Business news from Ukraine

Fertilizer market in Ukraine by end of 2022 will subside by half – expert

Ukrainian fertilizer market in 2022 will sag by about 40-55% – from 4.75 million tons to 2-2.9 million tons: it hit its bottom in early summer and began a rapid recovery, Oleg Arestarhov, director for corporate communications at Group DF, wrote in a column for Interfax-Ukraine.
According to him, in 2022 the revenue of farmers and solvent demand for fertilizers has decreased significantly. The main reasons were the increase of selling prices for fertilizers due to high gas prices, the reduction of cultivated areas by 14-16% because of the war and land mines, the direct losses associated with the destruction of warehouses, the withdrawal of the occupants of grain and stealing their agricultural equipment, as well as export restrictions on sales.
According to the representative of Group DF – the largest producer of nitrogen fertilizers in Ukraine, the consumption market of ammonium nitrate, although the decline from 1.8 million tons to 600 thousand – 1 million tons, this fertilizer is still the biggest demand in the country.
Arestarhov noted that a very large decrease in consumption – almost twice – is expected for complex fertilizers because of the significant shortage of phosphorus and potassium. This is associated with the blocking of fertilizer supplies from Belarus and the closure of maritime shipping.
The specialist estimates a drop in consumption of ammonium sulphate to 210-250 thousand tons from 490 thousand tons last year, UAN (carbamide ammonium nitrate) – to 400-600 thousand tons from 1.3 million tons, carbamide – to 330-410 thousand tons from 1.12 million, NPK, DAP – to 620-660 thousand tons.
He specified that an important new global trend, affecting the structure of fertilizer consumption in the world market – is a significant drop in urea prices in the second half of the year, which reduces the attractiveness of ammonium nitrate, which has a lower concentration of nitrogen. According to Mr. Arestarhov, according to some reports, the port of Constanta (Romania) currently has accumulated about 120 thousand tons of urea from all over the world, effectively making it a new European hub, where traders buy urea at the most reasonable price, without reference to a specific producer. However, Ukraine has not been affected by this trend so far: having obvious logistical advantages and rather acceptable domestic prices for gas, Ukrainian producers have preserved urea production and offer it to Ukrainian consumers at a competitive price.
As to forecasts Arestarhov paid attention to the change in the structure of consumption of mineral fertilizers by farmers: in 2023, oilseeds and soybeans may gradually replace cereals, which showed not the best profitability, while the determining factor for the structure of crops are the prices for grain and oil on world markets.
A Group DF representative pointed out that two plants of the Ostchem holding, Cherkasy Azot and Rivneazot, continued operating under war conditions, while Odessa Port Plant and Dniprozot have temporarily pulled out. Production was concentrated on the production of ammonium nitrate, UAN, IAS (lime ammonium nitrate) and compound fertilizers.
According to Mr. Arestarhov, UAN produced at Rivneazot was the most successful export product: 170.6 thousand tons of UAN were exported during 11 months, and the main buyers were European agrarians/traders from Romania, Hungary, Slovakia, Poland and Moldova.
Urea was exported 64.8 thousand tons, UAN – 29.6 thousand tons, ammonium nitrate and ammonia – only 11 thousand and 2.3 thousand tons, respectively. According to the expert, the reasons for the sharp decrease in exports are the priority to supply Ukrainian farmers and the logistical and administrative constraints on exports. Ukrainian fertilizer producers got a logistical advantage over fertilizer importers, as they are physically closer to customers, he added.
“2023 was, to put it mildly, very disappointing for importers: half a year there was almost no import of fertilizers to Ukraine, and now the number of imported fertilizer corridors across the entire spectrum of products has decreased significantly and has not recovered Among the imported fertilizers, which are still gradually imported – ammonium nitrate, UAN, urea. But the war will continue to block most imports,” stated Arestarhov.
Among other features 2022 on the Ukrainian fertilizer market, he called the active introduction of grain exchange schemes due to the lack of farmers working capital needed for the sowing season 2023.
According to the representative of Group DF, there is a significant pent-up demand for fertilizers on the market and great potential for growth in January-February 2023, which can be additionally assisted by the state’s help in concessional lending.
“In fact, the fall campaign-2022 was held on old stocks that remained in storage since the spring. The market heated up only in late fall – early winter – the active buying of fertilizers and the formation of the necessary reserves for the spring of 2023 began,” he wrote. The expert added that demand was fueled by price cuts by domestic producers, primarily for ammonium nitrate and UAN, in anticipation of a significant increase in sales.

