Noranda Income Fund Unit NNDIF

I love the smell of sulfuric acid in the morning...

[galvanized]

Sulfuric Acid is at a current level of 304.35, up from 263.32 last month and up from 187.00 one year ago. This is a change of 15.58% from last month and 62.75% from one year ago.
https://ycharts.com/indicators/us_producer_price_index_chemicals_and_allied_products_sulfuric_acid

[schocor]

Thanks for that info. I undersatnd that the reason for the price spike is due to high demand for fertalizers.  Anybody know how much suphuric acid Noranda produces a year? They treat roughly 500,000 tonnes of concentrate a year and I wonder roughly how much sulphuric acid they produce. Thanks  

[Bigbird9999]

They produce about 400 ktpa acid.  Netback for Q1-22 was $80 vs $50 for FY-21 If acid price holds it will add about $15 million to net revenues.  see MDA of financial statement. BB

[galvanized]

The netback for Q1-22 was $88/usd  per the the last statement. but, when I try to calculate the numbers myself, their discussion seems to be confused between usd and cad. Well anyway, looks like the sufuric acid netback is still moving higher.  the recent closure of the flin flon smelter can only help zinc premiums and sulfuric acid netbacks.

[ljp0101]

It's a hazerdous bulk commodity with high transport costs so I wouldn't get too excited about the price without understanding what's happening on the cost side as it could easily move similarly. Most significant variable is how terrible the physical premium "hedge" with Glencore is.

[ZincDink]

Stop it. Next your going to accuse GC of selling the mill genuine GC pens, pencils and paper at inflated GC prices. We all know that GC screws both suppliers and the mill over TC. Good little model. We suspect they trade off the price premium as well. Sulphuric acid is usual sold FOB plant. I am sure the costs have gone up on site for handling the acid, but no way close to the selling price.

[Scotch12]

When you say FOB (Free on Board) what is your precise understanding of the transaction.   Do you mean once they sell the sulphuric acid, they are not liable for any damage during transportation to the buyer?    I assume they are responsible for the transportation costs?

[ZincDink]

Many companies will look after shipping. It all depends on what is contracted. Usually, the carrier and the buyer take the responsibility for the load. So for clarity, it depends on terms. Normally, you would say something like FOB Salaberry-de-Valleyfield,to indicate buyer, come pick up your juice on your own. Noranda would charge the going rate, say $ 300 per ton. Now if fertilizer company in

[ljp0101]

Historic realized prices for sulphuric acid never matched quoted market prices so I'd assume they're losing transport cost in the netback to a FOB price. Whether the transport cost is paid by CEZ or reflected in a lower realized price doesn't change the economics.

[schocor]

Where did you get the historical prices for sulphuric acid for this company? As far as I have seen they just report it as a byproduct credit (along with copper etc).  And you are able to correlate the Noranda suphuiric acid price with the market? Another data set I struggle to get a good read on as it doesnt trade like copper, zinc, alluninium etc.  I like financial modelling as much

[ljp0101]

You'll get a more productive response from me without the baseless accusations. I suggest you start by reading NIF's regulatory filings and having a gander around their website and you just might find this data you don't believe exists. Interesting to learn Glencore owns the railcars that transport the acid, though I shouldn't be surprised. I wonder how the economics of rising

[rjb1954]

NorFalco, a division of Glencore looks after marketing and shipping of sulfuric acid. NorFalco leases a large fleet of railcars designed specifically for handling acid. Because it is such a hazardous material, they like to keep tight control over material handling. Ultimately, commercial terms come back to Glencore.