Ladies and gentlemen, thank you for standing by, and welcome to today's OCIN B Second Quarter 2020 Results Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and 1 on your telephone. Please be advised that today's conference is being recorded.
And I would like to hand the conference now to your first speaker today, Mister Hans Saied. Please go ahead, sir.
Yes, thank you and good afternoon and good morning to our audience in the U. S. Thank you for joining the OCINV 2nd quarter first half twenty twenty conference call. With me today are Aetna Lohoshi, as of the 1st this month, our new Chief Executive Officer who is transitioning from his previous role as a Chief Operating Officer and Hassan Badrawi, our Chief Financial Officer. As you've seen, we published our results this morning.
And on this call, we will review OCI's key operational events and financial highlights for the quarter and then followed by a discussion of our outlook. Usual, at the end of the call, we will host a question and answer session. Just as a reminder, statements made on today's call contain forward looking information, These statements are based on certain assumptions and involve certain risks and uncertainties. And therefore, I'd like to refer you to our disclaimers about forward looking statements. Now let me hand over to,
Thank you, Hans, and thank you all for joining us today. Let me start by introducing the recent management changes. As you may have seen, lots of service has become executive chairman, and in that role, you will be fully focused on the strategic direction of the company. You'll be working closely with the rest of the executive team, namely Hassan Badrawi, our chief financial officer, and in charge of M and A, you'll all know well. And Maldivries, our Chief Legal And Compliance Officer as well as myself.
We also, of course, have the benefit of the next layer of management that is very strong and dynamic across commercial operational sustainability, M and A, and other functions who position us well to continue to drive value for OCI stakeholders. We believe this is an opportune moment for the management change. This year marks an important inflection point for the company as our portfolio is maturing, and we can now fully focus on our operational and commercial excellence to cement our position in the global industry further. Of course, portfolio optimization and M and A continue to be in our DNA where we look for value creation and consolidation opportunities during periods of volatility in our markets with the goal of realizing the best potential for our global are based. We continue to strengthen our leadership across the group with, for example, the recent appointment of Bard Foods for the newly created position of VP of Manufacturing to run global production platform.
Bart will join in September and it was previously at Shell for 27 years overseeing 10 manufacturing locations across EMEA and Asia, spanning 6,000,000 tons of chemicals production, 1,500,000 barrels a day of refining capacity and with responsibility of over 17,000 staff and contractors. Turning to the quarter, safety is our top priority And to that to that end, we are pleased that our safety performance continued to be best in class. Our recordable incident rate was an excellent 0.11 for Q2 the 12 month rolling, average is 0.23 incidents for 200,009 hours, a big improvement from 2019. This is one of the lowest in our global industry. But even though these are excellent results, when it comes to safety, any incident is 1 too many.
We therefore continue to prioritize process safety and aim to reduce occupational safety incidents ultimately to 0 for all our assets across the globe. With COVID 19 prevalent from, for some, for some time to come, we remain even more alert than ever. We've been fortunate to have had relatively few COVID 19 cases amongst our global staff, and all those afflicted have thankfully recovered other than a few existing cases, recently contracted the disease and where we can we are continuing to monitor. Our goal is to keep all our employees, their families, as well as those in the surrounding community safe. On our operations, largely thanks to the vigilance of our employees across our platform.
And I'd like to thank all of our OCIT members for their dedication and resilience as well as staying as well as staying safe. As you have seen, Hurricane as you've seen over the last few days, Hurricane Laura landed in the US Gulf Coast this morning. Our priority has been to ensure the safety of our employees and their safe evacuation from the impacted region, as Jefferson County, where both OCIB and that gasoline are located in order to mandatory evacuation. Consistent with the industry in the region and to ensure the safety of our staff and and and community, both plants were shut down yesterday ahead of the storms. We've taken many precautions across both sides as we shut them down to safeguard against the hurricane.
In the last couple of hours, because this happening live, but we've gotten an update, from, the team in Beaumont for both OCI Beaumont as well as Natgasoline. We were lucky in that, the storm did move a bit to to the east, from our site into Louisiana, with a large focus around Lake Charles, And the wind speed did not reach the levels anticipated by the, category 4 hurricane. We're still assessing how the site looks but preliminary, very preliminary information that has come to us has suggested that everything remains intact course, we're going to do a thorough investigation, over the next day, with the aim of restarting facilities. We're starting right now in the next few hours by ending, drones in to look at, the different parts of the club. Next else go on to our, operational results.
