MUCH heralded change forced upon the poorly performing fertiliser industry by excess capacity is finally about to happen.

The status quo has long been that of two major European manufacturers, Hydro and Kemira, with nutrients as a core business , alongside others that might readily divest themselves of fertilisers should the climate be right.

On Monday, Kemira announced a move to sharpen up group strategy by focusing on areas with sound growth prospects and low dependency on economic cycles.

For them, this means pulp and paper chemicals, water treatment chemicals and paints.

Once representing the lions share of the groups interests, nitrogen fertiliser will now no longer be a core business for Kemira and the company will seek “joint venture” or “ownership structure agreements”.

The most obvious interpretation of these words is that Kemira will sell or merge its agricultural fertiliser business.

Hydro have also acknowledged the need for “strong medicine” with a “major adjustment” required in their fertiliser activities.

With conclusions on their strategy revision due any day now, Hydro are expected to announce similarly reduced reliance on fertiliser as a core business.

Naturally, this has raised speculation that some sort of deal may ultimately be struck between the two major organisations.

Terra, already lean and mean in the UK, will no doubt capitalise on the situation if it can by exploiting its nitrogen manufacturing capacity, whereas Kemira strength lies in its efficient NPK granulation plant at Ince. Terra has further streamlined its organisation in Britain following the appointment of Paul Thompson as MD.

David Hopkins now runs the industrial chemicals division with Stuart Beer heading up fertilisers.

Sales and Marketing have been merged to provide a strong distributor support team, marketing fertilisers with and for the merchants.

Meanwhile, spring NPK prices are starting to emerge with 25.5.5 (Complex granule) pitched at £97/t pre-Christmas and £100/t Jan/Feb.

Potato fertiliser (15.15.20) is similarly £127/t and £130/t. Blenders are expected to come into the market after Christmas and one would expect a £5.00 differential in price on average.

Blenders too are rationalising as Fertiliser Products close their Bridgenorth location.

Finally, Nitrogen is pitched at £87/t pre-Christmas and £90/t Jan/Feb pay April. This price should stick as all three UK manufacturers reduce capacity in some way or other; Terra by turning down production at both Severnside and Billingham, Hydro with a planned shutdown at Immingham in November and Kemira by planning to extend their May shutdown.

CURRENT MARKETS

Immediate delivery N
(no market)
November delivery N
December delivery N Imported urea Imported N deliver December Imported 0.26.26 Domestic 0.24.24 blended Liquid N, 37kg/100l or 29.6% N/t
£86 £87 £90 £90-92 granular/
&prilled – no market
£75-78 £None available £110-114 £95/100,000 litres or £76/t

N/S (High S) N/S (Low S) TSP (47% P2O5) Muriate of Potash (60% K2O)
87 87 125 120

 

IRELAND
No urea market at present

  Imported CAN

CAN

0.23.24

0.16.36

Complex compounds

Northern Ireland Prices withdrawn No market 132 132 No market
 

CAN

0.10.20

0.7.30

Republic of Ireland* No market 140 140

*Note in the Republic of Ireland nutrients are expressed as elements not oxides. Analyses will not be directly comparable with those used in the UK..

*Prices in the Republic are IR£

 

BACKGROUND MARKET
Products not currently traded in volume.
Some spot business in grass sectors.

  20.10.10 and 25.5.5 complex/blend* KN KNS 20.5.15
England/Wales Grassland Markets 100-105/95-100 90-95 90-95 90-95
England Arable Markets No Market 93-96 93-96 93-96
Scotland 108-112/103-108 90-95 90-95 90-95

*Complex fertilisers are those where typically all nutrients are combined in one granule.

Note All illustrated prices are based upon 20 tonne loads for immediate payment. Prices for smaller loads and those with credit terms will vary considerably.

Source: Bridgewater Associates