LSB Industries Inc. said it expects an Alabama ammonia plant to lose several months of production after a pipe rupture, the third time this year the company has reported issues at one of its chemical plants.
The news sent shares tumbling in Wednesday trading on the New York Stock Exchange. LSB shares fell $5.10, or 13 percent, to close at $33.04. Volume was almost three times the normal daily trading average.
The Oklahoma City company said a pipe rupture at its Cherokee Nitrogen Co. plant in Cherokee, Ala., caused damage to the heat exchanger part of its ammonia plant. LSB said it's evaluating how much damage went beyond the rupture. No serious injuries or environmental issues were reported.
Executives at LSB called the pipe rupture a “freak” occurrence and said the Cherokee plant had recently undergone routine maintenance and repair.
“Basically, you had a pipe that burst,” said Tony Shelby, chief financial officer. “But because this is a very profitable plant, you had a strong (market) reaction to it. This is a very well-managed, consistently profitable plant. About half their product is nitrogen fertilizer, which as you know, carries pretty good margins today because of the cost of natural gas.”
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