US fertiliser manufacturer CF Industries reports record sales volumes in the first six months of 2020, following the favorable US crop planting season this year.
The Illinois-based multinational company said its first half total sales volumes, including urea, ammonium nitrate (AN) fertilisers and diesel exhaust fluid (DEF), exceeded 10 million product tons for the first time.
Looking ahead, CF expects the global nitrogen demand outlook to remain positive into 2021. It said the USDA WASDE figure of 92 million acres of US corn for harvest was lower than CF’s forecast of 92-94m acres and the USDA’s own early season prediction of 97m acres.
However, the company believes that a combination of the lower-than-expected corn area, farm insurance and government support, plus strong import demand for corn from China will support US farm incomes in 2020.
In turn, 2020 corn yields will help influence US farmer planting intentions for 2021 - along with corn and soybean export activity and the pace of the post-pandemic recovery in fuel consumption.
“Based on conditions today, including a bean-to-corn price ratio that is supportive of corn plantings in 2021, CF expects US planted corn acres in 2021 to be in line with levels of the last ten years,” it stated.
Urea demand from Brazil and India
Other factors driving global nitrogen fertiliser demand are positive demand in India and Brazil – India has seen urea sales increasing by some 50% from April to July 2020 when compared to the prior year due to favourable weather. Brazil’s first half urea imports are up 13% year-on-year to 2.8m tonnes, with full year imports on track to exceed 6.5m tonnes.
Low global energy prices have helped manufacturers, but at the same time, low global nitrogen prices made some production uneconomic - three ammonia plants in Trinidad have been shuttered.
CF expects access to low cost natural gas to keep North American nitrogen production facilities open for the foreseeable future. However, Chinese anthracite coal-based nitrogen complexes will remain the global marginal urea producer and thus set the global price. Chinese anthracite coal has not fallen significantly during the pandemic compared to global natural gas prices – therefore Chinese urea prices have only fallen modestly.
Over the next four years, CF expects global demand growth for nitrogen to outpace net capacity additions given the limited number of facilities currently under construction around the world – the Covid-19 pandemic will only add to delays in completing and starting-up new capacity.
CF reported an EBITA of $786m on sales of $2.2 billion the first six months of 2020, compared to $973m and $2.5bn in the same period of 2019. It sold 10.704m tonnes of product in first half 2010 from 9.803m tonnes a year earlier. It says the lower average selling price in the latest half year was only partially offset by the increased volumes.
“The first half of 2020 demonstrated the resilience of our business model and outstanding performance by the CF team in a difficult and uncertain environment,” said CF president and chief executive officer Tony Will. “We maintained our focus on protecting the health and well-being of our employees, operated safely and met strong customer demand, helping us achieve record first half sales volumes.
“Looking forward, we believe that our strong operational focus and cost-advantaged network, along with improving global industry fundamentals, will support our cash generation capability and our continued ability to create long-term shareholder value.”