July 17, 2014
US could achieve urea self-sufficiency by 2017: Rabobank
Against the backdrop of decreasing natural gas costs in recent years, the United States may become self-sufficient in urea-- an important nitrogen fertiliser-- as early as 2017, Rabobank reports.
"Lower natural gas costs meant US fertiliser producers were able to realise their dream of converting low cost inputs into higher priced outputs", said Rabobank analyst, Suzanne Pera. "As a result, the US is set to move away from being a net importer of urea and is en route to self-sufficiency, which is set to have sizeable impact on global urea markets".
However, the US nitrogen fertiliser industry still faces production cost challenges. The recent abundance of cheap natural gas may be offset by LNG exports as the US takes its first steps towards exporting part of its shale gas reserves to other regions, such as Europe. Poor returns on investments in shale exploration could also cause a decrease in supply and raise price pressure on natural gas prices in the short to medium term. Additionally, attracting investment to secure plant financing is under pressure as a result of increased capacity supply exceeding global demand, which is putting pressure on fertiliser prices.