The news gives the reason for the drop of Rentech Nitrogen stock price as high natural gas prices used to make their fertilizer. What makes the difference what the price of natural gas is, all fertilizer manufactures use it to make their fertilizer, and farmer have to buy it regardless of the price. No fertilizer, no corn, and it's planting time.
In my parts, the Montana side of the Bakken, they're drilling wells like crazy and capping them off.
Waiting for higher prices and pipeline to put the product in.
Makes me think NG prices are going to be low for a long time.
The only reason natural gas prices are up at all is because the rigs drilling for it have been idled because prices were so low. The US exporting of natural gas will never happen- we will be stuck with a glut of it as huge fields are being found around the world. Russia, Qatar and Iran have tons of it, Australia is finding huge shale deposits and Total and another company, if I remember correctly it's Royal Dutch Shell, are just beginning to help China develop their own shale. So now matter how much we use in cars, or Buffett's plan to use it to power Burlington's locomotives, or for heating or electricity, we will still have an oversupply. And it will take at least about another decade to get the coal fired plants offline, assuming the political climate doesn't change during that time.
This sell off isnt anything about Nat Gas prices. If it were that simple, this stock would have been up today since nat gas prices have been coming down. This is a panic sell off my growth investors who bought at the IPO. This year RNF is doing some major expansion projects that will cause its plant to be shut down for 4 weeks. The lower 2013 EPS and distribution numbers has sent those growth chasers running for the hills. It will take time now for the shares to turn over to more value oriented investors.
Side note: if you look at TNH the other nat gas consuming nitrogen play their stock has hardly moved on nat gas prices. This either suggests that TNH just hasnt imploded yet or confirms my idea suggested above.
Most of the current bad press is bs.
Lots of corn being planted that need nitrogen equals big profits. Natural gases are not "surging", just a little bit higher. Plant shutdown was always advertised at IPO. Rnf is in best spot for more profitable delivery of fertilizer, rather than expensive shipping up river. Cheap stock price means stock is on sale.
"If you look at the price of natural gas which is included in our cost of sales, that price improved from $4.75 last year now to $3.44 in the fourth quarter of this year. So, that improvement brought about $6.9 million of benefit in the fourth quarter. Year-over-year, pricing on natural gas included in cost of sales dropped from $4.76 to $3.59."