As a result of this pricing environment and similar to industry trends, Rentech Nitrogen has updated its guidance for cash available for distribution to a range of $2.05 to $2.20 per common unit for the twelve months ending December 31, 2013. The 2013 guidance includes the impact of two previously announced scheduled outages at its facilities during 2013, and the impact of lost revenue in 2013 due to the unscheduled outage at the East Dubuque Facility in December 2012. The Partnership has included an updated calculation of forecasted cash available for distribution below in this press release.
Rentech Nitrogen has locked-in most of the East Dubuque Facility’s forecasted deliveries for the year. The facility has locked-in or delivered 100% of forecasted UAN deliveries for 2013 at an average price of $293 per ton. The facility has locked-in or delivered 79% of forecasted ammonia deliveries for 2013 at an average price of $655 per ton. The midpoint of the new guidance assumes that the ammonia deliveries this year that are yet to be priced will average near $550 per ton, which is slightly above the current spot posted mid-Corn Belt price for ammonia of $545 per ton and below posted fall prices of $575 per ton. The facility has locked-in or consumed 83% of forecasted natural gas for 2013 in cost of sales at an average price of $4.17 per MMBtu, including transportation costs. The midpoint of the guidance assumes costs of $4.21 for natural gas not yet locked-in, including an average of $0.40 per MMBtu of transportation costs, which is currently above the forward NYMEX strip for this year when transportation costs are added.
For the Pasadena Facility, the midpoint of Rentech Nitrogen’s guidance assumes that weighted average domestic and international ammonium sulfate prices for remaining tons will average $242 per ton, which is consistent with prices at which current business has been booked. Ammonia purchase costs for the Pasadena Facility are derived from a formula that includes the trailing one-month Tampa index. The midpoint of the guidance assumes that Tampa-based ammonia prices will average $470 per metric ton, which is consistent with the current Tampa ammonia price. The midpoint of the guidance also assumes that sulfur prices, which have declined rapidly and significantly in recent weeks due to abundant offshore production, are expected to stay near current levels of $95 per long ton. Based on the product margins implied by these price levels for ammonium sulfate and its raw materials, the Pasadena Facility would have an annualized EBITDA run-rate of greater than $20 million, although the carryover inventory produced with higher-cost raw materials earlier this year will cause 2013 EBITDA to be well below that level.
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