U.S. Nitrogen Imports For 2013

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 |  Includes: AGU, CF, MOS, POT, TNH, UAN
by: Chris Damas

The latest trade data on US nitrogen imports was released Friday for December 2013. The information shows Trinidadian ammonia exports declining in importance, the Middle East gaining traction in the US urea market, and higher urea ammonium nitrate solution imports from Russia. These trends have implications for US nitrogen producers. All tons are metric (one metric ton = 1.1025 short tons).

AMMONIA IMPORTS

US anhydrous ammonia imports were down 4.2% at 6.0 million metric tons in 2013 versus 6.3 million tons in 2012.

The restart of the Potash Corp (NYSE:POT) Geismar, Louisiana, ammonia plant in early 2013 (525,000 short tons capacity) reduced imports, as this plant previously imported ammonia from PCS Trinidadian plants. Record corn acres planted and strong spring application drove ammonia imports but these dropped off later in the year.

US Ammonia Imports

Quantity Description Country 2010 2011 2012 2013 Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tons Trinidad & Tobago 4,453 3,773 3,770 3,460 -8.2%
. Canada 1,012 1,161 1,129 1,213 7.4%
. Ukraine 478 588 303 461 52.2%
. Russia 281 546 538 430 -20.0%
. Venezuela 88 234 206 156 -24.2%
. Saudi Arabia 0 57 117 79 -32.4%
. Indonesia 36 42 57 45 -22.1%
. Mexico 55 31 86 40 -53.3%
. Latvia 76 38 0 35 N/A
. Estonia 46 109 0 30 N/A
. Brazil 34 13 7 25 251.0%
. Colombia 27 5 6 23 299.9%
. Argentina 0 0 0 15 N/A
. Switzerland 0 0 0 10 N/A
. Cayman Is 0 0 0 6 N/A
. Korea 1 5 4 3 -24.3%
. Germany 0 0 0 0 N/A
. Taiwan 0 1 0 0 100.0%
. Japan 0 9 0 0 -5.3%
. Egypt 90 162 49 0 -100.0%
. China 0 0 0 0 N/A
. Libya 20 0 0 0 N/A
. Oman 47 0 0 0 N/A
. Turkey 0 35 23 0 -100.0%
. Belgium 0 1 0 0 N/A
. United Kingdom 0 0 0 0 -100.0%
Subtotal metric tons 6,742 6,811 6,295 6,032 -4.2%
Click to enlarge

Source: United States International Trade Commission

UREA IMPORTS

US urea imports were down 6.4% to 6.5 million tons in 2013 versus 6.9 million tons in 2012.

The late field crop harvest and falling global prices caused a short and weakened fall fertilizer application season. Almost half of urea imports came from Middle Eastern countries. Excess Chinese capacity caused a 125% increase in imports.

US Urea Imports

Quantity Description Country 2010 2011 2012 2013 Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tons Canada 1,732 1,580 1,428 1,072 -24.9%
. Qatar 405 393 449 1,059 135.5%
. China 749 422 345 776 125.1%
. Oman 467 376 1,023 553 -45.9%
. Saudi Arabia 546 587 451 497 10.1%
. Kuwait 460 365 500 385 -23.0%
. United Arab Em 78 0 80 360 353.1%
. Indonesia 33 63 291 345 18.6%
. Russia 78 48 490 291 -40.6%
. Trinidad & Tobago 593 377 369 288 -21.8%
. Bahrain 266 352 381 265 -30.4%
. Egypt 546 523 493 130 -73.6%
. Netherlands 7 8 9 113 1,127.3%
. Venezuela 319 356 294 99 -66.5%
. Libya 107 66 0 78 N/A
. Singapore 0 0 0 32 N/A
. Romania 142 162 77 29 -62.7%
. Malaysia 0 53 53 27 -48.7%
. Argentina 0 0 0 27 N/A
. Germany 13 24 28 27 -6.2%
. Georgia 0 0 0 8 N/A
. Poland 6 2 4 5 23.0%
. United Kingdom 0 1 1 1 -26.7%
. Lithuania 0 0 0 0 N/A
. Latvia 0 0 0 0 N/A
. Dominican Rep 0 0 0 0 56.6%
. Italy 1 0 3 0 -89.5%
. Japan 0 0 0 0 -54.7%
. Mexico 7 4 10 0 -98.8%
. Liechtenstein 0 0 0 0 N/A
. Hong Kong 26 0 0 0 N/A
. India 0 0 0 0 30.0%
. Ireland 0 0 0 0 N/A
. Niger 0 0 0 0 N/A
. Israel 0 0 0 0 N/A
. Australia 4 1 0 0 N/A
. Taiwan 0 0 0 0 -100.0%
. Chad 4 0 0 0 N/A
. Switzerland 0 10 0 0 -100.0%
. Slovak Republic 0 0 0 0 -100.0%
. Denmark 0 0 0 0 N/A
. France 0 0 0 0 N/A
. Chile 0 0 0 0 N/A
. Bangladesh 23 0 0 0 N/A
. Austria 0 0 0 0 N/A
. Korea 0 0 2 0 -100.0%
. Croatia 20 85 103 0 -100.0%
. Estonia 0 0 27 0 -100.0%
. Spain 0 1 2 0 -100.0%
. Ukraine 0 0 0 0 N/A
Subtotal metric tons 6,631 5,860 6,914 6,469 -6.4%
Click to enlarge

