Why the Incitec (ASX:IPL) share price is in the spotlight today

The Incitec (ASX: IPL) share price will be in focus today after the company announced a supply agreement.

| More on:
ASX share price on watch represented by man looking through magnifying glass

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Incitec Pivot Ltd (ASX: IPL) share price will be in focus this morning. This comes after the company announced an off-take agreement with Perdaman Chemicals and Fertilisers Pty Ltd (Perdaman).

The Incitec share price was trading at $2.65 at the market close yesterday.

What did Incitec Pivot announce?

This morning, Incitec Pivot advised its wholly-owned subsidiary Incitec Fertilisers has entered into an off-take agreement with Perdaman to receive granular urea fertiliser. The 20-year agreement will see up to 2.3 million tonnes per year of urea from Perdaman's proposed urea plant at Karratha in Western Australia.

The agreement is subject to several requirements before the deal is formally executed. Incitec noted that the most important condition was on Perdaman securing finance to build its new plant.

Should everything go to plan, the offtake agreement will provide Incitec with a long-term domestic supply of urea. This will enable the company to target Australian consumption as well as expand sales into global markets.

Incitec Pivot managing director and CEO Jeanne Johns commented:

The investment by Perdaman in a new, world-scale plant will make it one of the most energy efficient plants in the world utilising low emissions technology.

We are pleased to support such a significant domestic manufacturing project that will use Australian gas to produce urea fertiliser, essential for our Australian and international agricultural markets.

More on Perdaman

Founded in 2006, Perdaman is a West Australian-based multinational group that specialises in a range of markets. This includes fertiliser production to help farmers produce crops, ownership and management of shopping centres, production and distribution of pharmaceuticals, recruitment services and advanced energy solutions.

Its chemicals and fertilisers business focuses on the production of urea, the most commonly traded nitrogenous fertiliser. Urea is non-toxic and contains safe, high nitrogen content that can be easily transported and stored.

Incitec share price review

In 2021, Incitec shares have lifted to record a gain of 16%. The company share price reached a 52-week high of $2.98 in late March.

On valuation grounds, Incitec Pivot commands a market capitalisation of around $5.1 billion, with close to 2 billion shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Materials Shares

A young man punches the air in delight as he reacts to great news on his mobile phone.
Materials Shares

Guess which ASX 200 stock is ending the week with a bang thanks to Rio Tinto

This stock has won a major contract from the mining giant.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Materials Shares

Is it time to buy ASX lithium shares?

Lithium prices continue to sink. Has this created a buying opportunity?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Materials Shares

Mineral Resources shares sink on Onslow Iron blow

This miner is having a tough session. Let's find out why.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

MAC Copper shares in trading halt as miner flags 'potential control transaction'

MAC Copper shares are frozen while Sandfire Resources shares are the fastest risers of the ASX 200 today.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Materials Shares

Bell Potter says this ASX lithium stock could rise ~50%

The broker has just put a buy rating on this lithium stock.

Read more »

A woman stands next to a large green battery smiling and eating an apple with a lifting green arrow line in the background, indicating rising stock prices.
Share Market News

Are Liontown Resources shares a buy, hold or sell according to Macquarie?

Here’s what the broker has to say about this Lithium miner. 

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Rio Tinto share price tumbles on CEO bombshell news

The mining giant is now looking for a new leader.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

What's going on with the Fortescue share price today?

This mining giant is making changes to its leadership.

Read more »