All Posts from May 5, 2023

Price Declines Impact SABIC Agri-Nutrients Co.’s 1Q

News, News Briefs, Saudi Arabia

SABIC Agri-Nutrients Co. Ltd., Riyadh, reported a 61% decline in net profit after Zakat and tax to SR981 million (approximately $263.1 million at current exchange rates) for the first quarter ended March 31, 2023, down from the year-ago SR2.51 billion, according to a company filing to Saudi Arabia’s Tadawul stock exchange.

The company saw comprehensive net income for the quarter fall to SR966 million from SR2.58 billion a year ago, while profit per share fell to SR2.06 from SR5.28.

First sales totaled SR2.76 billion, a 41% drop on the prior-year’s SR4.66 billion.

SABIC Agri-Nutrients attributed the profits and sales downturn to “an almost 40%” decrease in the average selling prices of the company’s products compared with a year ago.

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

SABIC Agri-Nutrients Co. last month completed the procedures to acquire 49% of the share capital of Dubai-based agri-nutrient blender and distributor ETG Inputs Holdco Ltd. (GM April 14, p. 25). It also owns minority interests in Yanbu National Petrochemical Co. (1.69%) and in Arabian Industrial Fibers Co. (3.87%).

SABIC Agri-Nutrients Co. is 50.1% owned by Saudi Basic Industries Corp. (SABIC).

CF Results Beat 1Q Estimates

Ammonia, Ammonium Nitrate, Eastern Cornbelt, Featured, News, UAN, Urea

CF Industries Holdings Inc.’s first-quarter net earnings of $560 million on revenues of $2 billion beat the average analyst estimates (Bloomberg Consensus) of $477 million and $1.87 billion, respectively. Adjusted EBITDA came in at $866 million, just shy of the analyst projection of $867 million.

While besting analysts, CF still fell way below its year-ago performance, which included net earnings of $883 million on sales of $2.87 billion and adjusted EBITDA of $1.65 billion. CF said first-quarter average selling prices were lower than 2022 due to higher global supply availability, as lower global energy costs led to increased global operating rates. Sales volumes in the first quarter of 2023 were lower than 2022, as lower UAN, ammonia, and AN sales volumes were partially offset by higher granular urea sales volumes.

“Agricultural purchases in North America took a wait-and-see approach as global nitrogen values fell and weather patterns did not support an early spring,” Bert Frost, CF Senior Vice President, Sales, Market Development and Supply Chain, told analysts. He added that several large importing regions were essentially absent from the market during the quarter as well, most notably India, which only had one tender during the quarter in large part due to higher domestic operating rates.

However, Frost said pricing in North America has risen as demand emerged and all products have started to move at a more normal rate. He noted that CF is on allocation at Port Neal and the plant is producing every day at maximum rates.

“So product is tight,” said Frost. “We don’t believe there is going to be enough urea, we believe that we’ll have to be migrating for second, third applications to ammonia and UAN, and we’re preparing for that with positioning product throughout the system and pricing has extended from the normal spread of NOLA, let’s say $30 to the Midwest, it’s between $50-$100 today, and will probably go up towards the higher end as we get to peak applications.”

CF President and CEO Tony Will added that CF’s in-market premium is heightened as logistics costs and delays in timing have gone up across the board, citing barge traffic impacted by higher water levels and a national shortage of over-the-road drivers.

Frost said the US is now the highest priced market in the world, and the company thinks that is going to extend through to the second quarter. As a result, he said inventories will be drained, positioning well for the third quarter.

“Despite downward pressure in the global nitrogen market compared to the unprecedented pricing environment in 2022, industry fundamentals remain positive and forward global energy curves suggest attractive margin opportunities for our cost-advantaged network for the foreseeable future,” said Will. “As a result, we expect to continue to drive strong cash generation, enabling us to create long-term shareholder value through disciplined investments in clean energy, inorganic growth opportunities and returning substantial capital to shareholders.”

