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CF Industries (CF) to Showcase the Use of Low-Carbon Fertilizer

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CF Industries Holdings, Inc. (CF - Free Report) and POET LLC, the world's largest producer of biofuel and a global leader in sustainable bioproducts, announced a partnership to test the use of low-carbon ammonia fertilizer to reduce the carbon intensity of corn production and ethanol. Demand for lower-carbon ethanol is likely to rise considerably to fulfill low-carbon fuel standards.

Although ammonia is a popular direct-application fertilizer for corn production in the United States, the traditional ammonia production process emits a lot of pollutants. As a result, ammonia production contributes significantly to the carbon intensity of corn production, and therefore, ethanol production. Producing ethanol with corn grown utilizing low-carbon ammonia can lower the carbon intensity of ethanol by up to 10%. The firms intend to apply low-carbon ammonia for the first time in the fall of 2024, with further applications in the spring of 2025 to produce the first crop, which will be harvested in the fall of 2025.

Fertilizers with lower carbon intensity offer a quantitative and certifiable way to decarbonize bioethanol inputs. CF Industries looks forward to demonstrating these benefits both for ethanol and corn production.

CF Industries recently completed the installation of a 20MW electrolyzer at its Donaldsonville complex. The electrolyzer is about to be operational, and the company plans to buy renewable energy credits to pair with the start-up to allow the production of green ammonia. CF Industries will have more low-carbon ammonia at the Donaldsonville complex starting in 2025 when a large-scale carbon capture and sequestration operation at the site will commence.

Shares of CF Industries have lost 4.1% over the past year compared with its industry’s 23.9% decline.

Zacks Investment Research
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CF Industries, on its first-quarter call, said that the global nitrogen market entered a long supply position early in the second quarter of 2024 as a result of lower-than-expected demand from Europe and India, as well as a buying halt in North America as bad weather delayed spring fieldwork. Management anticipates that worldwide demand will soon retrieve due to recovering industrial demand and farmer economics while global nitrogen trade flows will adjust to account for the extra supply of nitrogen that is available for international trade.

In the long run, management anticipates the global supply-demand balance for nitrogen to tighten as the growth in global nitrogen capacity over the next four years is not expected to keep up with the estimated 1.5% annual growth in global nitrogen demand for traditional applications and  clean energy applications. The ongoing issues with natural gas availability and cost are predicted to limit global production.

Zacks Rank & Key Picks

CF Industries currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Kronos Worldwide, Inc. (KRO - Free Report) . 

Carpenter Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.1%. The company's shares have soared 118.6% in the past year. 

The Zacks Consensus Estimate for Eldorado’s current-year earnings is pegged at $1.09 per share, indicating a year-over-year rise of 91.2%. The consensus estimate for EGO's current-year earnings has gone up in the past 30 days. EGO, which currently sports a Zacks Rank of 1, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.7%. The company's shares have gained roughly 53.1% in the past year.

Kronos Worldwide currently sports a Zacks Rank of 1. KRO has a projected earnings growth rate of 297.7% for the current year. The company’s shares have gained around 44.1% in the past year.

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