HOUSTON (ICIS) – U.S. fertilizer producer LSB Industries, which just announced it achieved record second-quarter operating results, said a variety of factors point to demand and prices fertilizers will remain high.
After achieving net sales of $284.8 million compared to $140.7 million for the same quarter year over year with an adjusted EBITDA of $158.1 million compared to $46.0 million dollars in the second quarter of 2021, the grower said fertilizer purchases are expected to remain strong as farmer income is seen to be improving as corn prices are higher overall.
“Fertilizer prices are expected to remain above historical averages for the remainder of 2022 and all of 2023. The U.S. Corn Belt experienced a very wet spring, forcing farmers to forego their typical application of fertilizer. fertilizer before planting and contributing to an almost unprecedented spike. corn prices in April and May,” LSB Industries said.
“As growing weather improved in June, corn prices have retreated from highs but continue to be well above historical averages. As a result, farmers’ incomes are likely to continue to be healthy, encouraging investment in fertilizers to maximize yield to take advantage of high maize prices. »
LSB said the high corn price environment looks set to persist given high levels of domestic ethanol demand and the impact of dry conditions in South America and the western United States. United on global corn supply. He noted that the demand for corn from China for animal feed also remains high.
Looking ahead, the producer believes that the last quarter could see significant activity for ammonia.
“While the third quarter is typically marked by limited fertilizer activity as planted corn matures, agricultural ammonia demand could be strong in the fourth quarter, post-harvest, as farmers seek to replenish nutrients. in their soil ahead of the spring 2023 planting season, especially given the decrease in pre-plant applications earlier this year,” LSB said.
He noted that US producers retain a significant production cost advantage and believes that the global ammonia supply constraint will contribute to higher nitrogen prices.
In terms of sales, LSB said volumes in its industrial business remained stable despite weaker economic growth forecasts as demand for nitric acid remained strong.