Commodity

CF Industries Sees Tight Nitrogen Supply and Demand Balance — Commodity Comment

CF Industries Holdings, Inc., which makes hydrogen and nitrogen products, on Tuesday said it expects “global nitrogen supply and demand balance to remain tight for the foreseeable future and for the commercial environment to be highly favorable for producers in low-cost regions.”

The company also said global nitrogen inventory is believed to be low after a year of strong demand and lower production, and added “management expects global demand for nitrogen to remain robust.”

Price Outlook

“The need to replenish global grains stocks continues to support high front month and forward prices for nitrogen-consuming crops,” CF Industries said. These prices “support high levels of planting and incentivize fertilizer application,” the company said, adding, “increased economic activity continues to drive strong demand for diesel exhaust fluid for emissions abatement as well as ammonia, urea and nitric acid for industrial uses.”

North America Outlook

The company said it projects corn plantings in the U.S. will be 91 million to 93 million acres this year, “based on positive economic returns for farmers and a robust fall ammonia application season.” The company also said it sees other nitrogen-consuming crops being planted at high levels in 2022. “Industrial activity in the region continues to increase in line with economic activity, supporting further demand for nitrogen products,” CF Industries said.

India Outlook

CF Industries said urea imports to India from April to December last year were about 2 million metric tons lower, “and domestic urea production was flat compared to the same time period in 2020.” The company added, “published reports indicate that this lower-than-expected level of imports and domestic production has resulted in low urea inventory levels in India.”

India issued a new urea tender in January, the company said, adding, “management expects India will tender regularly in the coming months to meet urea demand in the country, which is projected to remain strong.”

Brazil/South America Outlook

Drought conditions in Southern Brazil and Argentina reduced production forecasts for the current first-crop corn. Along with strong global support prices, these factors support higher planted corn acres in 2022 and continued strong demand for nitrogen and urea imports, the company said

Europe Outlook

“Forward curves for natural gas in Europe remain above historical norms, challenging producer profitability and likely resulting in continued lower operating rates in the region,” the company said.

China Outlook

Urea exports from China are expected to be limited through at least the first half of this year, the company said, “as the Chinese government has implemented measures to discourage urea exports and promote the availability and affordability of fertilizers domestically.” CF Industries also said “published reports indicate that the Chinese government has issued supply contracts to build temporary reserves for summer application. It is estimated that over 1 million metric tons of urea could be accumulated for the country’s first-ever summer fertilizer reserve plan.”

Write to Stephen Nakrosis at stephen.nakrosis@wsj.com


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