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Released February 14, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--North American fertilizer major Agrium Incorporated (NYSE:AGU) (Calgary, Alberta) is ratcheting down growth investment capital expenditures this year as it wraps up key projects. The company expects to spend between $150 million and $200 million in investment capital for 2017, versus $365 million in 2016, and $647 million in 2015.
Speaking during the Agrium's fourth-quarter 2016 earnings conference call last week, Chief Financial Officer Steve Douglas said, "This quarter also brings to a close the last of our major wholesale investment capex [capital expenditures] programs, as the new Borger [Texas] urea facility construction was completed at the end of 2016, which will bring down our wholesale investment capex significantly in the coming years."
Commissioning is under way at the 610,000-metric-tonne-per year urea plant at Agrium's nitrogen facility in Borger, and production is expected to start in March. Agrium also continues to ramp up potash production from the 1 million-tonne-per-year expansion project at its Vanscoy mine in Saskatchewan. The company noted that total capital expenditures in 2016 had dropped from 2015 due to the completion of the Vanscoy mine expansion and decreased spending on the Borger project.
Agrium expects overall capital spending -- including both investment and sustaining expenditures -- to run between $650 million and $750 million this year, in comparison with $724 million in 2016, and $1.1 billion in 2015.
The company is now targeting several retail site-related capital projects, which range between $5 million to $9 million per location, Agrium executives said during the earnings presentation.
Industrial Info is currently tracking more than $860 million in future active capital projects by Agrium.
Trey Hamblet, Industrial Info's vice president of research for the Chemical Processing Industry, said during the Industrial Info's 2017 Industrial Market Outlook in Houston that he expects the fertilizer industry to push out the construction start dates for big ammonia capacity projects into future years, and to see smaller projects moving forward to meet regional requirements in the short term.
"We have got $12.5 billion worth of [fertilizer projects] spend that we are tracking over the next couple of years," Hamblet said, and concerns of overcapacity persist. "The short story on that is we saw 6 million tons of new capacity begin construction in 2014."
North American farm income began to drop substantially in 2015, he said, leading to concerns of an overbuild in fertilizer capacity. Hamblet continued: "Most of us here who are tracking ammonia know that in the last 12-18 months, we haven't seen a whole lot of movement in those projects."
Hamblet said the kick-offs for a "significant portion" of the large ammonia fertilizer projects being tracked by Industrial Info are likely to be delayed. "The concern of oversupply is still very real. When we satisfy the appetite for demand on a regional basis, I think that will lower the probability of some of those very large projects."
For related information, see January 4, 2017, article - CF Industries Completes Big Expansions, Sees Lower Capex for 2017.
Looking to 2017, Agrium Chief Executive Officer Charles Magro said during last week's earnings presentation that the nitrogen/ammonia fertilizer market will remain "relatively tight, at least, through the spring season, despite new nitrogen capacity coming on stream in the U.S. The recent strength in nitrogen prices is largely a result of the significant drop in Chinese urea production and export levels, which is associated with higher coal costs in China and more restrictions on heavily polluting industries, such as coal-based urea facilities."
North America saw record crop production in 2016, Magro noted, but added that crop prices remain under pressure from last year's record yields. "As a result, we expect U.S. corn acreage to be between 90 million and 92 million acres in 2017, down from 94 million acres last year. Soybean acreage, which requires fewer input is expected to increase, but this impact will be partly offset by an expected increase in cotton and canola acreage in North America."
Agrium plans to complete its merger with PotashCorp of Saskatchewan Incorporated (PotashCorp) (NYSE: POT) (Saskatoon, Saskatchewan) by mid-2017. For related information, see September 13, 2016, article - Merger of PotashCorp and Agrium Includes $2.8 Billion in Active Projects.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Speaking during the Agrium's fourth-quarter 2016 earnings conference call last week, Chief Financial Officer Steve Douglas said, "This quarter also brings to a close the last of our major wholesale investment capex [capital expenditures] programs, as the new Borger [Texas] urea facility construction was completed at the end of 2016, which will bring down our wholesale investment capex significantly in the coming years."
Commissioning is under way at the 610,000-metric-tonne-per year urea plant at Agrium's nitrogen facility in Borger, and production is expected to start in March. Agrium also continues to ramp up potash production from the 1 million-tonne-per-year expansion project at its Vanscoy mine in Saskatchewan. The company noted that total capital expenditures in 2016 had dropped from 2015 due to the completion of the Vanscoy mine expansion and decreased spending on the Borger project.
Agrium expects overall capital spending -- including both investment and sustaining expenditures -- to run between $650 million and $750 million this year, in comparison with $724 million in 2016, and $1.1 billion in 2015.
The company is now targeting several retail site-related capital projects, which range between $5 million to $9 million per location, Agrium executives said during the earnings presentation.
Industrial Info is currently tracking more than $860 million in future active capital projects by Agrium.
Trey Hamblet, Industrial Info's vice president of research for the Chemical Processing Industry, said during the Industrial Info's 2017 Industrial Market Outlook in Houston that he expects the fertilizer industry to push out the construction start dates for big ammonia capacity projects into future years, and to see smaller projects moving forward to meet regional requirements in the short term.
"We have got $12.5 billion worth of [fertilizer projects] spend that we are tracking over the next couple of years," Hamblet said, and concerns of overcapacity persist. "The short story on that is we saw 6 million tons of new capacity begin construction in 2014."
North American farm income began to drop substantially in 2015, he said, leading to concerns of an overbuild in fertilizer capacity. Hamblet continued: "Most of us here who are tracking ammonia know that in the last 12-18 months, we haven't seen a whole lot of movement in those projects."
Hamblet said the kick-offs for a "significant portion" of the large ammonia fertilizer projects being tracked by Industrial Info are likely to be delayed. "The concern of oversupply is still very real. When we satisfy the appetite for demand on a regional basis, I think that will lower the probability of some of those very large projects."
For related information, see January 4, 2017, article - CF Industries Completes Big Expansions, Sees Lower Capex for 2017.
Looking to 2017, Agrium Chief Executive Officer Charles Magro said during last week's earnings presentation that the nitrogen/ammonia fertilizer market will remain "relatively tight, at least, through the spring season, despite new nitrogen capacity coming on stream in the U.S. The recent strength in nitrogen prices is largely a result of the significant drop in Chinese urea production and export levels, which is associated with higher coal costs in China and more restrictions on heavily polluting industries, such as coal-based urea facilities."
North America saw record crop production in 2016, Magro noted, but added that crop prices remain under pressure from last year's record yields. "As a result, we expect U.S. corn acreage to be between 90 million and 92 million acres in 2017, down from 94 million acres last year. Soybean acreage, which requires fewer input is expected to increase, but this impact will be partly offset by an expected increase in cotton and canola acreage in North America."
Agrium plans to complete its merger with PotashCorp of Saskatchewan Incorporated (PotashCorp) (NYSE: POT) (Saskatoon, Saskatchewan) by mid-2017. For related information, see September 13, 2016, article - Merger of PotashCorp and Agrium Includes $2.8 Billion in Active Projects.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
