Poland’s Grupa Azoty SA said late last week despite “the record-breaking” gas prices, it is taking “all possible measures” not to limit production. However, the group said it is prioritizing access to fertilizers for Polish farmers, and recently decided to limit exports and re-direct its products to the domestic market, with the exception of long-term contracts.
“Exactly a year ago, the price of gas per megawatt hour was around €15; today it fluctuates around €100 (approximately $116 at current exchange rates) per megawatt hour, which means an increase of over 560 percent. In the last 10 weeks alone, the price has tripled, from around €30 to €100 per megawatt hour,” said Azoty in an Oct. 8 statement.
To these prices should also be added a significant increase in the cost of CO2 emission allowance prices, which increased by around 80 percent, from €33 to €60, the group said.
In order to keep production going, it is inevitable that gas prices and CO2emission allowance prices will be passed on in the price of fertilizers, Azoty said, adding it wants to ensure that is done “in the least painful way” for the end customer.
Fellow Polish fertilizers and chemicals producer Anwil SA said on Oct. 11 its production process was “running smoothly” and there were no restrictions on the availability of nitrogen fertilizers. The company said it was fulfilling “100 percent” of its contractual obligations. Around 70 percent of Anwil’s finished products go to the domestic market, with the balance going for export, according to the company.
However, Anwil warned that a blockade of its production site on Oct. 11 by agricultural organizations protesting rising prices for the company’s nitrogen fertilizers could lead to a production stoppage and limit the availability of fertilizers for Polish farmers. The company noted it does not sell to individual customers, but through sales contracts between the company and fertilizer distributors.
Anwil said its production facilities operate 24/7, and if the distribution of manufactured products from its storage facilities were to be blocked, the current storage capacity would be used up after approximately 12 hours.
The producer said escalating gas costs have directly translated into an increase in production costs and sales price quotations for its products, especially ammonium nitrate, saltpeter, and nitro-chalk. Anwil cited “the 200 percent” rise in gas prices between January to mid-September this year, and when compared with September 2020 and September 2021, it said the price of gas has increased “by six times.”
The company had provided no updates on its production status by press time, nor had it responded to Green Markets’ inquiries for comment.
Last week, a group of Polish farmers rallied in the town of Nowy Dwór Gdański on Oct. 7 protesting against the fast-rising price of potassium nitrate.
A farmer and board member of the local farmers’ association, Andrzej Sobocinski, cited by the Polish Press Agency (PAP), alleged that Polish nitrogen plants are not fulfilling previous contracts signed in July, August, and September, and are supplying distribution companies with potassium nitrate “at unacceptable prices.” According to the report, Sobocinski put the price today at over Pln3,000/mt (approximately $758 at current exchange rates), while the July contracts were for Pln1,200/mt, which he said were never fulfilled, reportedly referring to Grupa Azoty.