Robert McGuire's questions to CVR Partners LP (UAN) leadership • Q1 2025
Question
Robert McGuire asked for details on several topics, including the reason for lower Q2 2025 utilization guidance, the status and potential production increase from growth projects, and a cost estimate for the Coffeyville natural gas feedstock project. He also inquired about a specific cash reserve for future needs, the outlook for UAN pricing and summer fill discounting, the pricing divergence between ammonia and urea, and the potential market impact of China reducing its U.S. corn purchases.
Answer
CEO Mark Pytosh explained that the Q2 utilization step-down is due to planned downtime at the East Dubuque facility to install a new control system, a key reliability project. He stated that growth projects are aimed at reducing downtime and expanding nameplate capacity over the next 2-3 years but did not provide specific production percentages. For the Coffeyville project, he estimated a cost in the 'low double-digit millions' and confirmed its technical feasibility. Pytosh also affirmed that Q2 UAN pricing would be stronger, reflecting recent market increases, and that low system-wide inventories bode well for the summer fill season. He clarified that the widely cited Tampa ammonia price is not representative of their Midwest market, where prices are more aligned with urea and UAN. Regarding trade, he noted that Mexico is a more significant corn buyer than China and that global grain markets would likely readjust to shifting trade flows. CFO Dane Neumann added that the cash reserve in question was set aside to ensure funds are available for heavier CapEx later in the year.