Norwegian fertilizer giant sees tough year due to China and energy costs

On 22 April 2013, Norwegian fertilizer giant Yara International stated that it sees tougher nitrogen fertilizer market conditions on the horizon because of a combination of increased competition from China and higher energy costs.

In notes accompanying its first-quarter results, the Oslo-based company highlighted a rise in Chinese ‘urea’ production in early 2013 and warned a “continuation of this trend would increase the probability of significant second-half urea export volumes from China”.

According to Yara, China exported 7.2m tonnes of urea between July 2012 and February 2013, more than double the 3m tonnes exported in the previous corresponding period.

“Based on current forward markets for oil products and natural gas, Yara’s second-quarter energy costs are expected to be approximately [Norwegian kroner] NKr300m [$51.6m, €39.4m] higher than last year,” the producer added. Third-quarter 2013 energy costs are expected to be NKr50m higher than a year earlier.”

Including output from joint ventures in countries such as Qatar and Libya, Yara’s production volumes totalled 6.43m tonnes in the first quarter versus 5.94m tonnes in the year-ago period, with year-on-year rises registered across nearly all products.

A breakdown of Yara’s fertilizer sales volumes by region for the first quarter show of the 5.3m tonnes sold, 2.9m tonnes were sold to Europe, 923,000 tonnes to Latin America, 802,000 tonnes to North America, 484,000 tonnes to Asia and 198,000 tonnes to Africa. Total sales in the year-ago quarter were higher at 5.43m tonnes.



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