Seeking Alpha
Contrarian, newsletter provider, commodities, industrials
Profile| Send Message|
( followers)  

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).


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 DescriptionCountry2010201120122013Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tonsTrinidad & Tobago4,4533,7733,7703,460-8.2%
.Saudi Arabia05711779-32.4%
.Cayman Is0006N/A
.United Kingdom0000-100.0%
Subtotal metric tons 6,7426,8116,2956,032-4.2%

Source: United States International Trade Commission


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 DescriptionCountry2010201120122013Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tonsCanada1,7321,5801,4281,072-24.9%
.Saudi Arabia54658745149710.1%
.United Arab Em78080360353.1%
.Trinidad & Tobago593377369288-21.8%
.United Kingdom0111-26.7%
.Dominican Rep000056.6%
.Hong Kong26000N/A
.Slovak Republic0000-100.0%
Subtotal metric tons 6,6315,8606,9146,469-6.4%


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 DescriptionCountry2010201120122013Percent Change
2012 - 2013
In 1,000 Units of Quantity
metric tonsRussia6796116811,19375.2%
.Trinidad & Tobago446916773652-15.6%
.Saudi Arabia0600N/A
Subtotal metric tons 2,2063,4953,0113,1615.0%

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).

Source: U.S. Nitrogen Imports For 2013