Urea prices near 4 year low
U
rea prices, at their lowest in four
years, may have hit the bottom as
an unusually large number of producers
are making thin, if any profits, according
to Russian fertiliser producer Acron as it
revealed a 28% drop in earnings.
Urea market values have declined not
just to the marginal cost of Chinese
producers, some of whom are currently
operating at a loss, but to levels at which
factories in other countries are also
struggling to breakeven.
A drop in the cost of the coal which
Chinese producers typically use as
their power source for making energyintensive urea, has rendered their costs
of making urea "comparable to that" of
the gas-based plants more common in
the likes of North America, the former
Soviet Union and Europe.
As a result, the number of marginal cost
producers has gone up Acron said.
This in turn means that the potential for
further urea price reductions appears
to be limited, with further reductions in
values risking a drop in output which
would support market price increases.
Urea prices measured in the Baltic sea
ports were $246 a tonne as of the end of
November, well below the $800 a tonne
reached at their 2008 peak, and down
23% so far this year, according to Credit
Suisse, the Swiss bank.
The bank sees the decline in values
continuing but with improved signs
of stability in other nitrogen markets,
including ammonium nitrate whose
prices were flat at $200 a tonne in the
Baltic. Although this price is down 30%
so far in 2015.
NPK fertilisers have proved to be more
stable, declining by 7% this year to $340
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FARMERS GAZETTE
November 2015
a tonne in the Baltic. Acron said that
"unlike the prices of basic products, NPK
prices tend to demonstrate less volatility
and remained almost unchanged from
the beginning of the year.”
However, in September NPK prices
finally declined following prices for basic
products.
Prices of ammonium nitrate have been
under pressure from Brazilian factors,
including the weaker Real and higher
interest rates, which have brought down
the purchasing power of local farmers,
who are major AN consumers Acron
said.
The comments came as Acron unveiled
a drop in earnings for the July-toSeptember quarter to 2.26bn roubles,
from 3.66bn roubles a year before.
Revenues rose 68% to 28.58bn roubles,
supported by the devaluation of the
rouble, which boosts the value the group
of sales of nitrogen fertilizers which are
priced in dollars on the international
market.
Operating profits at the group more than
doubled to 11.92bn roubles.
However, profits were dragged lower
than last year when the group logged a
4.94bn-rouble gain on asset disposals
as well as finance costs on the back of
the weaker rouble.
Acron is seen as a low cost producer as
a result of its access to low-cost Russian
gas supplies, but also thanks to selfsufficiency in phosphates required for
NPK fertiliser production. P
hosphates are typically distributed
as compounds with nitrogen, eg
monoammonium phosphate (Map) and
diammonium phosphate (Dap).