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   Non-TechUAN - The variable distribution MLP that could go a long way

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From: Elroy9/3/2021 12:25:40 PM
1 Recommendation   of 811
Hmmm, here's a post on Seeking Alpha about natural gas prices, they are apparently becoming problematic in certain parts of the world for fertilizer production.

We should all be aware of what is happening on the cost side for nitrogen fertilizer. Natural gas has gone from$1.75 to $4.75 in the US in the last year. That will cut into profits for the nitrogen producers (I have used $4.30 for my projections going forward which is a lot more than the forward curve for next year, but I may have to adjust for Q4). But what is happening in Europe (and Asia) is astonishing. In the same period, natural gas has gone from $2 to over $18.

To give some perspective to this, $18 gas means that $860 worth of gas goes into a ton of ammonia (current price about $665 in the corn belt). That does not include any labor or capital or maintenance costs. For UAN, it takes $375 worth of gas to make a ton, again with no other expenses. What that means is that nitrogen fertilizer made in Europe (or Asia from gas) is now done at a huge loss. To what extent they will start shutting down production is not something that I can judge, but economically they should shut it all down.

China has always been the marginal producer of nitrogen fertilizer, but they make it mostly from coal (which is very expensive there). Those producers still need an extremely high price to keep producing, but that price is now less than the price in Europe.

Bottom line is that while I have focused on the demand for NH3 and UAN, the supply side is at least as important. And the supply is going to start contracting without much higher prices. Very scary if you are a farmer, but really good for CVR owners.

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From: Elroy9/3/2021 1:00:28 PM
   of 811
My hunch is the Q3 distribution should be at least $4.00, and might be higher.

We get a $5m reversal of the charges taken for the previously planned Q4 2021 turnaround which has been postponed to 2022.

We get high sales prices for UAN and ammonia. It's hard to say what the prices will be since UAN forward sells production sometimes, but not others. My guess is they get AT LEAST $280/ton for UAN, compared to $237/ton in Q2 2021.

There was some production left over from Q2 which did not get sold. They will likely sell that in either Q3 or if not then for sure in Q4. Gotta wait and see.

And since there's no turnaround planned for 2021 now, we can expect the plants to run at maximum capacity. They've been doing fairly well with production recently hitting between 95%-100% of capacity. But you never know, we only find out about unplanned downtimes when the financial results are released.

Hurricane Ida is going to take competitors New Orleans plant off line for some period, hard to say how long, but whatever the length of downtime it's good for reduced supply. UAN has no such issue (I think) as their plants are not in the path of the storm.

The expected major cash user this quarter is the planned debt buyback of the $95m 9.25% stub that was left in existence when the refinancing was done. They've indicated they will buy it all back over two years, or when the carbon credits get monetized whichever comes first. Debt buyback reduces distribution in the quarter that they buy it. So perhaps they bought back $12m of debt in Q3, perhaps they bought have all $95m, perhaps they bought back zero, who knows?

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From: Elroy9/3/2021 5:23:28 PM
   of 811
UAN NOLA futures up again today….Q1 2021 above $350/ton now.

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From: Elroy9/3/2021 6:07:55 PM
   of 811
UAN Q1 $350/ton

I am going to start regularly posting Q1 UAN NOLA prices each time they go $10 higher. Today they hit $350/ton

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From: Elroy9/7/2021 5:27:13 PM
   of 811
Force Majeure at Top Fertilizer Plant Has Prices Soaring

Every month up a few bucks today. It's early Sep, slow period. What's going to happen in Jan 2022???

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From: Elroy9/7/2021 7:30:33 PM
   of 811
USDA Crop Progress Report

USDA Crop Progress Report Lowers Corn Condition From Previous Week

DTN's Lead Analyst Todd Hultman added that corn's good-to-excellent rating was "the fifth lowest rating in the past 12 years with rating declines seen in Illinois, Michigan, Nebraska and Ohio."

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From: Elroy9/8/2021 1:28:51 AM
   of 811
US Nola urea barges hit 9 year high with supply tightening post Hurricane Ida

The largest fertilizer plant in the region, CF Industries’ Donaldsonville facility, was forced to shut down. While reports suggest there has been no major damage to the plant, it is now facing delays restarting with power yet to be restored. Several reports also suggest that CF was checking the market for barges this week. Prior to the Hurricane making landfall the plant was reportedly focused on UAN production, with CF an active buyer in the urea market in recent weeks.


Tarriffs on Russian UAN imports

Hurricane Ida taking the major competitor's UAN facilities offline for weeks or months

UAN's Debt refinanced from 9.25% down to 6.125%

UAN's scheduled Q4 2021 turnaround pushed back to H2 2022.

UAN's CEO buys 5,000 units at $58 last week

Urea and UAN fertilizer prices continue to climb in the slowest seasonal time of year (right now).

What do you people think is going to happen from November when farmers start actually ordering fertilizer for the 2022 spring planting season?

We're all going to be rich!

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From: Elroy9/8/2021 4:25:51 PM
   of 811
CVR Partners Announces Notice of Partial Redemption for its 9.250% Senior Secured Notes Due 2023

CVR Nitrogen Finance Corporation (together with CVR Partners, the “Issuers”), delivered a notice of partial redemption for $15 million of the Issuers’ outstanding 9.250% Senior Secured Notes due 2023 (the “2023 Notes”) at a par redemption price, plus accrued and unpaid interest on the redeemed portion of the 2023 Notes, to be redeemed on September 23, 2021.

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From: Elroy9/8/2021 7:39:49 PM
   of 811
UAN futures up another 1.5% or so today. It's still early Sep.

What do you guys thing is going to happen in Nov and Dec when farmers are buying?

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To: Elroy who wrote (188)9/8/2021 11:53:17 PM
From: Elroy
   of 811
Lets see.......

the company is repurchasing it's own high cost debt

the CEO is buying units

the futures price of UAN fertilizer continues to rise.....each day

The company has delayed a planned 2021 turnaround to next year, indicating this will allow them to produce more product now during a time of significant margin.

Ida apparently has damaged the competitor's UAN production facility

We are in the slow season for fertilizer purchasing, the high season begins in November

What in the world is going to happen when demand for UAN fertilizer picks up in Q4 this year?

What's a better investment than these guys? We're all gonna be rich!

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