Despite the challenging COVID 19 circumstances and selling prices reaching crop cycles during the quarter, we delivered resilient results and deleveraged our balance sheet by $222,000,000 so far this year. As we sold record owned production volumes during the second quarter first half of twenty twenty. Our volumes increased 6% during the quarter from an already strong q 2 in 2019 and increased 26% in the first, half of twenty twenty year over year. Our nitrogen portfolio was the main driver of the growth. We achieved record CAN volumes in Europe, in Q2, despite the pandemic and drought conditions on the farming side taking the total increase in H1 to a healthy 16% compared to the same period last year.
UAN volumes in the US were also higher reflecting, on the one hand, IFCO stabilization and debottlenecking and production following last year's turnaround, and debottlenecking and also our strengthening competitive position in the Midwest via our end and joint venture. Our production, commercial and supply teams did an excellent job establishing these volumes under such circumstances. We also had the contribution from Fortiva and Abu Dhabi, which has been consolidated since Q4 of 2019. On a like for like basis, our first half nitrogen volumes increased by 10% during the first half. This was partially, partially offset by lower ammonia volumes at Fertile, largely at at sort of fare driven by electrical power issues in q 2 that have since been resolved with new high end high voltage industrial lines, attaching to the site there for the place in July.
Our methanol production was not at run rate yet during the quarter, and total owned produced metimal volumes decreased 11%. However, we've made substantial progress. Following the extensive turnarounds that we finalized in February, Beaumont, ethanol plant was running at high levels on average in Q2, resulting in a good improvement in EBITDA for the US methanol segment from the 1st and second quarter despite a big drop in selling prices. We also finalized the turnaround at our methanol facility in the Netherlands in June, which was the reason for a relatively low EBITDA contribution from BioMCN. But the two plants and BioMCN have been achieving average utilization rates in the 90 to 95% range since restarting, despite the heat wave in the Netherlands and over over 95% in the past couple of weeks.
In addition, from a volume perspective, Natgasoline had some equipment issues that occurred, during April, which we which we addressed successfully. But since the restart in early May, the plan has been able to operate reliably until our safety led shutdown yesterday. And, obviously, as I just mentioned, we're in the process of looking to restart. With that, I'd like to turn it over to Hassan to discuss the financial results.
Thank you, Ahmad. I'll cover some of the some more details on our results starting with the, income statement. As Ahmed described during the second quarter, we achieved resilient results and healthy volume increases. Despite these record, sales volumes, however, our revenue decreased by 8% to $875,000,000 in the 2nd quarter as compared to the same quarter last year, which was due to selling prices reaching trough levels across all our products. Our adjusted EBITDA was 20% lower at $220,000,000, in the second quarter as compared to the second quarter last year, again, as a result of the lower prices, but also a lower result at, Nagas Linas mentioned.
Reported EBITDA, excluding the effect from that gasoline was at the same level in Q2 2020 as in Q2 2019, as we include our share of negative E and the adjusted numbers. We estimate this negative impact on our EBITDA from prices to have been circa $120,000,000 if you compare Q2 2019 with Q2 2020. And this is despite the benefits of approximately $50,000,000, from lower gas costs during the quarter this year as compared to last year. And when we look on a half year basis, which captures a full season for fertilizers, both are adjusted and reported EBITDAR up by 2% 16%, respectively. In terms of the segment in terms of segment contribution, the EBITDA for the nitrogen business was overall lower during the quarter.
This was despite healthy demand. Our agricultural markets and despite COVID circumstances, which more than offset weaker volumes in the industrial markets. It should be noted that our European business did well and reported a higher EBITDA as we captured the full effect of the lower gas prices during the quarter. We also benefited from healthy demand for our products in Europe. And as a result, reduced inventories meaningfully during the second quarter, which obviously had a noticeable effect on our working capital.
The same holds for our U. S. Business, where we recorded higher volumes compared to an already very strong Q2 2019, However, benefits from the gas prices were not enough to offset the weaker prices for UAN, in particular. As vertical, we had a boost from the inclusion of teed in our consolidated results, but overall results were also significantly affected by pricing environments. Ammonia volumes were lower, but that did not have a meaningful impact given the, consistently low ammonia prices so far.
The methanol's group adjusted EBITDA was lower in Q2 2020 due to a sharp drop in methanol prices, as Ahmed mentioned earlier, as well as lower production volumes in zadine and the turnaround activities in the Netherlands. On a reported basis, however, we saw an improvement in Q2 2020 compared to both the second quarter of 2019 1st quarter in 2020, with Beaumont and the Netherlands both reporting better results. Worth noting that our 50 percent share of a further insurance payment of $10,000,000 as compensation for business interruption losses and damages incurred in the past few months is also included in netgas and EBITDA number for the 2nd quarter. Turning to the balance sheet and cash flow, Free cash flow before growth CapEx during the quarter was $191,000,000. This reflects our operational performance for the quarter as well as the reversal of working capital from the high seasonal levels seen in the first quarter culminating in healthy free cash flow conversion.