CANADA MAY REPLACE BELARUS IN UKRAINIAN FERTILIZER MARKET – UCAB

After Canada cancels import duties on Ukrainian goods for a year, Canadian potash fertilizers may become the main ones in the Ukrainian market and thereby replace Belarusian ones, which have not been imported to Ukraine since the beginning of Russia’s armed aggression.
The possible role of Canada in the Ukrainian market of potash fertilizers was reported by the Ukrainian Agribusiness Club (UCAB) on Facebook on Thursday.
The report states that Canada is the world’s largest producer and exporter of potash fertilizers. This country produces about 12 million tonnes of such fertilizers, thus occupying 24% of world production. At the same time, in 2021, Ukraine imported 287,500 tonnes of potash fertilizers, of which 69% came from Belarus, while its own production in the country is practically not developed.
“Therefore, Ukrainian farmers need to look for alternative suppliers, and Canada may become one of them. The abolition of import duties may become an additional factor, as it will increase the competitiveness of Ukrainian agricultural products in the Canadian market. Ukraine will be able to purchase potash fertilizers in Canada, in turn, sending its agricultural products, which are in abundance in the Ukrainian market, by the same transport,” the association said in the statement.
Canada imported 2.8 million tonnes of corn, 1.2 million tonnes of sunflower meal, and 0.5 million tonnes of soybeans in 2021, according to UCAB. It is these positions that Ukraine can supply to the Canadian market through the seaports of the Baltic countries.
The association recalled that before aggression of the Russian Federation, Ukraine had insignificant volumes of export deliveries of agricultural products to Canada, which was due not only to the significant territorial remoteness of this country, but also to the rather high development of the Canadian agro-industrial complex. Thus, during 2021, agricultural products worth $29.3 million were delivered to Canada, of which 49% of export revenue was formed by apple juice, 18% by sunflower oil and 11% by soybeans.
However, with the beginning of military aggression of the Russian Federation with the assistance of Belarus and the blockade of Ukrainian seaports by Russian warships, a number of countries canceled import duties on Ukrainian goods to help the Ukrainian economy. These factors may have an impact on Ukrainian foreign economic activity, including the increase in trade between Ukraine and Canada.
As reported, Canada, following the UK and the EU, would cancel all duties on imports of goods from Ukraine, Canadian Prime Minister Justin Trudeau announced on May 8 after meeting with President Volodymyr Zelensky in Kyiv.

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CHEMALLIANCE LAUNCHES LIQUID FERTILIZER PLANT IN ZAPORIZHIA REGION

Chemical Alliance LLC (ChemAlliance) has launched a plant for the production of liquid complex fertilizers with a capacity of 5,000 tonnes per month in Zaporizhia region, owner of the company Vitaliy Popov has said.
“On July 1, we launched a plant for the production of liquid complex fertilizers with a capacity of 5,000 tonnes per month in Zaporizhia region. Investments amounted to about $1 million,” he told Interfax-Ukraine.
According to Popov, now the company is looking for a site for the second, more powerful production, which is to be launched in the spring of 2020.
“We plan to build two more plants in different parts of Ukraine. Ideally, these are Zhytomyr and Poltava or Cherkasy. I hope that we will implement these projects by the end of 2020. In total, we will reach 30,000 tonnes of liquid complex fertilizers per month,” he noted.
Popov said that Ukrainian raw materials and those imported from the EU (50/50) are used for the production of fertilizers.
Chemical Alliance LLC (Poltava) was established in 2010. It is engaged in production and sale of liquid mineral fertilizers and sale of granular ones.

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TERRATARSA UKRAINE LAUNCHES FERTILIZER PLANT IN KHERSON REGION

TerraTarsa Ukraine LLC (Kherson region) has invested over $1 million in the launch of a first stage of the liquid mineral fertilizer plant in Kakhovka, Kherson region. According to a report of the Kherson Regional Administration, a production capacity of the first stage of the plant is 60,000 liters a day (3 million liters a year). The plant can store 100,000 liters of fertilizers. The production process is fully automated.
In addition, the company plans to open the second stage for production of crystalline fertilizers with a capacity of 15,000 tonnes a year. Currently, 75 people are working at the enterprise.
TerraTarsa Ukraine was founded in autumn 2011 after the merger of Doktor Tarsa (Turkey) and Terra Ltd. (Ukraine). The company supplies the Ukrainian market and the markets of neighboring countries with complex technological solutions for intensive cultivation of a wide range of crops, offers more than 20 types of fertilizers.
In September 2017, the company opened the Terralab soil-agrochemical laboratory in Kakhovka, which conducts a number of tests (soil, water, fertilizers and plants). The volume of investments is $500,000. According to the unified public register of legal entities and individual entrepreneurs, the founder of TerraTarsa Ukraine is TerraTarsa B.V. (the Netherlands), and the ultimate beneficiary is Andriy Hoholev.

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