Fertilizer market at the end of the year: Many pressures to increase prices

After a period of the downward trend, recently prices of many fertilizers have rebounded. Many experts predict that fertilizer prices will be under pressure to increase again in late 2022 and early 2023 due to supply shortages.

Supply shortage

Through the market survey, urea prices in Ca Mau, Phu My, Ha Bac and many types of urea imported from China and Indonesia are being sold at 780,000 – 840,000 VND/bag of 50kg. Meanwhile, prices of many types of DAP, Potassium, and NPK continued to remain at high levels. NPK fertilizer 20-20-15 Con Co and many types of DAP imported from China, Russia, and Korea, priced at 1,350,000 – 1,450,000 VND/bag; Potassium imported from Russia and Canada has a retail price in many places at 990,000 – 1,100,000 VND/bag.

According to statistics, the country currently needs about 11 million tons/per year, including both inorganic and organic fertilizers. While Vietnam’s production capacity is about 7 million tons, the rest imports about 4 million tons.

According to the General Secretary of the Vietnam Fertilizer Association, Phung Ha, fertilizer prices in the country and the world are under pressure to increase prices. The first is because Russia and China are the countries with the largest share of fertilizer exports. However, China’s fertilizer export volume has decreased sharply since September 2021 after the export ban, and the application of an export quota by Russia has limited the global supply of fertilizer.

Although China’s export ban on urea was initially lifted at the end of June 2022, export activities are still very limited to ensure a sufficient supply for domestic consumption. Currently, China’s urea inventories at the port are 60% below the 10-year average. Meanwhile, Russia continued to apply export quotas on urea for the period from July to December 2022, but the quota level was increased to 8.3 million tons in the second half of 2022 from 5,9 million tons in the period from December 2021 to May 2022.

Elsewhere, after the military tension between Russia and Ukraine took place, the sanctions between the West and Russia included the postponement of the Nord Stream 2 gas pipeline; compulsory payment of gas in rubles; The gradual reduction of gas imports from Russia in the following years has made it more difficult to maintain sufficient EU gas reserves. The lack of gas supply, while the demand is still high, has caused gas prices in Europe to skyrocket. The price of natural gas has increased by $4.37/MMBtu or 117.19% from the beginning of 2022 to September 12, 2022.

Fertilizer prices may continue to increase sharply when gas prices remain high. With the current gas price, many factories have closed their Ammonia or urea production lines because the selling price cannot cover the cost. It is estimated that nearly 30% of urea production capacity will be cut and nearly 25% of ammonia production capacity will be cut.

“In the context that gas supply in Europe is extremely scarce, fertilizer production is cut, and world supply is in short supply, we expect fertilizer prices to be under pressure to increase again in the end. in 2022 and early 2023. The export value of Vietnam’s fertilizer will increase,” – Mr Phung Ha forecasted.

Maintain maximum capacity, stabilize domestic supply

According to statistics from the General Department of Customs, in the first 7 months of 2022, the whole country exported over 1.11 million tons of fertilizers of all kinds, equivalent to 721.81 million USD. The average price of 649.7 USD/ton, increased sharply by 41.5% in volume, 174.3 % in turnover and 93.8% in price compared to the first 7 months of 2021. Fertilizer prices in the market. Vietnam is forecasted to increase again in the last months of the year. Although export prices remained high, domestic urea prices fell more than 20% in Q2 due to reduced demand.

Although the third quarter is still the low season for the crop industry, due to the cut in the supply of nitrogenous fertilizers from Europe, the prices of fertilizers have started to increase again. It is forecast that domestic nitrogen fertilizer prices will continue to increase in the fourth quarter when the winter-spring crop begins and will remain high in the first quarter of 2023.

Deputy General Director of Lam Thao Superphosphate and Chemical Joint Stock Company Vu ​​Xuan Hong shared that over the past time, fertilizer prices in the world market have increased dramatically, such as sulfur doubled, urea increased 89%. .. has seriously affected production and business activities of enterprises.

As a domestic production unit, with such an increase in raw materials, enterprises are faced with the fact that there are not enough raw materials for production, leading to moderate production, and creating very high prices. In particular, with high input materials leading to high prices, so the selling price must also be raised, reducing the consumption power of the market.

Deputy Director of the Plant Protection Department (Ministry of Agriculture and Rural Development) Huynh Tan Dat said that to stabilize the market, fertilizer manufacturers are committed to maintaining maximum capacity, limiting exports, and supplying at a time prompt priority to the domestic market. Up to now, enterprises are doing this well, contributing to stabilizing domestic supply. Solutions to change the production process in the direction of saving raw materials and increasing the circulation of agricultural wastes at the scale of households, households and cooperatives need to be replicated and disseminated. Along with that, to reduce fertilizer prices, enterprises need to be proactive in input materials, production, business and market planning to harmonize benefits, and transparent prices to minimize production.

According to the General Secretary of the Vietnam Fertilizer Association Phung Ha, it is necessary to increase domestic supply. Domestic fertilizer enterprises need to maintain maximum production capacity, supply timely, reduce intermediary agents, and prioritize fertilizer supply to serve domestic agricultural production needs. Enterprises need to focus on ensuring supply for the domestic market.