Total cash capital expenditures reached $68,000,000, again, during the second quarter of 2020, of which maintenance CapEx was approximately $52,000,000. We spent the balance of $60,000,000 on various growth CapEx initiatives. And the first half CapEx amounted to a total of $164,000,000, but and this is more than half of what we expect for the full year as a turnaround schedule for the and half is lower. Also note that our interest payments are semiannual and always higher in the second and 4th quarters based on our current debt structure as a result of our free cash flow generated and outstanding extraordinary circumstances resulting from the pandemic, we were able to further deleverage our balance sheets during the quarter. Net debt as you may have seen decreased by a $128,000,000 from a figure of $3,970,000,000 at 31st March, 2020, to the reported $3,840,000,000 as at 30th June 2020.
Resulting implying a total deleveraging of $222,000,000 year to date. I'd I'd just want to also like to add that we, and reiterate that our priority remains to optimize free cash flow generation, and we remain committed to our financial policy to deleverage our balance sheets. Although, obviously, that is, logically impacted by the, in terms of timing and how fast we can achieve this through movement to selling prices. We have also mentioned in previous calls that we continue to evaluate our capital structure to identify further cost effective refinancing opportunities with a view to simplify structures, further simplify our structures and target savings. We're very pleased with the $385,000,000 refinancing package at Firdi Globe, for which final terms have been negotiated with lenders This debut financing refers to global resets.
The capital structure insurance relies on some of the OpCo debts within Ferty Globe at the Ferty Globe holding level. Facility is meaningfully oversubscribed and attracted strong interest from an array of leading region international banks. The newly negotiated facility has an rate, which is 175 bps lower than the existing debt or, translating to approximately $9,000,000 in annual run rate savings on the interest expense line. We believe the success of this refinancing reflects the leading competitive position of Furgi Globe as a, and its healthy balance sheets standing from his position as a global, exporter. With that, I'll hand I'd like to hand over back to Aframa for our look at some concluding remarks before we move on to Q And A.
Ahmed? Yes. Thank you. Thank you, Hassan. So as Hassan said, I'd like to conclude with an outlook for the for our business, which despite all the challenges around us is looking much more positive than only a few months ago.
I also believe that OCI's asset based commercial capabilities and financial standing are well positioned to maintain any any near term volatility, if that were to happen. If I start with the nitrogen markets, we believe that the global nitrogen markets are looking positive for the rest of the year and 2021. The main driver is healthy demand in several importing countries as farm economics are healthy. We are seeing robust demand from India and Brazil, in particular, but also other countries in South Asia, Latin America, East Africa, as well as Australia. This benefits our export platform for TIGLOB in particular we benefit from our strategically placed distribution network and healthy netbacks.
Outlook for our core US Midwest market has also strength of recently and market sentiment has improved. We are anticipating a favorable fall application in the U. S. For the ammonia markets given the rapid rapid pace of planting the spring and the maturity of the current crops, allowing for a potential extended application window after harvesting and before the winter. Corn prices have moved up recently and futures suggest further upside, which is positive for nitrogen market and pricing versus level seen earlier this summer.
On the one hand, there's been a strong pull from China, where a combination of drought the recovery in demand has resulted in significant increases in corn purchases. And on other hand, a recent the ratio storm in the Midwest has like part of the corn crop, in our core area, Iowa, Indiana areas. It is too early to state what the financial impact will be or the final impact will be, and it's being assessed, but it's likely to result in less harvesting, less supply, and more reliance on government and insurance programs and or insurance programs to support the farmers. In Europe, our order book is looking healthy, and we expect rate prices to be supported by healthy demand and quite some room to catch up with the recent increases in earlier prices. Industrial markets have been weak in q2 2020 as a result of the slowdown in economic activity, which has resulted in ammonia prices, in particular, lagging the reach and rebound in urea prices.
However, we've started to see a recovery in demand in our industrial end markets, which should benefit ammonia and in some of our other industrial products is now online. Furthermore, the fuel ethanol market in the US is also recovering from trough conditions, which is, obviously favorable for end markets associated with agricultural as well consportation. Lastly, and and and quite important, the demand for diesel exhaust fluid or DEF in the United States has increased significantly recently. With the rebound of over the road traffic. We saw a very strong recovery for DVF out of bio fertilizer with record volumes in July and sales in August at a pace that suggested it would even be better.
