CF expects 2Q urea prices above 2017 levels

Leading US nitrogen producer CF Industries expects global urea prices in the second quarter to remain above levels from a year ago amid strong global demand, higher feedstock costs and freight.

The producer said the delayed and compressed US application season resulted in behind-schedule pre-plant ammonia shipments, which could translate to higher side-dress ammonia, urea and UAN demand.

Globally, increased urea demand in India and Brazil is expected to support global prices during the next few months. International urea prices are also expected to receive support from higher energy prices in east Europe and China, CF said.

Freight costs also climbed during the first quarter, with the average cost of shipping urea from the Middle East to the US Gulf up by 25pc from a year ago, the producer said.

CF said these factors and environmental regulations will likely continue to limit Chinese urea production and exports, giving support to global prices.

CF produced 2.5mn st of gross ammonia during the first quarter, flat with the prior year. Granular urea production climbed by 15pc year-over-year to 1.15mn st, while UAN production was nearly flat at 1.8mn st.

Granular urea sales volumes reached 982,000st during the three-month period, up by 3pc year-over-year on increased production from the company's Port Neal, Iowa, plant. Average urea selling prices increased by $21/st from a year ago to $269/st on tighter international urea supply.

Cold and wet weather conditions reduced UAN and ammonia sales volumes during the first quarter.

UAN sales volumes fell by 10pc year-over-year to 1.67mn st as unfavorable weather delayed spring applications primarily in the Southern Plains. Average UAN sales prices were relatively stable, falling by $1/st from the prior year to $170/st.

Ammonia sales volumes declined by 28pc year-over-year to 664,000st because of delayed pre-plant demand and applications in the Midwest and Southern Plains. But the producer said tighter global nitrogen supplies raised average selling prices by $12/st from the prior year to $319/st, offsetting lower sales volumes.

CF's other nitrogen products segment saw year-over-year sales rise by 27pc to 571,000st on increased DEF sales at the company's Donaldsonville, Louisiana, plant.

Overall, CF posted a $63mn profit during the first quarter compared to a $23mn loss from the prior year.