20 February 2013 23:07 [Source: ICIS news]
HOUSTON (ICIS)--Striving to produce more nitrogen for their growing share of the fertilizer markets, CF Industries announced on Wednesday it is moving forward with capacity expansion projects in Louisiana and Iowa.
In a conference call to discuss 2012 fourth-quarter earnings, the Illinois-based fertilizer producer said it expects to start work on both projects by this summer.
The company plans to invest $3.8bn (€2.9bn) to expand their plants in Donaldsonville, Lousisiana, and Port Neal, Iowa, which could increase nitrogen volumes by 25% to 8.5m tons (7.7m tonnes) by 2016.“We’re off to a fast start on our capacity expansion projects. I’m pleased to report that we have applied for our air permits in both Louisiana and Iowa. And as of February 15, a total of $480m has been spent on or committed to these two projects,” said chairman and CEO Stephen Wilson.
“For all of 2013, we expect to invest between $1bn and $1.3bn on capital expenditures for these projects, in addition to the $450m we expect to spend on normal maintenance and existing plant investments.”
CF officials predict that at least 35% of the upgrades could be completed by the close of 2013, with the company focused on an accelerated schedule in order to build future inventories.
“We’re on a very aggressive timetable,” said Wilson. “We want to bring these projects on line as quickly as we can.”
Like many in the industry, CF officials are optimistic about North American spring crops, primarily corn, as they feel farmers will strive for maximum yields resulting in full utilisation rates of crop nutrients, primarily nitrogen products if drought conditions persist through the growing season.
Company officials estimate the upcoming corn crop would be 97m acres (39m ha), with a forecast yield of 160 bushels/acre.
“Crop economics around the world support our expectations for a great 2013. Tight stocks-to-use ratios and the resulting high crop prices, especially for corn, are expected to cause farmers across North America, Europe, Ukraine and China to plant large acreage to grains,” Wilson said.
“This should result in strong domestic demand for nitrogen in all its forms. We saw that demand reflected in ammonia shipments this past [autumn], and demand this spring should continue to support ammonia pricing.”
Wilson said several factors are contributing to the current nitrogen market conditions, including a lack of urea ammonium nitrate (UAN) imports, lower domestic production and lower-than-normal inventories, which together add up to create the tight supply picture for the first half of 2013.
($1 = €0.75)
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