Adam Samuelson: That’s really helpful. I’ll pass it on. Thank you.
Operator: Thank you. The next question comes from Steve Byrne with Bank of America. Please go ahead.
Steve Byrne: Yes. Thank you. I’d like to continue that discussion there, Bert. You had production issues this year. You had less imports into the U.S. China’s exports of urea first couple of months or almost zero. We were thinking that there was going to be some strength going into the application season, but yet over the last month, pricing has fallen. Just curious what you think of that? Has there been less application rates of nitrogen than maybe you expected? Or was there significant ammonia application in the fall that may have reduced some of the near-term demand? Or is this a shift towards curious of your view of where that price trajectory on Slide 8 goes?
Bert Frost: Yes, welcome to my confusing world because that is exactly that you’ve listed the dynamics that we deal with every day that really were confusing. And then just pointing to the CF system of what Tony and Chris articulated with the difficulties with the weather and the production and the maintenance issues that created on the sales side or at least the commercial side, different product allocation and movements. And I give a lot of credit to our logistics team for moving that product around, but yes, the — when you look at the overall market, and I would have expected what you thought coming in a strengthening market or at least a firm market, but a lot of work has gone into detail this. And you’ve really had some pullback in demand in some areas.
I would say the EU when you look at Italy, Germany, Belgium, France on this year basis and on a fertilizer both a fall in demand along with Mexico, Philippines and then there’s India tender that took place where they had a tender, had 3 million tons put into the tender announced 750,000 tons of purchases with LOIs issued and then canceled that would not cancel, but cut it to 350,000 tons the traders and producers that had positions allocated towards that then had to move that into the market and got aggressive. And that, coupled with some additional production coming on in different places, but also India, Russia, Iran, and Nigeria coming back on production because several places were limited on gas. Probably overwhelmed a little bit the second quarter market.
And so what we would have thought was tight inventory is probably looser inventory and the U.S. won’t resolve that long, but lower prices tend to incent additional demand. So, as we work through Q2, I think we’ll still be in the state of where we are today with pricing probably a line plus or minus where we are today. and work towards the back half of the year.
Steve Byrne: Okay, thank you for that. And just a question on the green ammonia plant that you’re commissioning. Just curious if you’ve signed any contracts for that product and any of your partners in Japan or South Korea interested in bringing green ammonia into their facilities? Or do they really prefer the blue?
Tony Will: Well, the volume is not really sufficient to be able to meet the application for co-firing. We’re only going to be able to make about 20,000 tons a year. And even the smallest of the power stations is going to require somewhere in the neighborhood of 350,000. And because that is a part of a broader program with some incentives provided by the government, they are going to be, I think, focused on the most economically available decarbonized product. And so that’s going to be a blue product as opposed to green. But we are in conversations with a number of companies, particularly some companies in Europe that are focused on the extremely low carbon attributes of the green product. And we need to begin making it and very likely building some level of inventory for probably half a year before we’ve got sufficient volume to be able to ship.
So, more to come on that, Steve, but we’re excited about being able to both start that plant up as well as what the future holds for us.
Bert Frost: And we’re looking at two options. Like Tony said, as we build inventory, that could be for a vessel to a customer that wants only zero carbon product. or it could go up to one of our terminals, which our terminals are about that size, where we can isolate an area with zero carbon ammonia, again, back to the corn value chain. So, working on several different fronts at this time.
Steve Byrne: Very good. Thank you.
Operator: Thank you. The next question comes from Josh Spector with UBS. Please go ahead.
Josh Spector: Yes, hi. Good morning. So, I wanted to ask on all the projects you guys are evaluating. So, particularly, I guess, with JERA, converting to a JDA, how many separate plants are you now considering at this point? And I guess, as you look at all these separate agreements, could that combine together to be more offtakes from a smaller number of plants? And would CF be interested in a very small stake and maybe more of an operator role? Or do you see yourself as requiring majority control over the facilities you built?
Tony Will: Yes, Josh. While we’re evaluating a couple of different projects, principally, what we’re looking at is different technology pathways to get us to a very low carbon intensity solution. And realistically, at least at this time, we’re focused on one plant as opposed to multiple plants and doing the evaluation, as I said, should that be just a straight SMR, should it be an SMR with flue gas capture? Should it be an ATR, Kind of what’s the right technology to deliver on both an OpEx and CapEx basis the most competitive returns for us and our partners. And on the second question about the role that we would play. I think we’re — we are open to a variety of different structures, some of which would have us with a majority control and other structures might have us on equal footing or even, as you say, more of an operator of the asset, but with a smaller equity participation.
So, we’re pretty open to different ways of structuring the agreements. And we’re in those discussions at the same time as doing the technology evaluation, but we’re really only looking at building one plant initially and seeing how the market develops, then we’ll make some decisions as that continues moving forward.
Josh Spector: That’s helpful. I guess just to clarify on my part. I guess I’m thinking about the Mitsui JV announced earlier now JERA, JDA are those just different tranches of the same plant, those aren’t two separate plants you’re looking at then?
Tony Will: Initially, they were different based on the type of technology but certainly, it’s our hope that we can find a way to have all of our partners participate in the same project, and that would be something that we can combine together and aggregate demand so that we’re — have a home for more rather than fewer of the tons coming off of that project.