We've already been able to increase prices, which bodes well for the 2021 season. Contracting is another. Moving to the methanol market. The outlook for our methanol end markets is also strengthened. There there can be from volatility going forward depending on how the pandemic develops, but spot methanol prices have rebounded already more than 50% since reaching a bottom below $2 a $140 per, per ton spot price in June.
In our main US and European markets, we've seen month to month improvements in demand from the low the lows reached in the spring. And going forward, we see support from several factors. First, Methanol's olefin economics versus naphtha Crackers are healthy resulting in high and rising utilization of ATO plants in China, which have been a key driver of a rebound in methanol demand. The outlook for downstream demand has also with fuel consumption picking up, following the easing of lockdowns across the globe and a gradual return of global and industrial construction activities. Driving increased demand for derivatives such as fromaldehyde, Mesquiteic acid.
The idling of high cost, methanol production capacity also help heightens the supply and demand balances in 2020 and have supported price recovery. So all in all, we feel good about the improving outlook for both the nitrogen and methanol businesses. And we believe that given our low cost position that OCI is well positioned to benefit, disproportionately these would be peers in the environment of improved selling prices. In the meantime, we focus on operational and commercial excellence, volume growth, synergies at Firdsey Grove, as well as the optimization of our capital structure. All with the goal of generating free cash flow and lowering our net debt.
I'd like to just finish with some remarks about the wider environmental impact incentives about wider environmental impact sustainability as a top priority for the company and our strategy. As a global leader in our industries and our communities, we're committed to investing in product help feed the world and provide greener fuel solutions, including, for example, bio methanol based on waste gas. Sonic such as ammonia and methanol is significant potential and spends benefit from increased sustainability focus as clean fuels, as stores of energy, clean burning fuels and the storage of energy with storage and transportation infrastructure in place globally already. We are dedicating significant amount of time and manpower to identify, evaluate, and develop sustainability initiatives that reduce our environmental impact grow our green portfolio and innovate more effective ways of reaching the world's carbon neutral goals. Importantly, we are also working on improving our reporting and transparency and our expanding performance management of non financial parameters.
Furthermore, you will have seen today that we also announced nomination of HEICO Dunderferfeld as a non executive director and who and who will have a specific focus on sustainability, diversity, and inclusion within our and inclusion within our board, and then our board is directed. In addition to our extensive insights and background in the chemicals and industrial space. With that, we'll open the line for questions. Operator.
I'm so sorry I was in mute. Okay, ladies and gentlemen, we will not begin the question and answer session. And as a reminder, if you wish to ask a And would you like to take our first question now, sir?
Yes, please.
Okay. Our first question comes from the line of Princeton Pates. Your line is now open.
Yes. Thank you. Good afternoon, Ahmed, Hassan, and Hans. I have a couple of questions. I'll ask them 1 by 1 if I may.
Man, thanks already, for providing some use on the impact of Hurricane Nora, the top of all your employees and their families are safe as well. First question, can you share with us any update on the planned methanol disposal?
Sure. So with regards to the final disposal, we don't have an update from what we what we shared in the last quarterly conference call other than that we have postponed it till, the first half of next year. So we remain to be were made to to come back to the market, with an update, in the beginning of the year next year.
Okay. Thanks.
With regards to this, thanks thanks for your attention on the hurricane Laura. So far, from an employee perspective, everybody's accounted for, there have been some there's been people without power, but, we're still collecting information. So, we're we're thankful and and hopeful that, not we'll not get any negative news.
Okay, thanks. Then my second question, please. Can you please run us through the scheduled maintenance shutdowns in all of your major locations for this quarter and perhaps all 4 for H2 overall. Thank you.
For this quarter being q 2?
Q 3 and and q and q4.
Yes. So, as Hassan mentioned, I mean, with regards to, the amount of CapEx that we had in the first half of this year, this should be a lower intensity second half year. We did mention in the press release, an OCI nitrogen turnaround, as well as an inspection soft response software had to do over the course of the second half of this year for, it's really for 1 ammonia line and 1 of our, nitric acid flash fertilizer lines. Otherwise, we don't provide guidance with respect to, specific shutdowns, but I can't say that should be, materially lighter than past, than the first half of the year as well as last year.
Okay, great. Thanks. And a final question, please. How do you see a free cash flow evolving in, the second half of this year? Thanks.
Sure. Hassan, would you like to take
Yeah, sure. I mean, as you know, we've we focus our guidance on on, CapEx, and our and our for interest and we, it's we do we defer to you on your modeling views on commodity prices What I can tell you is that, on an annual basis, and I've I think I've used this sensitivity before. I apologize to repeat it, but I think it's a good it's a good indication. On an annual basis, if you apply a $25 per ton, average increase in our portfolio of commodities. That alone results on an annual on an annual $330,000,000 EBITDA improvement.
