NEW YORK (Reuters) - Netherlands-based fertilizer producer OCI NV expects to run its new Iowa nitrogen plant at full capacity starting in June, and has no plans to slow down, even as new plants open across the United States and depress prices, the head of its Americas unit said on Thursday.
OCI’s $3 billion Iowa plant, which opened in April, will produce 1.5 million to 2 million tonnes annually of nitrogen fertilizer, part of a building boom in the United States, a net importer. CF Industries Holdings Inc, Agrium Inc, Yara International ASA and others are expanding North American capacity.
Urea nitrogen prices at New Orleans fell to decade lows this year due to new capacity and a wet spring that dampened U.S. farmer demand, according to BMO.
Even so, OCI has no plans to limit production and intends to produce around 2.5 million tonnes in 2018, above the plant’s rated capacity, said Ahmed El-Hoshy, CEO of OCI Americas, on the sidelines of the BMO Farm to Market conference in New York. All output will be sold in the United States.
“The (U.S.) market is big enough to absorb our full capacity,” he said. “It is still bringing tonnes in from overseas.”
Global nitrogen supply additions will slow dramatically next year, Citi analyst P.J. Juvekar said.
OCI’s plant, known as Iowa Fertilizer Co, can produce ammonia, urea and urea ammonium nitrate (UAN), as well as diesel exhaust fluid.
Construction costs ran over budget, and there has been speculation the plant was for sale.
OCI is open to selling the Iowa facility, but it is unlikely to happen during a weak market, El-Hoshy said.
“It’s not something we would rule out, but we are at trough pricing right now. We see that there is meaningful upside that we will start enjoying.”
Reporting by Rod Nickel in New York; Editing by Phil Berlowitz