20 percent higher than year-ago levels.
He reiterated the company’s position in not selling into the fill market during the off season, saying the company’s policy worked well last year. “So there will be no bargains offered in the summer of 2019, especially on the back of low global inventories,” he said, adding that he expects materially higher prices across all nitrogen products.
As for the possible sale of its methanol business (GM March 8, p. 1), the company said it may have an update later in the summer when second-quarter results are released. The company said methanol is taking an increased amount of time for the company to evaluate all strategic options.