This will give you the the sense of the the sheer size of impact of pricing movements. We are obviously focused on achieving our operational and volume targets. This year has been a meaningful step up, as you saw already in the first half, And given the lower intensity CapEx schedules, we should continue to see good volumes in the second half. At least we this is what we are aspiring for. And it becomes really about how prices continue to move as we as we come out from these truck levels.
As a business, we have demonstrated residiously. We'd like to think that even in such, extreme circumstances where we saw all prices hit trough levels, we were still able to, generate, free cash flow, deleverage and continue on our path.
Okay. Great. Thanks, Hassan. Just to just to clarify 25 USD you said, leads to a 330,000,000 equity a sensitivity. Right?
Yep.
Great. Thank you very much, gentlemen.
Thank you.
Okay. We will now take our next question. Okay. Our next question comes from the line of Lisa Denopy. Your line is now open.
Hi. Good afternoon. Ahmed Hassan and Hans 3 small questions. I mean, first, on on the nitrogen outlook, supervisor's detail, you've brought this on the demand side and you touched on China in exports for the remainder of the year. But could you tell us a little bit more about how do you think about how the supply side will develop over the sort of next next 12 to 18 months, specifically with new supplies coming free income Iran, possibly India and as well as in brownfield in Russia.
That's the first question. Thank you.
Sure. So with regards to the the supply side, talking to something we focus on, and From what we see for the next 6 to 12 months months, there has been delays not only on the arrear production side, but also on the new methanol side for additional capacity coming online. You know, a lot of things were slated to come online in the middle of this year, then got deferred to later this year. Into into next year. So, with with the continued increases in demand that we've seen, particularly on the arrears side, if that's the quantity you're asking about, we think that that it should be able to be absorbed by the additional, the additional demand that we're going to continue to have out of the South Asian, Latin American, U.
S. And European markets. The Indian additional production, we understand, there's still are still on the high side of the cost curve. And to the extent, you have some increases in the LNG pricing environment, which we started to see, they'll continue to be, on the high end. It may not run at full rate, as, as well as on the Chinese side, some of the natural gas based and coal based production, continues to be, marginal when you think about, you know, the price to be solved, for example, in Q2 and Q3.
Sure. Thank you very much. And second question is on the methanol side. I know I'm aware that a meaningful amount of your methanol are typically contracted. But I wonder if you could provide some color on what you're seeing on the methanol demand side, specifically in the Europe and U.
S. I'm particularly looking for what you're seeing in July August versus the second quarter. Is demand picking up on the industrial side?
Yes, absolutely. So I think, basically, with Christian's question and the previous question about free cash flow outlook, from the first half and moving into the second half of this year. One of the things that was, was quite important to keep in mind is that the results that that we're presenting today reflect a pretty poor performance from our methanol production side overall. You know, we had a very large turnarounds in in Europe that had a lot of the production out for the quarter as well as, sizable downtime in that gasoline in April. So given that we're on an improved volume outlook from a production perspective, we know we do we do feel like we can achieve a lot more in the best part of our business.
With regards to the demand that we've been monitoring since March when COVID started to hit. We did see some reductions, in nominations in May June from some of our customers in U. S. And, Europe, but we've started, as you said, as you as you mentioned, see that come back. So, say, versus our contracted amounts and nominations, we don't see, any shortfalls at this point for the, August September time frame.
So we've seen a good recovery Some parts of the industrial market, are still kind of ramping back up, but from our customer base, speaking for OCI South, we feel pretty good about the demand.
Thank you very much. And then just a household keeping question, if you like, I mean, just you provide any sort of guidance on CapEx in the second half and how should we think about maintenance, abnormal maintenance CapEx? And maybe any growth CapEx we should account for. Thank you.
Sure. Hassan, maybe you start with this 1 and I'll I'll jump in.
Yeah. I mean, as we as we mentioned, I think in previous calls, our CapEx guidance, for this year was meaningfully lower than last year. There has been the 1st half certainly has a higher intensity. So the, the, a larger share of the year has been already expensed in the first half of twenty twenty. We expect that number to be lower for the second half.
There is some impact from the, inspections in Holland, which I can comment about a little bit, which may have slight impact on the CapEx number that we were expecting for the year, which was circa. I believe we had mentioned up to 2 60 $1,000,000 of CapEx might move a little bit. That's not my budget. And as a business overall, as we hit our sort of mature run rate and our and we come out of this, significant methanol a methanol, repair program that we had undergone and Natgasoline, which has successfully demonstrated some stability until the safety led shutdown. I think overall, we're starting to we're hoping to start, getting to a more sort of run rate phase with very limited growth except on very, interesting, bolt on high return growth projects.