CF added that it will take at least two years of harvests at trend yield to fully replenish global grain stocks, supporting strong grains plantings and incentivizing nitrogen fertilizer application over this time period. It noted that the USDA is projecting 92 million acres of corn and nearly 50 million acres of wheat to be planted in the US in 2023.

Quizzed about lower corn prices, Frost said $5.25 per bushel corn is still “incredibly profitable,” with the company estimating 2023 to be the third most profitable year for corn after 2022 and 2021.

Going forward, Will does not see Europe returning to higher operating rates. “We think it is going to be spotty,” he said, adding that he expects Europe to continue to evaluate and look at bringing in more urea and UAN as an alternative to locally produced nitrates.

“Today, I would say that the cost of ammonia is probably $550-$600/mt, where you can import for substantially less, so it makes sense, and that then supports the global price of ammonia,” said Frost, referring to European ammonia production. “So, I think that these trends only continue and get worse as we hit winter.” In the meantime, CF noted that US natural gas prices have continued to go down, which bodes well for second-quarter results.

As for Chinese urea exports, Frost does not see a significant amount of exports, estimating that that the country only has 3-5 million mt that could be exported beyond what it needs for its domestic market.

In other news, CF touted its first-quarter announcement that it plans to purchase the Waggaman, La., ammonia plant from Incitec Pivot Ltd. (GM March 24, p. 1), and its growing list of blue and green ammonia projects (GM April 28, p. 1).

Production (000 st) 1Q-23 1Q-22
Ammonia 2,359 2,613
Gran Urea 1,211 1,074
UAN 32 1,598 1,865
AN 388 405
Ammonia 1Q-23 1Q-22
Net Sales ($/M) 424 640
Gross Margin ($/M) 144 360
Sales Volumes (000 st) 652 727
Avg Selling Price ($/st) 650 880
Gas Costs ($/mmBtu) 6.62 6.48
Gran Urea 1Q-23 1Q-22
Net Sales ($/M) 611 765
Gross Margin ($/M) 284 495
Sales Volumes (000 st) 1,323 1,096
Avg Selling Price ($/st) 462 698
UAN 1Q-23 1Q-22
Net Sales ($/M) 667 1,015
Gross Margin ($/M) 321 670
Sales Volumes (000 st) 1,662 1,828
Avg Selling Price ($/st) 401 555
AN 1Q-23 1Q-22
Net Sales ($/M) 159 223
Gross Margin ($/M) 55 52
Sales Volumes (000 st) 374 428
Avg Selling Price ($/st) 425 521
Other 1Q-23 1Q-22
Net Sales ($/M) 151 225
Gross Margin ($/M) 59 121
Sales Volumes (000 st) 524 545
Avg Selling Price ($/st) 288 413

CVR 1Q Income Moves Up; Utilization Rate Hits 105%

Ammonia, Earnings, News, Texas, UAN

CVR Partners LP reported first-quarter net income of $101.9 million on net sales of $226.3 million, up from the year-ago $93.7 million and $222.9 million, respectively. EBITDA saw a slight uptick to $124.3 million from $123.4 million.

“CVR Partners achieved solid results for the 2023 first quarter led by record production, including a combined ammonia utilization rate of 105%, offset somewhat by lower fertilizer pricing during the quarter,” said Mark Pytosh, CEO of CVR Partners’ general partner. “The maintenance work that was completed during last year’s turnarounds has improved reliability at both nitrogen fertilizer facilities, and we plan to continue to invest in additional reliability projects during the next two to three years.” The year-ago utilization rate was 88%.

“The spring pre-planting season is off to a robust start, and the US Department of Agriculture estimates that planted corn acres will increase approximately 4% this spring compared to a year ago, driving strong demand for nitrogen fertilizer,” he added. “Our focus for the remainder of the year is on safe, reliable operations while maximizing our free cash generation.

“I won’t promise 105% for forward quarters,” Pytosh told analysts, “but we feel like we’ve addressed some of the reliability issues. Our target is to operate at 95-100% on name plate.”

