Measured on the price of the cereals, the N fertilizer are very expensive - comes a correction?
Nitrogenous fertilizers are produced throughout the year, but spread over just within a few weeks of the year. It requires a thoughtful storage and financing behavior.
Nitrogenous fertilizers are produced with high energy (above 1,000 degrees Celsius). Therefore, sites are preferable to get inexpensive energy is running. These Erdölbohrstationen are offered, where natural gas as a by-product is and was just torched in previous years due to lack of alternative use. Today concentrate the fertilizer locations as possible in the vicinity of such pumping stations and with direct access to the sea.
Fertilizers include the heavy load goods with high transport costs. Therefore comes in 1. Line the waterway as cheaper in consideration.
The N Düngeindustrie on a few central locationsacross the world. These include the oil platforms in the Caribbean Sea for the priority America supply. The Black Sea region applies to Europe as an option in addition to the sites in Egypt and Saudi Arabia.
In addition, there is intensive relations between China as a phased exporter and the Indian Pakistani permanent import territory.
For the assessment of the market development, the production conditions on these sites are crucial, first does not always necessarily decisive. Currently cause political tensions in the of Ukraine supply risks with a special perspective on Russian gas supplies. The financially struggling Ukrainian and Russian economy relies on possible little errors On the other hand, to maintain the production.
There are these problems in Egypt and Saudi Arabia not to the same extent, but from this region can only have been manufactured in parts of the European requirements.
For the assessment of price developments come but not in 1. Line production costs in consideration, but that level and of course the price of grain supply the crucial standards. Over the years, can be to prove that there is a More or less close relationship of urea prices as lead product with the wheat / corn prices.
With the exception of the marketing year 2011/12, the ratio of the urea price (location Black Sea), between the 1.10 to 1,20-fachen to the wheat pricemoves in recent years. There is a pronounced seasonal progression in appearance. Before and in the fertilizing the prices of urea are highest, while strongly give prices already at the end of the fertilizing for the purpose of clearance.
The current market situation is characterised by a significant price increase for the month of Aug-2014. Of course the price ratio between urea and wheat prices is even more pronounced, because wheat prices have been reduced significantly in recent years and for the rest of the grain year likely to be remain at a low level.
A such an unfavourable development is likely the willingness to buy the fertilizer users impair so strongly, that the demand will decline noticeably. The amount could go so far as the quantity of fertilizer production for reduced consumption would become too large, significant resources are overlaid. This perspective gives rise to the assessment that it is difficult to enforce will be more price increases in the nitrogen market. Whether and to what extent they already can derive price reductions to the spring, comes too early for an assessment. The adaptation period in the fertilizer works is still sufficiently large to adapt the production to the next consumption. The uncertain situation in the Ukraine is added this year.
A decisive impulse could be used by Chinese export taxes on urea, again be raised normally towards the end of October on the full measure. In this way, the flow of goods in favour of self-sufficiency for the upcoming fertilizing is to be controlled. Thus, the market and prices will get again kick start.
Risk reasons you will secure a part of fertilizer demand (1 spring gift) in the early procurement business in Oct-2014 at the latest.