And similarly, green initiatives that we're evaluating in due course, that have a more long term nature.
I'm not denying that. Yeah. That's exactly that's exactly right. And I think that what what Hassan's mentioning is what we had in our press release and what I mentioned earlier, which is OCI Nitrogen was scheduled for, a turnaround at the end of this year. And these inspection stops, and the opportunity to undertake some activities, during these inspection stocks here in Q3.
That resulted in some of the CapEx that would have been booked in 2021 getting booked in 2020. So that could lead to some of that nominal variance versus our guidance from a few months ago.
Very helpful. I thank you very much.
Okay. Our next question comes from the line of praful Sami from Goldman Sachs. Your line's now open.
Yes. Hi. This is the face holder husband from Goldman thanks for the opportunity for asking questions. Just a few questions on my end. Maybe starting off with if you can shed some light on the situation in Egypt and the recent done at the ammonia plant.
Do you see any potential for the cost structure changing? We've been hearing kind of the likelihood of maybe revising a or coming out with a new cost for natural gas there. That's something that some of the companies have been kind of highlighting. Is that something that, you think happen? And if so, how does it also impact the domestic sales of fertilizers in Egypt and the pricing, that you actually saw domestically And then secondly, maybe on on nitrogen fertilizers and when thinking about the pricing strength that you've kind of mentioned just now, we've seen the kind of winding down a bit.
If you can kind of share a bit of a view on trading flows recently and then what has caused that strength to fade out? And then thirdly is just on the synergies with ADNOC, if you can shed some insight on the numbers achieved so far this year, and whether you've identified further potential for next year. Thank you.
Sure. I'll take the first 2 and then Hassan, perhaps you can give an update on the synergies prepared to go So and good speaking to you today. So so with regard to the first question, on on the Egypt side, obviously, our gas price is at 4 in MMBtu, which is for the production of ammonia, it ends up at these trough ammonia levels we saw a few months ago resulting in, you know, pretty low, margins on the same only portion. We still make sizable margins, obviously, on the previous side. With regards to the gas price review, we understand that that's something that's being undertaken right now.
And reviewed by the government for a number of sectors, 1 of which is fertilizer to ensure miss with, you know, I can't shed light on, on on where that stands, but that's something that we understand to be under review. I'm gonna leave it at that. With regards to, what that means for domestic sales, we've seen a move towards liberalization of the domestic sales market for urea, which means that, the government's going to be you know, allowing more international pricing into the domestic markets rather than the lower domestic prices. So that should also bode well for, regional or actually Egyptian, fertilizer producers. So that's something we are monitoring and focusing on across our network obviously, otherwise, particularly does have, you know, further advantage gaps in, in the non Egyptian plants, right now.
The second question is a good deal of follow-up person.
No. I don't have a problem.
Second question. Okay. Yeah. Yeah. The sec the second question was with regards to trade flows and the run up that we've seen in on the, on the pricing side.
Yeah, so over the last several months, I mean, if you recall in June and, obviously, that's reflected in the Q2 results that we had May June. We had very low pricing in, in NOLA in the US, despite it being, the the spring season. And, I think a bit of producer panic, and consumer panic at the same time. Very low liquidity people did not want to buy until, they saw the demand right there and, you know, right then and there, even when you were on the on the custom payment season. And so you had prices go below 200s, for urea, that was just not sustainable.
It's below cash cost for a lot of production globally. Since then, with the turn downs of, of of supply that we saw on that marginal cost producers, the fact that the logistics prevail, logistics costs are something doesn't go away. You know, when prices are lower, and the sizable demand increases out of the India as well as Brazil. We've seen this big recovery where the Indians have continued to come back to the market and take social supply culminating with the tender, whose results we've seen this week, taking well over a 1,000,000 tons of urea. So that's helped suck up a lot of the supply in the system over the last several months.
And as the Indian season comes to close before coming back with Bravia later this year, in late October, November, you know, this is where Brazil starts to step in because it has 2 crops going in in this court, Q4 and Q1 of this year. And the European and American buyers who've been waiting as well. They've seen this rally. They've been waiting on the sidelines, and you seen that reflected in the pricing in the US and Europe. So we expect, and we're starting to see kind of some green shoot with the Europeans coming back to work, you know, close to August here and starting to look at the demand for later in the year and next year.
And on the U. S. Side, starting to look towards positioning products, we'll call it, you know, 2 to 3 months out from now, to start building, domestic supplies in the US because the US, as you know, still need to import something like 4 to 4 and a half 1,000,000 tons of urea, before the spring next year. So there's some catch up that still needs to be done, where that low liquidity in the US and European markets should, should start to dissipate and start seeing more transaction. Hassan, do you want to discuss the synergies?
