Fertiliser tickers had recently witnessed marked improvements in their price and liquidity due to favourable market conditions, but the upward trend did not last for long, with corrections occurring since late August.
Fertiliser tickers’ price upsurge stemmed from the fact that scores of fertiliser plants in Europe like those in Norway, Germany, Poland, France, the United Kingdom, and Hungary have announced either trimming their output or temporarily halting production.
|Spiking material cost creates a big pressure on fertiliser makers |
According to Fertilizers Europe which represents most fertiliser makers in ‘the ageing continent’, over two-thirds of those plants’ production capacity incurred a halt due to escalating fuel costs.
By August 26, the price of gas – a key fuel in fertiliser production – rose for six continuous weeks, fetching nearly 3,500 euros per 1,000cu.m, setting a record since 1996.
Spiking gas prices came on the back of soaring demand for air-conditioners amid protracted hot weather. In addition, many countries in Europe have bolstered gas reserves for the upcoming winter amid declining gas supply from Russia.
|The fertiliser price might further go up in the upcoming time if the gas price continues upward trend and Russia maintains its policy on squeezing gas sources. |
According to Phung Ha, deputy chairman and general secretary of the Vietnam Fertiliser Association, urea fertiliser production relies on gas supply sources, particularly from Russia.
The urea fertiliser price has seen a slight increase in the past months.
Ha assumed that the fertiliser price might further go up in the upcoming time if the gas price continues its upward trend and Russia maintains its policy on squeezing gas sources.
Ha noted that fertiliser becoming more costly might bring benefits to firms, yet cast bad impacts on farmers.
According to Vu Xuan Hong, deputy general director of Lam Thao Fertilisers and Chemical JSC (LAS), fertiliser makers in the domestic market are facing a host of difficulties.
Accordingly, soaring input material costs for sulfur, urea, and potassium have largely influenced firms’ operations.
With an annual fertiliser production plan approximating one million tonnes, LAS must take initiative with material sources.
“We have made big purchases, striving to best avail of materials from domestic sources to control production. Thanks to that, last year and in the first half this year, LAS secures stable production,” said Hong.
“The company has also taken diverse cost-saving measures to lower the production cost to keep the stable price.”
| ||Businesses expect upward trajectory in confidence |
The domestic economy is gaining its strong growth momentum backed by a continued rise in enterprises’ confidence, promising a brighter growth landscape this year.
| ||Listed firms expect rosier third-quarter profits |
Many listed firms anticipate a fair growth in their third-quarter profit pictures, partly leveraging low developments a year ago when pandemic repercussions reached their peak.
At PetroVietnam Ca Mau Fertiliser JSC, despite undergoing maintenance from August 18 to September 4, the company has prepared more than 350,000 tonnes of products for the upcoming Winter-Spring season.
KIS Vietnam Securities assumed that fertiliser firms might scale up export in the last two quarters, particularly to India as there the Summer-Autumn crop lasts from June to October when that country imports the biggest volume of fertiliser during the year.
“Usually, the fertiliser sector picks their most brilliant season in the fourth quarter thanks to the Winter-Spring crop. Albeit this year, the results could hardly be as outstanding as in the first quarter, the sector might still expect inspiring results in this second half,” said KIS Vietnam’s expert team.