Production problems hit Nitrogen producers

23 August 2000

Production problems continue to hit the home producers of nitrogen.

This time its Terra whose relatively minor problems have none the less affected their ability to supply.

In such a tight market this inevitably has had a knock-on affect on the others. Even before the last week of August, the September books have also been closed with indications that both October and November are filling rapidly.

If merchants take a reasonable but modest profit, nitrogen will now go on farm at 119-120/t delivered, more if in small bags or small loads.

The arable sector is responding by committing to purchase, whereas the grass sector, it seems, has not awakened to rapidly changing circumstances.

The NFU and Scottish NFU have been urged by their membership to look into this rapidly changing scenario of increasing prices and similarity between suppliers, together with the matter of import duties.

The most likely explanation is that the major swing in the supply/demand equation has enabled Terra to take a position of strong leadership amongst a group of companies who were otherwise all bleeding to death, and who are now happy to follow the lead.

Despite this sudden change, Bob Chorlton, managing director of Kemira Agro UK, maintains his business is still loss making and will be lucky to break even by the end of 2000.

In some ways one could argue that anti-dumping levies are currently of little relevance as exporters find better markets elsewhere.

This change has yet to work through to the compound market. Kemira are the leaders in granular compounds but Terra has a dominating affect in the blending scene because they hold the whip hand in nitrogen.

Compound prices should be revealed in October.

CURRENT MARKETS (prices in )