CVR declared a first-quarter 2023 cash distribution of $10.43 per common unit, to be paid May 22, 2023, to common unitholders of record as of May 15, 2023.

Sales (000 st) 1Q-23 1Q-22
Ammonia        42 40
UAN 359 322
Plant Gate Price $/st 1Q-23 1Q-22
Ammonia        888 1,055
UAN 457 496
Production (000 st) 1Q-23 1Q-22
Ammonia        – gross 224 187
Ammonia – net 62 52
UAN 366 317
Feedstock 1Q-23 1Q-22
Petroleum Coke 77.24 56.46
Natural Gas ($/mmBtu) 5.76 5.54

Andersons Shares Fall Most in a Year After Fertilizer Demand Slump

Earnings, Eastern Cornbelt, News, Specialty

Shares of The Andersons Inc. tumbled by as much as 17% on May 3, the most in a year, according to Bloomberg, as farmers continued to delay fertilizer purchases even as prices fell from the elevated levels sparked by Russia’s invasion of Ukraine.

The Nutrient & Industrial (formerly Plant Nutrient) segment reported a first-quarter pre-tax loss of $10 million on revenues of $164 million, compared to year-ago income of $11 million and $210 million, respectively. EBITDA was a $1.3 million loss versus a positive $18.8 million.

“The Nutrient & Industrial business was faced with declining fertilizer prices and deferred customer purchasing in the quarter,” said CEO Pat Bowe. “This is in contrast to first-quarter of 2022, when fertilizer market prices were moving toward a record high and there were concerns regarding availability of supply. This drove buyers to lock in orders early and at significant margins for sellers.”

He told analysts that the company also believes increased interest rates influenced the timing of customer purchases.

“The agricultural businesses experienced significant declines in fertilizer prices since last year, and lower volumes due to limited customer engagement,” he added. “The Bloomberg Green Markets Fertilizer Index declined almost 60% in the same period. Due to these falling prices, we recorded a $4 million charge to revalue certain nitrogen-based inventories.

“In April, customers have engaged and prices have firmed a bit as fieldwork began in our service geography,” Bowe continued. “While some of the typical first-quarter business will shift into Q2, we do not expect that all the business will be recovered.”

The company also expects improved fertilizer volumes on increased corn acres.

Bowe said the outlook for the Nutrient & Industrial business is mixed. “We anticipate growth in our industrial product lines, and have seen good engagement in our specialty liquid fertilizers.”

Company-wide, The Andersons reported a net loss from continuing operations attributable to the company of $14.8 million on sales of $3.88 billion, down from year-ago income of $6.1 million and $3.98 billion, respectively. Adjusted EBITDA was $55.3 million, down from $55.8 million.

Mosaic Misses Adjusted EBITDA Estimate; Colonsay Restart Pushed to Second Half

Brazil, Earnings, Featured, News, Phosphate, Potash, Tampa

The Mosaic Co. on May 3 announced first-quarter adjusted EBITDA of $777 million, falling below the Bloomberg Consensus, the average estimate by major analysts, which was $805 million. Mosaic posted adjusted earnings per share (EPS) of $1.14, missing analyst estimates by a dime. Mosaic, however, exceeded analyst expectations on revenues at $3.6 billion versus $3.24 billion, and matched their average on net income at $435 million.

Never mind that Mosaic beat the revenue estimate and those for potash and phosphate volumes and matched net income – company shares fell 10% on May 4, its biggest intraday slide since November 2022, according to Bloomberg, which reported that earnings per share missed Barclays analyst Benjamin Theurer’s estimates “despite top line results beating our expectations by a wide margin.” He noted lower prices and “somewhat” higher volumes, and that the bottom line was down “across the board on a consolidated level,” with misses in operating income and adjusted EBITDA.

Year-ago first-quarter net income was $1.18 billion on revenues of $3.9 billion with adjusted EBITDA of $1.45 billion, all far surpassing the 2021 quarter’s $157 million, $2.3 billion, and $560 million, respectively.

