Rentech Nitrogen will restructure operations at its ammonium sulfate plant in Pasadena, Texas, as shrinking margins and falling export prices have hindered profits.
Rentech expects to implement the plan in the fourth quarter and is exploring future terminal options as well as how best to maximize the value of the plant's location on the Houston Ship Channel, chief executive D. Hunt Ramsbottom said.
The Pasadena plant had a gross loss of $4.7mn in the second quarter, down from a profit of $2.4mn in the same time in 2013, despite sales volumes jumping 53pc year-over-year to 174,000st and production increasing 16pc to 144,000st.
Average amsul selling prices declined 30pc year-over-year to $202/st. The drop was largely a product of weaker international prices, which have been depressed in part because of increased Chinese amsul production. Rentech, as the sole voluntary amsul producer in the US, has also felt the effect of higher-than-expected ammonia and sulfur feedstock prices.
Rentech's overall second-quarter profits were $23mn, down 32pc year-over-year, not including an unfinalized goodwill impairment of $27mn related to the Pasadena plant.
Rentech expects to produce 8pc less amsul over the second half of 2014 than previously estimated.
"Current margins simply don't support international sales to these locations at lower prices," Ramsbottom said.
Rentech saw better results from its East Dubuque, Illinois, plant, which produces ammonia, UAN, urea and nitric acid. Gross profit at East Dubuque was $33mn for the second quarter, down 12pc from the prior-year period.
The company sold 72,000st ammonia in the quarter, up 76pc year-over-year and 82,000st UAN, up 39pc. Ammonia production grew 12pc year-over-year to 85,000st while UAN production declined slightly to 71,000st. Average ammonia selling price fell 26pc year-over-year to $548/st and UAN prices dropped 14pc to $309/st, partially offsetting the higher sales volumes.
Rentech expects third-quarter deliveries to be "seasonally low," projecting shipments of 23,000st ammonia, 91,000st UAN and 165,000st amsul.
bh/dcb
Send comments to feedback@argusmedia.com
If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.
Copyright © 2014 Argus Media Ltd - www.ArgusMedia.com - All rights reserved.