Sure. Yeah. On the on the synergies. That's obviously a a reflection of the integration plan that we've, that has been really quite successful, since the since the consolidation of Brazil into our business. We have not given any specific progress report on a quarterly basis, but we have stated, I believe, I believe in the past that we were targeting north of $60,000,000 of commercial and technical synergies based on the prevailing prices, selling prices at that time.
Note that since then, we had also added to that target $20,000,000 of technical cash savings, that don't necessarily appear in the EBITDA line. Because of the extremely successful technical integration work, as you know, we have almost 3 identical, technologically identical plans, which gives us a lot of possibilities. And we continue to work on what other value we can extract from this very interesting combination. You already saw on the commercial side the name Fernti Globe appear increasingly so as a brand, and we have been able to participate intensely in large tenders that we were never really present in before. We used to go through.
We had to participate in the through traders and through, middle, middle, middle entities. Now we have appeared inside with the ability to supply from multiple sources, and has been quite commercially beneficial. For us without getting into too much detail. And lastly, I mean, with the, another feature of the synergies, of course, has been the recently has successfully negotiated a refinancing of our debt in Vertiglobe part of our debt in particular, but we continue to hold obviously the Alger and in our debt in Algeria, at the sulphurate level. But the rebalance of the debt has been centralized at the, Abu Dhabi HoldCo entity.
And we have been able to achieve significant flexibility, good tenure, and most importantly, a meaningful reduction in our interest interest rates. I think This is directionally reflective of, the states, of our business, the stability is we're achieving. And Fernti Globe's, sort of thesis as a global exporter and the synergies we've been able to extract. And we hope we can continue to find similar optimization opportunities across our group, especially in very, in the backdrop, a backdrop of very strong capital markets on the debt side.
Thanks. Maybe just a quick follow-up on the last point. When looking at GCC or Egypt or even North Africa. Are you looking could you expand that cooperation to include other players maybe on the operation on the tribution side where you can kind of widen the offering. Or do you think at this stage, you're just focusing on ADNOC and then then maybe at some point, you would look for more consolidation within the market Not necessarily M and A, but just forming JVs of of of certain sorts.
Thanks.
How much should I start?
Yeah. I mean Go ahead. Yeah. Go ahead then. I'll I'll jump in.
No. I was gonna say, I mean, it's a it's a it's a it's a good question. As I've mentioned, a very important word of the onset of the call that, It is in very much embedded in our DNA, to think of value creation and optimization of our asset portfolio in many ways. Ahmed successfully led, the creation of similar of such joint ventures in the US. On the trading side, which have been extremely important for our business there, and impactful.
Maybe it's not not in visually tangible ways, but we know it has been impactful and synergistic. We believe that such opportunities, it should arise, we would evaluate, in other regions. And And we could and we continue to look for, for ways to extract value from, from this, very technologically advanced young, asset base that's been put together this past decade. I'm not gonna add.
Yeah. I mean, that that's right. I mean, like I said, we're looking at the, you know, ways that are done on a, you know, cash list as well as potential M and A basis, all the time. So, you know, the the commercial team and the the the general management team of vertical has done a great job of actually, being a distributor for some, some loan buyers, producers that are single plants or two plants that, would like for people to distribute their products. I think Nelson had mentioned on previous calls, the size of our export platform at 1stglow on a run rate basis is larger than the Chinese exports.
So, you know, that has room to continue to grow regionally. And we've gotten pretty good inbound inquiry as well as some successful one off distribution distribution opportunities with, certain other producers. And, you know, we continue to evaluate those opportunities on a more systematic basis. Yep.
Okay. We will now take our next question that comes from the line of Senan Kieran. Your line is now open.
Hi there. Good afternoon. Two questions. I think Hassan, it was you that mentioned, some of the industrial applications. I've seen some weakness.
Is that across the board, or are you seeing some sectors, weaker than others?
I I can take that one, Hassan, actually. I mean, on on just from a commercial perspective, it definitely varies, and it varies on location as well. You know, by location as well. But, we did see some weakness from some of our, ammonia customers in Q2, for example, in Europe, they actually turned on production in Q2 and have since restarted. As, you know, their their, you know, downstream value chain, whether they'd be in the, the, the textiles, automotive, you know, plastics and markets, they've all started to pick back up.
You know, we've seen good demand out of our industrial customers in the US Gulf Coast. And it's been fairly resilient for both, ammonia as well as methanol. And our methanol consumers actually in Europe as well are are to the customers have been, quite resilient. Now there have been some you know, some areas where, there've been, you know, pockets of weakness over the last several months, but I'd say the general trend is to, continue to, to see, you know, people reopen and try to build back stock after periods of of legal. Hello?