“Mosaic delivered another strong first quarter,” said President and CEO Joc O’Rourke. “While fertilizer prices have pulled back from last year’s peak levels, they remain constructive. At the same time, North American fertilizer demand has accelerated as growers are being incented to maximize yields.”

Mosaic said grain and oilseed markets are expected to remain tight through 2023 and likely beyond, citing the disruption in Ukraine’s production as well as sub-optimal weather in major growing regions like the Americas, Europe, and China. It said this suggests that global stocks-to-use ratios, already projected at 25-year lows, will remain under pressure.

Mosaic said North American spring nutrient application rates are trending toward normal levels. Mosaic said its own April shipments to North American customers have recovered significantly from last year and represent the highest April shipments in the last five years, with this trend continuing into May. “Combined, Mosaic shipped over 1 million tons of potash and phosphate to North American customers in April alone,” O’Rourke told analysts.

In Brazil, Mosaic said an attractive fertilizer-to-soybean barter ratio suggests a significant recovery in fertilizer shipments in 2023. It also expects movement soon for the safrinha season, which begins in the third quarter.

Mosaic sees constraints on both potash and phosphate production, with annual shipments from Belarus down 5-6 million mt from pre-sanction export rates. O’Rourke said the company continues to see indications of reduced Russian production. Mosaic expects only a modest recovery in Chinese phosphate exports, citing domestic production, rising industrial demand, and environmental restrictions.

While first-quarter potash sales volumes were up, production was down, with the company saying this reflected the idled Colonsay mine. Mosaic said the mine’s restart has been pushed to the second half from the first half (GM Feb. 24, p. 1), though O’Rourke said much depended on international demand and whether those markets “heat up” or are lackluster. “I don’t want to be stuffing product into a market where there isn’t a buyer or we just actually destroy the market we are in,” he told analysts.

At the Esterhazy mine, he said the last of the 13 mines is expected to come online later this year, with Esterhazy’s production rate going from 5.5 million mt to well over 6 million mt by the end of 2023. The Belle Plaine mine adds another 3 million mt. As a result, the company will have 9 million mt of production without Colonsay.

Mosaic expects second-quarter potash sales volumes of 2.0-2.2 million mt with realized mine-gate prices of $325-$375/mt. It said second-quarter shipments are expected to reflect a higher percentage of lower-priced export sales.

Mosaic said first-quarter phosphate production was the best quarterly production since 2021, as operations recovered from second-half 2022 disruptions that were resolved in the early part of the quarter.

Second-quarter phosphate sales volumes are expected to be 1.8-2.0 million mt, with DAP FOB prices averaging $550-$600/mt. Lower raw material prices are expected to provide a sequential benefit during the quarter.

Mosaic Fertilizantes posted a negative gross margin of $1 million during the first quarter, with the company attributing this primarily to a concerted effort to destock high-cost inventory in the distribution business. It said this is now largely complete, and margins are expected to return to more normalized mid-cycle levels in the second quarter.

During the first quarter, Mosaic returned $608 million to shareholders, with $456 million via share repurchases and $152 million by special and regular dividends. The regular dividend is $0.80 per share, and Mosaic said its business position is to consider further increases over time.

Potash (millions) 1Q-23 1Q-22
Sales Volume (000 mt) 1.9 1.8
Production Volume (000 mt) 1.9 2.2
Gross Margin (million $) 413 579
Operating Earnings (million $) 402 563
Adjusted EBITDA 474 651
Sales (million $) 907 1,100
MOP Selling Price $/mt 421 582
Phosphates (millions) 1Q-23 1Q-22
Sales Volume (000 mt) 1.8 1.7
Production (Finished) Vol. (000 mt) 1.8 1.7
Gross Margin (million $) 259 528
Operating Earnings (million $) 266 493
Adjusted EBITDA 382 632
Sales (million $) 1.4 1.5
DAP Selling Price $/mt 660 785
Mosaic Fertilizantes (millions) 1Q-23 1Q-22
Sales Volume (000 mt) 2.1 1.8
Gross Margin (million $) (1) 219
Operating Earnings (million $) (32) 187
Adjusted EBITDA 3 233
Sales (million $) 1.3 1.5
Avg Finished Price (Dest.) 646 817

