fertilizer demand continues to grow

Fertiliser costs, demand continue rising
20-04-2007

HCM CITY — Farmers this year will be in a bit of a pinch with the cost of locally produced and imported fertiliser increasing.

Demand for urea for the summer-autumn crop stood at about 430,000 tonnes, with local producers only able churn out about 280,000 tonnes, according to the Viet Nam Fertiliser Association. The situation has caused a heavy reliance on expensive imports.

In addition, raw material and transportation costs domestically have increased on the back higher energy prices.

Since January, the transportation of phosphate fertiliser has increased by VND30,000 (US$1.88) a tonne, says Bui Quang Lanh, director of Van Dien Melt Phosphate Fertiliser.

As for raw materials, says Lanh, urea now costs VND5,000 a kilogram, up from VND4,400, while potassium rose from VND3,600 to VND4,000 a kilogram.

The net result has been a VND30,000 a tonne increase in the final price of phosphate fertiliser and a VND50,000-100,000 a tonne rise for NPK fertiliser.

Similar price hikes have occurred in the global market, which has not only caused issues for farmers but also importers.

Fertiliser prices in the world market have been rising since November 2006, says the association, citing an $85-90 a tonne increase in the cost for urea and $115-120 a tonne inflation in phosphate fertiliser.

Under these conditions, "it’s hard for us to import materials since prices are so volatile," says Binh Dien Fertiliser Company Director Le Quoc Phong.

"The price of potassium fertiliser has continuously increased from $215 to $225, and now $235 a tonne."

The trend in the global market is being attributed to rising natural gas prices. In Russia and Belarus, gas has increased sharply from $46 to $100 a 1,000cu.m, says the fertiliser association’s standing Vice Chairman Nguyen Dinh Hac Thuy.

In the Ukraine, fertiliser producers must now pay up to $170-180 per 1,000cu.m for natural gas, he adds.

Thuy also attributed import price hikes to a policy in China to limit exports of urea to assist its own farm industry, which has cut world supplies.

Since there is such a heavy reliance on imports, a Ministry of Construction official at a Wednesday conference on fertiliser in HCM City urged local companies to work together in increasing output.

"The country will continue to see a shortage in fertiliser supplies over the next few years," says the Southern Fertiliser Company Director Nguyen Tan Dat.

"It’s necessary that the sector forecasts annual demand to inform enterprises in advance."

According to the Ministry of Industry, urea supply will catch up to demand in 2010 when the Ninh Binh Coal and Ca Mau fertiliser plants come online and the Ha Bac plant completes it expansion.

Even then, the ministry predicts that 50 per cent of DAP and all potassium supplies will have to be imported for local fertiliser production. — VNS

http://vietnamnews.vnagency.com.vn/showarticle.php?num=03BUS200407