The urea market, one of the worst affected by the summer
slump in fertilizer prices, is showing signs of revival, nutrient giant Acron
said, spurring ideas that the worst of the nutrient market downturn may be
The Russian based group acknowledged that urea prices -
which fell to some $300 a tonne last month in the key Yuznhy and Middle Eastern
origins last month, down more than 25% in 2013 – had led the nitrogen sector in
price declines seen across fertilizer markets.
"Of all nitrogen fertilisers, urea showed deepest price drop,"
Acron chairman Alexander Popov said.
Besides the furore in potash prompted by the break-up of the
Belarusian Potash Company, which has spread uncertainty to other fertilizer
segments, urea prices have also been undermined by huge exports from China and by
the opening of fresh capacity in Algeria.
However, the urea price "has slightly revived since the end
of the July-to-September quarter", Mr Popov added, in part because of a "decreased"
flow of supplies from China.
"Moreover, the decision of Ukrainian producers to suspend operations
in September-October supported the market," he said, reflecting the explosion which
closed the Stirol plant, but also the industry's relatively high costs.
Indeed, analysts at UralSib have warned that the temporary Ukraine
shutdown is "an indication that the urea price is close to testing the bottom,"
approaching even "the production costs of Chinese producers".
Acron's comments come as the fertilizer industry is awaiting
signs of stability in prices - an outcome which seen likely to encourage a wave
of demand with a return by buyers, which have been holding off in expectation
of cheaper deals.
Phosphate prices too have been in decline, down some 15% so
far this year as measured at US ports, with UralKali forecasting in July that
potash values could collapse from $400 a tonne to less than $300 a tonne,
although a decline of that extent has been nowhere near realised yet.
In the July-to-September period, "the supply on the global
mineral fertiliser market exceeded demand which suppressed prices for all
fertiliser types", Mr Popov said.
In the composite NPK fertilizer, a mixture of nitrogen,
phosphate and potash, and an important market for Acron, "prices decreased due
to weak potash and phosphate markets.
In NPK, a "recovery of strong demand is only possible after improvement
of conditions in the basic markets".
Acron, a relatively low cost producer, revealed that its
urea output rose 16% to 499,900 tonnes in the first nine months of 2013, despite
the lower prices of the fertilizer.
The group's shares stood 0.40 roubles lower at 977.30
roubles a tonne in afternoon deals in Moscow.
Shares in Yara, the world's biggest nitrogen group, which
have fallen to their lowest in more than a year thanks to the low urea prices,
ticked up 0.3% to NOK241.90 in Oslo.