|
92%
agree
13 votes
|
Terra Nitrogen Company(TNH) |
|
66%
agree
3 votes
|
Nitrogen Fertilizer Requires Natural Gas |
May 25, 2013
Terra Nitrogen Company (NYSE:TNH), owned in majority by Terra Industries, operates the fourth largest nitrogen fertilizer production facility in the U.S. Revenues are driven by rising food prices and greater demand for corn, higher nitrogen fertilizer demand and prices. Corn prices reached a high of $7 per bushel in the summer of 2008, but they have fallen since November of 2008 as a result of the slowing global economy.[1] If corn prices remain low, demand for nitrogen fertilizer will fall.
The largest cost component of ammonia production is natural gas. Natural gas prices fell by more than 50% in 2009 as compared to 2008, thereby helping TNH stay profitable.[2] A 10 cent per million Btu decrease in natural gas prices would result in a reduction of $3.4 million in annual costs for the company, which has significantly helped it post positive earnings.
(Read more at Wikinvest
) - Business Overview
- Background on Nitrogen Industry
- Business Financials
- Products
- Urea Ammonium Nitrate (UAN)
- Anhydrous Ammonia
- Trends and Forces
- Decreasing natural gas prices lower operating costs
- Rising Worldwide Demand for Food Increases Fertilizer Profit Margins
- Environmental Regulation Poses Additional Costs in Near Future
- Competition
- References