UAN

US imports of urea ammonium nitrate solutions were up 5% to 3.16 million tons versus 3.01 million tons in 2012.

Most of the increase occurred in the spring but fell off during the fall, as was the case with urea. Russian imports were up 75%.

US UAN imports

Quantity Description Country 2010 2011 2012 2013 Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tons Russia 679 611 681 1,193 75.2%
. Trinidad & Tobago 446 916 773 652 -15.6%
. Egypt 111 106 200 332 65.8%
. Canada 396 560 365 302 -17.1%
. Romania 230 442 258 216 -16.2%
. Netherlands 40 130 130 169 30.6%
. Lithuania 72 443 359 108 -69.8%
. Germany 27 138 73 100 37.8%
. Bulgaria 30 19 99 49 -50.0%
. Poland 0 0 0 38 N/A
. Ukraine 67 27 0 0 N/A
. India 0 0 0 0 N/A
. Oman 0 0 30 0 -100.0%
. Estonia 106 83 0 0 N/A
. Algeria 0 9 0 0 N/A
. Ireland 1 3 3 0 -100.0%
. Mexico 0 0 0 0 N/A
. Turkey 0 0 42 0 -100.0%
. Saudi Arabia 0 6 0 0 N/A
. Suriname 0 0 0 0 N/A
Subtotal metric tons 2,206 3,495 3,011 3,161 5.0%
Click to enlarge

2014 Outlook

Future nitrogen import levels will be derived from several variables, including new crop corn and wheat prices, acres planted, demand for fertilizers from other countries, demand for industrial ammonia, competition between US domestic and international nitrogen producers, plant shutdowns and new capacity start-ups, and a host of other variables, including currency and freight rates.

We'll get the USDA February crop production and WASDE reports at noon EST today, which could cause fluctuations in crop prices. Some pundits are looking at a slight drop in corn stocks, which could boost prices. Corn is the largest consumer of nitrogen fertilizers in the US.

The weakened fall application season could set the US up for decent spring fertilizer demand. Gulf prices have rallied for urea, UAN and phosphates, the latter being a major consumer of imported ammonia. Prices seem to have stalled. We won't know if this is a temporary lull caused by bad weather, or more import activity, until trade data comes in several weeks afterwards.

My guess is the Q1 turnaround of Qatar Fertilizer Company and the slow transit of Chinese urea imports to the USGC and elsewhere during the Lunar New Year may have given US nitrogen producers the edge so far his year, but this advantage could dissipate by spring, as imports roll in to the key port of New Orleans, LA.

Intense snow storms have ruled out winter ammonia application as we experienced two years ago. Right now, a major problem is shipping the large 2013 field crops to market due to weather, rail and barge congestion. Although US farmers are generally confident coming off record income years, weaker corn prices have squeezed new crop margins and softened soaring farm land values.

We'll get more color on the state of the industry as year-end earnings conference calls begin in earnest, starting with The Mosaic Company (NYSE:MOS) on February 11.

Our top picks in the US nitrogen space are CVR Partners LP (NYSE:UAN), Terra Nitrogen L.P. (NYSE:TNH), CF Industries (NYSE:CF) and Agrium (NYSE:AGU).

Disclosure: I am long UAN, TNH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.