Hello? Yep.
Hello?
Yes? Okay. Sorry. Did that answer your question?
Yes. Yes. I said. Thank you. But maybe it didn't come through.
The other question I had was on the refinancing opportunities you might have. To simplify the structure or to reduce the interest burden. Any comments on the bonds you have, which became callable, I guess, back in April?
Yeah. Obviously, it's also a a very valid question. We all I can see at this time is that we're obviously continuously to we continuously monitor the markets. We're, quite aware of the strong market conditions that prevail. And we will make a our evaluation, on a, really, on a, we consistently look week in week out on whether there are any opportunities that we should be looking at.
But this is something arise. Obviously, something we're going to be quite transparent about.
Thank you very much.
Now I add to that, of course, that as a company, we're, and I something else worth reiterating because we're despite trough conditions we've seen on commodity prices. We have we had all the all our recent refinancing activity has given us quite a comfortable maturity profile. Going forward, the averaging less than $160,000,000 of repayments per year for the next 3 years. And our liquidity position continues to be quite robust with $1,500,000,000 of available liquidity $900,000,000 of undrawn committed facilities, of which nearly $700,000,000 of that sitting, at the NV, multiple level. So, that's, again, quite a quite a position, and that gives us the luxury of making these these of making any further optimization decisions, in a sort of a calm and, calculating manner.
I understand. Thank you.
Okay. Our next question comes from the line of Japan Udeshi. Your line is now open.
Hello. Hi. Thanks. Couple of questions. Just first one, at this point, looking, you know, almost end of August and given the different moving parts.
Can you help us understand how do you see overall Q3 in terms of earnings directionally versus, say, the 2nd quarter? Should we expect a a material change or significant change either way? Versus second quarter. That would be just a first question. And second one was just a clarification in a way.
There is a big deferred tax liability balance on the balance sheet. Is is there any cash element to it in the future at all, or is this something got to do with just accounting which may not have any cash implications in the future? Thank you.
Yeah. Hassan, do you want to take the the tax question first? And then I'll jump in on the on the q 3? Hello?
Sorry. I was on mute. No, there is no there is no cash aspect to that. I think as a company, we have we've continued we've continued to deliver on, a pretty low cash tax rates, which is reflective of a combination of factors, whether it's the fact that some of our businesses have benefit from accelerated depreciation, including our US assets, for example, which actually also protects us from any further whether, whether, because of, carry forward losses and accommodation activity depreciation. So Whatever happens in the US in terms of a political landscape, we're pretty much a little bit indifferent there.
Also a combination of the fact that our businesses such as Algeria are, not, subject to tax because OLX all petrochemical exports in Algeria are not taxable. And then of course, we have, fiscal Uniti's, Unity in our European businesses also allows us to manage our tax bill. So overall, we've maintained a pretty effective, cash tax and we are forecasting that that will continue, at least for the several few next several few, several years.
Sure. Thanks, Hassan. And, Jifang, can you remind me? You said that that you wanted to get some guidance on how, Q3 was looking versus Q2?
Yeah. Just directionally, if you don't want, I mean, of course, there's no specific guidance, but just directionally, should we expect any major change either way. Just wanted to see, in terms of direction of change.
Yeah. We don't just given the commodity our business, we don't like to give, you know, specific guidance and, you know, whether it's directionally or otherwise with regards to how the quarter performs. But we'll say that, you know, we've seen, you know, good volume, of, production. And we've seen a recovery in, prices across the board, particularly, urea, here in, in Q3. You know, the, the European contract price for methanol, for example, we see we should see that step up in Q4, because the spot prices recovered quite meaningfully.
So I'll I'll I'll I'll leave it at that. But, yeah, I mean, you know, typically 2, 3 is a is a lower quarter for fertilizer dump. For fertilizer companies in general. And Q2 tends to be a little bit stronger, but we've seen a good recovery here in Q3 as stated on the on the urea side and on the, and on the methanol and on your side.
Understood. Thank you. I mean,
the one thing I could add to Ahmed team is that obviously you recall also last year, our Q3 last year was specifically quite intense in terms of in terms of, turnaround activities. So that's, that that is the backdrop we leave you with.
Under, sir.
Yeah. It's a good place. Any further questions?
Okay, sir. There are no further questions at this time. Please continue.
Okay. Thank you very much for for and thank you, everyone, for joining this call. Please stay safe and look forward to our next quarterly update. Thank you
Okay. That does conclude our conference for today. Thank you for participating. You may all disconnect.