OCI Global, NuStar Ink Midwest NH3 Agreement

Ammonia, Featured, News, Texas, The Netherlands, Western Cornbelt

Affiliates of OCI Global NV, Amsterdam, and NuStar Energy LP, San Antonio, Texas, have entered into an agreement for OCI to transport ammonia on a new segment of NuStar Pipeline Operating Partnership LP’s ammonia pipeline system, OCI Global said on May 2.

Under the arrangement, NuStar will install a new 14-mile pipeline segment that will connect OCI Nitrogen’s Iowa Fertilizer Co. (IFCo) facility in Wever, Iowa, with NuStar’s existing 2,000-mile anhydrous ammonia pipeline, which originates in Louisiana and flows northbound to various points in the Midwest, including Iowa.

The IFCo Wever plant uses ammonia to manufacture urea and UAN and to produce Diesel Exhaust Fluid (DEF).

The agreement has been executed by both companies and commits NuStar to provide transportation services under a long-term arrangement, OCI said.

To facilitate the project, OCI has committed $30 million in capital expenditures for new ammonia cooling and storage infrastructure, which, it said, would allow it to “economically” transport ammonia from the US Gulf Coast and capitalize on its existing storage capacity.

OCI is expecting to bring an additional 1.1 million mt/y of blue ammonia capacity online in 2025 in the Gulf Coast. OCI broke ground on a new blue ammonia production facility in Beaumont, Texas, last December (GM Dec. 9, 2022).

NuStar expects the new section of pipeline to be operational in 2024.

At the launch of the IFCo plant in April 2017, the facility had production capacities of 2,200 mt/d for ammonia, 420,000 mt/y for urea, and 1.5 million mt/y of UAN, as well as production capacity for DEF (GM April 21, 2017; Nov. 23, 2016).

OCI NV and Fertiglobe CEO Ahmed El-Hoshy told analysts at an OCI earnings call in February that the company now has achieved over 1 million mt/y of DEF capacity at the IFCo plant, and could potentially go to 1.3 million mt/y (GM Feb. 17, p. 22). The nameplate capacity for DEF was approximately 315,000 mt/y when OCI brought the plant online in 2017.

Yara Ending Nitrate and NPK Curtailments Amid Stronger European Demand

Featured, News, Norway, NPK

Yara’s nitrates and NPK production curtailments are now being discontinued due to strong demand in Europe, Yara President and CEO Svein Tore Holsether told participants in an April 28 presentation of first-quarter earnings.

Adapting to market conditions, the company’s production curtailments in the first quarter amounted to 1.3 million mt of fertilizers (actual volumes) – around 30% of its European capacity – and 0.6 million mt of ammonia – about 44% of its European capacity (GM April 28, p. 24).

“A major part of the 1.3 million mt of the finished fertilizer production curtailments in the first quarter were nitrates and NPKs [and some urea, according to a company spokesperson],” Yara Executive Vice President and Chief Financial Officer Thor Giaever confirmed in an earnings call in response to an analyst’s question.

The Yara spokesperson told Green Markets that the company has not given a more detailed split of the curtailments per product in the first quarter.

After a declining price environment toward the end of 2022 and through the first quarter made farmers and distributors delay purchases, Yara said it sees a tighter nitrogen market into the second quarter, with “strong European demand at new season nitrate prices and strong farmer affordability metrics indicating higher nitrogen application rates.”

Bolivia Exports 77% of its Urea Output to Brazil in 1Q

Brazil, News, News Briefs, South America, Urea

Bolivia exported 77% of its urea fertilizer production to Brazil in the first quarter of 2023, with some 63,300 mt shipped, according to a Rio Times newspaper report, citing Armin Dorgathen, President of Bolivian state-run oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos SA (YPFB).

