NEW YORK -- Shares of chemical and fertilizer producers fell Monday after an analyst suggested that the recent spike in natural gas prices could affect fourth-quarter earnings results.
Natural gas prices are up roughly 21-percent jump since Aug. 31, according to data provider FactSet.
The price for the fuel has risen because of forecasts calling for colder-than-normal weather in the Midwest and Northeast. There also have been a larger than usual number of nuclear plant outages, which has increased demand.
In addition, there was a major explosion at a Mexican gas processing plant. Citi Research analyst P.J. Juvekar said that could lead to more U.S. natural gas being exported to Mexico.
Natural gas futures fell 2 cents to $3.38 per 1,000 cubic feet in morning trading Monday. That's up about 77 percent from April 19, when the price hit the lowest level in more than a decade at $1.907 per 1,000 cubic feet.
Natural gas is used as a feedstock for ammonia production, and typically makes up about 60 percent to 80 percent of cash costs, Juvekar told clients in a research note. That could affect North American producers like CF Industries Holdings Inc. and Agrium Inc.
"If high gas costs are sustained, there could be some modest margin pressure starting in 4Q (fourth quarter), but this does not alter our positive view on nitrogen ahead of...corn planting season in the U.S. in 2013," he wrote.
The Dow Chemical Co. and LyondellBasell Industries NV use natural gas as a fuel to generate power for chlor-alkali or methanol.
In late-morning trading, shares of CF Industries fell $2.41 to $219.51.
Agrium shares dipped 67 cents to $103.61.
Dow Chemical gave up 21 cents to $28.99, and LyondellBasell lost 32 cents to $52.36.