CF Industries expects global nitrogen supply and demand balance to remain constructive near-term

HOUSTON (ICIS)–Fertilizer producer CF Industries expects in the near-term that the global nitrogen supply and demand balance will remain constructive as inventories globally are viewed as being below average, with production economics for the industry’s marginal producers in Europe remaining challenged.

The company said in a results announcement that global nitrogen pricing was supported in Q4 of 2024 by positive global demand as well as constrained supply availability due in part to natural gas shortages in Iran and Egypt.

There was also China’s impact on the market with their continued restrictions on urea exports.

Looking ahead at North America, CF is forecasting average US corn returns above soybeans.

The producer said this is due in part to improving corn prices from strong corn exports and lower 2024 yield estimates, which is expected to be positive for corn plantings and nitrogen demand in the region.

At this time the company expects US corn plantings in 2025 will be approximately 93 million acres, which falls on the lower end of domestic industry projections of between 93 million and 96 million acres being sowed in the weeks ahead.

For Brazil there was an uptick in urea imports in 2024 to 8.3 million tonnes, which was 14% higher than 2023.

CF said that imports to Brazil are expected to remain strong this year because of forecasted high corn plantings and continued nominal domestic nitrogen production.

In India the producer said urea inventory is believed to be low following strong domestic demand for urea, lower-than-targeted domestic urea production and lower urea import volumes in 2024.

The company noted that there has been the inability of import agencies to secure targeted volumes in the country’s two most recent urea import tenders and that another urea import tender may be necessary in Q1 of 2025.

If that comes forth it will compete for volumes with demand in the northern hemisphere for spring applications.

Additionally, CF thinks it is likely that India will tender earlier in its next fertilizer year than in recent years given the lower urea stock position.

For Europe there is approximately 25% of ammonia capacity and 20% of the urea capacity is reported in shutdown/curtailment as of January.

The producer said it believes that ammonia operating rates and overall domestic nitrogen product output in Europe will remain below historical averages over the long-term given the region’s status as the global marginal producer.

Looking at China, the company said the ongoing export controls continue to limit urea export availability from the country. There were less than 300,000 tonnes of urea in 2024 exported, which was 94% lower than 2023.

CF has a view that urea exports may resume following China’s domestic spring application season.

In Russia exports have increased by 16% through the end of Q3 2024 compared to the same period in 2023, with the producer attributing this to the start-up of new urea granulation capacity and producers favoring urea upgrades over UAN upgrades.

Also, it cites the willingness of certain countries to purchase Russian fertilizer, including the US and Brazil.

CF said over the medium-term the significant energy cost differentials between North American producers and high-cost producers in Europe and Asia are expected to persist.

As a result, the global nitrogen cost structure will remain supportive of strong margin opportunities for low-cost North American producers.

Longer-term the company expects the global nitrogen supply and demand balance to tighten as global nitrogen capacity growth over the next four years is not projected to keep pace with expected global demand growth.

That rate is projected to be approximately 1.5% per year for traditional applications and new demand growth for clean energy applications.

Further the amount of global production is seen as remaining constrained by continued issues over the availability and cost of natural gas.