International factors drive fertiliser pricing

A combination of international factors has contributed to the price increase of fertilisers, David Aitken of Transammonia told an Omex Agriculture fertiliser seminar.

“Where phosphate is concerned, we saw raw material production costs rise significantly, while transport and taxation costs also went up.”

For diammonium phosphate (DAP), which is produced from sulphur, ammonia and phosphate rock, soaring demand for all three raw materials resulted in a $785/t increase.

“Transport costs then added a further $50/t, while the 6.5% duty on fertiliser products coming into the EU put on $60/t. This meant that the total production costs for DAP went up by $895/t.”

In contrast, potash was not a traded product, so prices tended to be fixed every six months, said Mr Aitken. “But it’s a vital ingredient for edible oils and biofuels, so high demand for these helped to put prices of potash up.”

Urea prices had shown enormous volatility in the past 12 months, with the market now being back where it started, he said.

“China is the biggest producer and user of urea, so when there were concerns about feeding their people last winter, they put an export tax on urea. This resulted in a buying frenzy, which was given further impetus when India entered the market.”

Since then, demand had evaporated, bringing prices right back down again. “The credit squeeze has resulted in nervousness, so no-one is buying. Countries are struggling to fund imports.”

“We’re expecting reduced fertiliser demand in 2009, due to lower plantings.”


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