Market and product

Manufacturers’ apprehensions that Russian commodity will appear in the market after anti-dumping duty cancellation are not confirmed yet. Plants force events. Taking into account that natural gas price for Q3 for chemical plants could be changed, they prepared a MP’s request and a few letters to government regarding prices review to the level of $170/ thousand cubic meters on border. The plants’ letters remained unanswered, but they were asked to wait. Gas issues were not discussed at Cabinet of Ministers meeting on May 19.

It’s probably necessary to wait with stopped capacities because according to NERC, there are not budget funds for such gas price for chemists. Only Concern Stirol is halted yet (only one ammonia production line still works). Cherkassy Azot could stop production of both ammonia and urea. Odessa pre-port plant will stop only one ammonia line, which will lead to urea production decrease.

According to unchecked information, Severodonetsk Azot Association is going to work for warehouse delivering ammonium nitrate to partners’ warehouses for sale. Operative scheme should provide with effective mechanism of pricing. Actual ammonium nitrate ex-factory prices are UAH1,950/t in bags (Severodonetsk and Cherkassy) and UAH2,050/t (Rovno). Prices will be reviewed in a week, expected level is UAH1,850/t in bags.

Ammonium sulfate prices decrease. White sulfate is sold at UAH940/t FCA in bulk, gray — cheaper. UAN could be bought at UAH1,900/t. Despite relatively high demand, the commodity price could decline more. Demand for ammonia water which could be fertilized at cold weather without rainfalls reduced quickly. As a result, water is bought at UAH990/t. Price decrease to UAH950/t and even lower is expected in May.

Astarta’s tender for urea was won with very low price (near UAH2,457/t). Complaints of tender’s participants could lead to reduction of number of participants in the nest tenders. Importers became more active. Nitroammophoska and diammophoska are the main import commodities now. Ammnia nitrate supply price from Ukrainian importers is at the level of $160/t DAF in bags, which was supported by Uralchem and other holdings. However, the prices of $170–175/t are nonperspective even now.

Probably, the issue regarding lower gas prices for Russian chemists had been already brought up at the monthly meeting of Russian Association of Fertilizers Manufacturers in May 2010. According to Russian manufacturers, prices of $130–170/ thousand cubic meters will force to decrease production of ammonia and fertilizers. Besides, issue of new ammonium nitrate prices for Ukraine (after duty suspension) was also discussed. It’s strange that at prices of ammonium nitrate at Russian manufacturers’ warehouses at the level of RUB5,600–5,800/t (VAT excluding) (which correspond to $190–195/t in bags), there are not any measures of export regulation (export prices are lower by $25/t). Export supply prices of Russian commodity are $160/t FOB Black Sea/Baltic.

Revival is expected in Ukrainian market of phosphorous fertilizers — one of manufacturers could launch diammophoska 10:26:26 production. If the price is lower than UAH3,800/t or even at such level (taking into account prices growth in Russia), sales could be rather successful. However, implementation is difficult without subsidies probably.

(Source: www.agroperspectiva.com)