LSB pauses low-carbon ammonia project in Houston Ship Channel
Quantum Commodity Intelligence - Oklahoma City-headquartered LSB Industries said in its Q1 earnings on Tuesday it has "put a pause" on its 1.1 million mt/year blue ammonia production and export project on the Houston Ship Channel citing uncertainty from tariffs, and lukewarm demand.
"Regarding our Houston Ship Channel project, given the impact of US tariff-related price increases and other global economic uncertainties on costs, coupled with a slower-than-anticipated ramp-up of low carbon ammonia demand, we have decided to put a pause on the project," Mark Behrman, LSB Industries' CEO said.
During the company's Q4 earnings call in February, the company said had been involved in talks with potential customers to get a "sense of the pricing levels for low carbon ammonia that could lead to high volume, long-term offtake arrangements".
The outcomes of pricing conversations were to act as key factors in determining the timing of LSB's next step in the project development process, which would be a full FEED study starting in H1 2025.
Based on comments from LSB on Tuesday, the company seems unlikely to be targeting FEED during H1.
On its low-carbon ammonium nitrate project at El Dorado, LSB said on Tuesday it has earned verified ammonia carbon intensity pre-certification status from The Fertilizer Institute, while still waiting for EPA approval to commence construction.
"With respect to our low carbon project at our El Dorado facility, we expect production of low carbon ammonium nitrate solution to begin by the end of 2026," said Behrman.
"Our El Dorado facility is one of only four North American plants to be granted this status, which we expect to be integral to our ability to secure sales agreements for its low carbon ammonia and upgraded product output," he added.
Market
LSB said that domestic ammonia prices are currently strong, driven by historically high US corn plantings for the current Spring season, and strong corn prices that support nitrogen fertiliser prices.
"We have had a healthy ammonia application season this Spring and UAN prices are well above year-ago levels. On the industrial side of our business, our sales volumes have benefited from strong end market demand for nitric acid and ammonium nitrate," the CEO commented.
LSB said it produced more ammonia compared to Q1 2024, and saw stronger ammonia selling prices.
Average ammonia selling prices during the quarter were reported at $432/st, 7% higher y-o-y.
"However, during the quarter we experienced materially higher natural gas prices which offset the higher selling prices and the operating improvements we made. While natural gas prices remain volatile given global economic uncertainty, they have moderated recently and we expect to benefit from that in the second quarter," the executive said.
