Demand for nitrogen for industrial use is led by mining activity in North America, noted CF Industries Holdings.
CF Industries projects U.S. corn plantings will be below its expectations of 91-93 million acres in early 2022, due to poor weather in parts of the country during the spring that affected planting decisions.
The company’s main product is anhydrous ammonia (ammonia), which contains 82% nitrogen and 18% hydrogen.
Globally, CF Industries expects the nitrogen supply-demand balance to remain tight for the foreseeable future, thanks to resilient agriculturally driven demand and uncertainty about global production and export supply availability.
In addition, energy differentials between low-cost producers and marginal production in Europe and Asia are expected to remain historically wide.
The company believes that the need to replenish global grain stocks will support continued positive demand for nitrogen products.
According to USDA data, global cereal stock ratios for 2022/2023 are forecast to be similar to 2021/2022, which should maintain strength in global cereal prices, incentivizing nitrogen fertilizer application.
Demand for nitrogen
The outlook for global nitrogen supply availability remains challenging due to high natural gas costs in Europe and Asia, which have been exacerbated by uncertainty over the future of natural gas flows from Russia and the ripple effect of increased competition for LNG cargoes.
From CF Industries’ perspective, higher production costs are likely to result in lower ammonia production in these regions, although production facilities in Europe and Asia that import ammonia can continue to produce upgraded products profitably.
The energy differentials in Europe and Asia compared to low-cost regions remain significant.
This has steepened the global nitrogen cost curve and increased margin opportunities for low-cost North American producers. Forward curves suggest that these favorable energy differentials will persist through 2023.
The company was founded in 1946 as Central Farmers Fertilizer Company, and was owned by a group of regional agricultural cooperatives for the first 59 years of our existence. Central Farmers became CF Industries in 1970.
