US LSB Industries eyes lower natgas prices in H2 – exec

HOUSTON (ICIS)–LSB Industries expects that more moderate natural gas prices in the second half of the year will help boost the profitability of its chemical business, a top executive for the US-based firm said on Friday.

LSB Industries manufactures and sells chemical products for the agricultural, mining and industrial markets. It also makes climate control products.

In the first six months of 2014, gross margins in LSB’s chemical business fell year over year because of a spike in US natural gas feedstock costs during the winter and early spring, president and chief operating officer Barry Golsen said in an update.

However, natural gas prices have moderated in recent weeks, “a trend that, if sustained, would be a benefit to our chemical business profitability in the second half,” Golsen said.

Furthermore, LSB will benefit from US corn plantings, he said. US corn plantings are estimated at 90m acres in 2015, despite prices having declined from about $7.00/bushel a year ago to slightly below $4.00/bushel currently, he added.

In the second quarter ended 30 June, LSB’s operating profit rose from $6.4m in the same period a year ago to $23.6m as sales rose by 12% to $135.8m.

Operating profit benefited from improved production at LSB’s plants in Pryor, Oklahoma, and Cherokee, Alabama, partially offset by higher natural gas feedstock costs and lower selling prices for nitrogen fertilizers, the company said.