Fertiglobe Financial Overview
R22°
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10
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Henry Hub
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Ukraine
Higher Costs for Marginal Producers Supportive of Nitrogen Prices
Global Feedstock Prices 2017-2023F, $/MMBtu
Cash Costs per ton of Ammonia 2017-2023F, $/t
TTF futures are ~$38MMBtu for 2023 and
3,000
c. $30/MMBtu in 2024/25
2,500
2,000
1,500
1,000
500
Sep-19
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Chinese anthracite coal price
Asia LNG
Jan-22
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Jan-23
May-23
0
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United States
Marginal costs have escalated on high end of cost
curve and not expected to correct to 2016-2020 levels
"
Surge in gas prices has been driven by limited Russian gas flows, lower than average storage levels in Europe and higher global demand for gas resulting in highly volatile gas markets
TTF futures point towards gas prices of c.$38/MMBtu for 2023 and $27/MMBtu in 2024/2025, compared to $5/MMBtu in 2015 - 2019
Gas prices expected to remain volatile, and pricing is expected to remain well above historical averages given Russian gas into Europe, reduced US LNG short-term exports and tight coal and power
markets
✓ 2023 expected to have higher feedstock prices than 2022 on average factoring in no Russian gas for full year, LNG import and export logistics and capacity bottlenecks and need to price above Asia. This
doesn't factor (1) potential colder-than-average weather, (2) lower LNG imports if Asia has a cold spike / Chinese economy rebounds (3) extended Freeport outage
✓ Some downside risk from weather and EU government intervention to cap pricing in the short-term, but this will incentivize power consumption and hence demand which combined with low storage
levels expected to keep EU gas prices elevated to end 2023/24 winter
✓ Europe is the marginal nitrogen producer 19 Mt of European ammonia capacity, 10 Mt of urea and 34 Mt of nitrates capacity at risk of being permanently shut if pricing remains below costs for a
sustained period
Higher marginal costs have steepened the global cost curves and provide support for nitrogen pricing into 2023 and beyond
Source: Bloomberg, CCTD, CRU, OCI, Gas futures as of 02 November 2022. (1) Cash costs includes feedstock costs, and variable costs such as labour, SG&A, power. It does not include debt servicing or maintenance capex. (2) Average North American
Fertiglobe production assumed to be 37.2 MMBtu per ton of ammonia for feedstock; Average European production assumed at 37.8 MMBtu per ton of ammonia for feedstock; Average Ukrainian production assumed at 38 MMBtu per ton of ammonia for feedstock;
An ADNOC and OCI Company
Chinese production assumed to be 1.12 tons of coal for feedstock.
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Europe
16
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Ukraine
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Chinese marginal costs
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May-23View entire presentation