The Fertilizer Industry Takes a Hit as Prices Plummet: Is There Any Hope for Recovery?
- 19-May-2023 11:41 AM
- Journalist: Emilia Jackson
Vietnam: Despite having a year of exceptional profits, fertilizer companies experienced a sharp decline in the last quarter due to the fall in prices of urea, potassium, NPK, DAP, and other fertilizers. Ca Mau Petroleum Fertilizer Joint Stock Company, for instance, recorded a profit after tax of VND230 billion (US$9.8 million), which is an 85% drop compared to the previous year. This was mainly attributed to the 40% decrease in the price of urea - their primary fertilizer product that accounts for 80% of their overall sales.
Petrovietnam Fertilizer & Chemicals Corporation has experienced a significant decrease in profits, plummeting from VND2.08 trillion to VND260 billion. This drop in earnings is primarily attributed to the decline in prices for urea. Similarly, Binh Dien Fertilizer experienced a loss of VND40 billion in contrast to last year's profit of VND86 billion. Habac Nitrogenous Fertilizer & Chemicals JSC faced a similar fate, experiencing a loss of VND130 billion in contrast to their previous year's profit of VND870 billion. The fertilizer industry has observed a 30-50% decrease in prices this year.
Urea prices have recently plummeted to VND10,000 per kilogram, which is nearly 50% cheaper than its price a year ago. Potassium, NPK, and DAP prices have experienced a significant drop of 30%, bringing them down to VND12,000-15,000. This marks the lowest price point witnessed in the last two years. The reduction in prices can be attributed to several factors, including the steady decline in gas and petrol prices since the end of 2022 and the recession threats in several key markets. These have collectively contributed to the decrease in fertilizer prices. It's worth noting that gas is responsible for 80-90% of the cost of ammonia, a crucial component in producing urea.
The reopening of China's economy has resulted in an increase in supply, contributing to the continuous decline in prices. As a result, dealers have become hesitant to accept additional stocks, causing producers to accumulate more inventories. Experts predict that fertilizer prices will continue to decrease throughout the year.