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Released May 16, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Last month, Iowa Fertilizer Company, a subsidiary of Netherlands-based OCI N.V., celebrated the start of production at what it said was the first world-scale nitrogen facility built in the U.S. in more than 25 years. Located near the border of the top corn-producing states of Iowa and Illinois, the grassroot plant at Wever, Iowa, is designed to produce 1.5 million to 2 million metric tons of nitrogen fertilizer products annually.
However, the plant also might be the last one of its kind for a while due to market conditions.
"Going forward, we expect there to be additional ammonia and urea fertilizer capacity built, although this project will likely be the last of the world-scale plants built," said Trey Hamblet, Industrial Info's vice president of research for the Chemical Processing Industry. "We suspect that much of the new capacity will be met with smaller, regionally-sized units."
Industrial Info is tracking nearly $21 billion in U.S. nitrogenous fertilizer project activity. The projects come in various sizes and stages of development. A handful of them involve proposed grassroot facilities ranging in value from $1.5 billion to $3 billion, but the vast majority of the tracked projects comprise less costly additions and expansions. Much of the planned capacity build-out could see future delays, Hamblet said, as a result of a global supply (too much)/demand (not enough) imbalance. Slippage from originally planned construction starts for the big grassroot projects already averages nearly five years.
Fed by low-cost natural gas feedstock, U.S. output of nitrogen-based urea surged by around 10% last year, according to The Wall Street Journal. The industry has seen a substantial capacity buildout in recent years, investing $5.1 billion in capital infrastructure projects in just 2015, compared with $3.48 billion in 2014 and $1.99 billion in 2013, according to The Fertilizer Institute (FTI).
Hamblet said that the industry saw 6 million tons of new capacity begin construction in just 2014.
But nitrogen prices fell in 2016 to 7-year lows amid oversupply, the FTI said. According an FTI presentation last year by Hoadley Consulting, U.S. nitrogen fertilizer demand is forecast to decline 1% to 2% this year, and growth in nitrogen production capacity has already peaked. A global supply/demand balance will begin to return in 2018-2019, according to the consultancy.
North American fertilizer producers Agrium Incorporated (NYSE:AGU) (Calgary, Alberta) and CF Industries Holdings Incorporated (NYSE:CF) (Deerfield, Illinois) each have signaled the days of large expansions are over, at least for now.
Agrium said in February it was bringing down capital growth investments this year as it wrapped up key projects. The company expected to spend between $150 million and $200 million in investment capital for 2017, versus $365 million in 2016, and $647 million in 2015. The company commissioned a 610,000-metric-ton-per-year urea plant earlier this year at its Borger, Texas, facility, and started up a new ammonia plant in September at its Donaldsonville complex in Louisiana. For related information, see February 14, 2017, article - Agrium Ratchets Down Capex as it Completes Key Projects.
With the completion of two major fertilizer projects last year, including a second ammonia unit at its Port Neal complex in Iowa and an ammonia plant at its Donaldsonville complex in Louisiana, CF Industries' expected capital expenditures for 2017 are in the range of $400 million to $450 million, roughly a fifth of what it spent in 2016. For related information, see January 4, 2017, article - CF Industries Completes Big Expansions, Sees Lower Capex for 2017.
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/.
However, the plant also might be the last one of its kind for a while due to market conditions.
"Going forward, we expect there to be additional ammonia and urea fertilizer capacity built, although this project will likely be the last of the world-scale plants built," said Trey Hamblet, Industrial Info's vice president of research for the Chemical Processing Industry. "We suspect that much of the new capacity will be met with smaller, regionally-sized units."
Industrial Info is tracking nearly $21 billion in U.S. nitrogenous fertilizer project activity. The projects come in various sizes and stages of development. A handful of them involve proposed grassroot facilities ranging in value from $1.5 billion to $3 billion, but the vast majority of the tracked projects comprise less costly additions and expansions. Much of the planned capacity build-out could see future delays, Hamblet said, as a result of a global supply (too much)/demand (not enough) imbalance. Slippage from originally planned construction starts for the big grassroot projects already averages nearly five years.
Fed by low-cost natural gas feedstock, U.S. output of nitrogen-based urea surged by around 10% last year, according to The Wall Street Journal. The industry has seen a substantial capacity buildout in recent years, investing $5.1 billion in capital infrastructure projects in just 2015, compared with $3.48 billion in 2014 and $1.99 billion in 2013, according to The Fertilizer Institute (FTI).
Hamblet said that the industry saw 6 million tons of new capacity begin construction in just 2014.
But nitrogen prices fell in 2016 to 7-year lows amid oversupply, the FTI said. According an FTI presentation last year by Hoadley Consulting, U.S. nitrogen fertilizer demand is forecast to decline 1% to 2% this year, and growth in nitrogen production capacity has already peaked. A global supply/demand balance will begin to return in 2018-2019, according to the consultancy.
North American fertilizer producers Agrium Incorporated (NYSE:AGU) (Calgary, Alberta) and CF Industries Holdings Incorporated (NYSE:CF) (Deerfield, Illinois) each have signaled the days of large expansions are over, at least for now.
Agrium said in February it was bringing down capital growth investments this year as it wrapped up key projects. The company expected to spend between $150 million and $200 million in investment capital for 2017, versus $365 million in 2016, and $647 million in 2015. The company commissioned a 610,000-metric-ton-per-year urea plant earlier this year at its Borger, Texas, facility, and started up a new ammonia plant in September at its Donaldsonville complex in Louisiana. For related information, see February 14, 2017, article - Agrium Ratchets Down Capex as it Completes Key Projects.
With the completion of two major fertilizer projects last year, including a second ammonia unit at its Port Neal complex in Iowa and an ammonia plant at its Donaldsonville complex in Louisiana, CF Industries' expected capital expenditures for 2017 are in the range of $400 million to $450 million, roughly a fifth of what it spent in 2016. For related information, see January 4, 2017, article - CF Industries Completes Big Expansions, Sees Lower Capex for 2017.
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/.