YPFB’s Marcelo Quiroga Santa Cruz (formerly known as Bulo Bulo) ammonia and granular urea plant, located in Bolivia’s central Cochabamba province, is the country’s only nitrogen fertilizer production facility. It has a nameplate capacity of 2,100 mt/d of granular urea and restarted production in September 2021 after an almost 22-month hiatus (GM Sept. 10, 2021).

Dorgathen, as cited by the report, said 20% of first-quarter urea output went to the domestic market, while Peru, Paraguay, and Argentina, in addition to Brazil, import Bolivian urea.

However, Bolivia is building an NPK fertilizer plant in Cochabamba province’s Santivañez Industrial Park in the Santivañez municipality, and when operational, will use urea from the Marcelo Quiroga Santa Cruz plant (GM July 15, 2022).

According to a BNamericas report, the new plant will have a potential production capacity of 60,000 mt/y, and will be managed by Bolivian Industrialization and Hydrocarbons Co. (EBIH), which in partnership with Sur Energy SRL is constructing the new facility.

At the project’s launch last year, the start of operations was targeted for July 2023.

Belarus’ Nezhinsky Potash Project Near 40% Complete, Reports Say

Belarus, News, News Briefs, Potash

Belarus’ Nezhinsky potash mining and processing project at the Starobinsky potassium salt deposit in eastern Belarus is almost 40% complete, according to a Belarus24 report on May 4.

According to the report, the state authorities are targeting the new potash operation to be launched on June 1, 2025. However, there is scepticism among industry watchers and analysts that this can be achieved, given that sanctions will likely continue to restrict equipment procurement activities, among other issues.

But, according to the report, some of the equipment for the project already has been purchased, but “one of the foremost tasks is to secure technologies.”

In December last year, reports were filtering out of Belarus that the former Russian-backed project had come under new management. It was reported that Belarusian government representatives had joined the management of a new company understood to be the successor to Slavkaliy Co., the Russian-backed company that was developing the project (GM Dec. 16, 2022).

Nezhinsky GOK produced its first ton of rock salt in April 2020, and at the time, construction and commissioning of the processing plant were targeted for fourth-quarter 2023, when exports of potassium chloride also were targeted to begin (GM April 24, 2020).

Some 2 million mt/y of potassium chloride capacity was originally planned at Nezhinsky, with plans for the production of both white and pink potash, as well as of granular grades. But the latest reports suggest a production capacity of 1.1 million mt/y of potassium chloride capacity is now being targeted, at least initially.

Nezhinsky GOK, when operational, would be Belarus’ second producer of potash, which is currently only produced by OJSC Belaruskali.

JPMC 1Q Hit by Drop in Global Phosphates Prices

Earnings, Jordan, News, Phosphate, Phosphoric Acid

Jordan Phosphate Mines Co. (JPMC), Amman, posted a net profit of JD103.4 million (approximately $145.8 million at current exchange rates) for the first quarter ended March 31, 2023, Jordan’s Petra news agency reported, citing a company filing to the Amman Stock Exchange.

The company’s net sales for the reporting period amounted to JD313.5 million.

JPMC did not provide comparable year-earlier figures in its filing. But an earlier filing showed a net income of JD146.53 million and sales of JD344.04 million for the first quarter of 2022.

In its latest filing, as cited by Petra, JPMC noted the “substantial” drop in global pricing for its products in the first quarter of 2023.

JPMC produced 2.524 million mt of phosphate rock in the first quarter of this year, according to the latest filing, a 7% increase on the prior-year same period’s 2.349 million mt.

Production of phosphoric acid by the company’s wholly owned subsidiary, Indo-Jordan Chemical Co. (IJC), and by the JPMC-IFFCO joint venture, Jordan Indian Fertilizer Co. (JIFCO), increased by a combined 32% in the first quarter, reaching 211,000 mt, up from the year-ago 160,000 mt.

JPMC sold 206,000 mt of phosphoric acid in the three months to March 31, versus 152,000 mt of sales in the same period of 2022.

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