Nitrogen prices climb

By Roger Chesher

ALTHOUGH prices have changed little at the end of May, the rising pattern continues to evolve as the industry changes.

The majors have tweaked the nitrogen price upward by 2 for June, the NK aftercut fertiliser prices are holding and the cash-only structure remains in place.

All this will give them a better chance to achieve their ambitions for a proper price structure for the new season, which opens in July.

Higher prices in the aftercut market naturally stimulate demand for budget-priced fertiliser but imports, although available, are not present in large volumes.

With farmers only buying to meet immediate demand – the so-called spot market – few importers would wish to take the risk of having significant tonnages left in stock when there is doubt as to how much of the current spot market is left.

The gap between imported/blended and domestic prices is still greater than usual as blenders defer increasing their own terms, perhaps to claw back lost volume sales.

With raw materials harder to source and more expensive this sector of the market place will be under increasing pressure.

These are factors which have perhaps contributed to the latest victim in the turbulent fertiliser industry as the large blending company Fertiliser Products enters into administration.

According to industry sources, market dynamics have dictated that FP significantly under-utilise an estimated 80,000-100,000 tonnes of capacity at Scunthorpe and Leith.

At present the future of these sites is unknown.

With rumours that China will once more purchase nitrogen in the near future, the pressure on prices is all one way – upward.

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