Poland’s government is reported to be considering a temporary ban on exporting fertilizers amid a surge in fertilizer prices as a result of soaring natural gas prices, Bloomberg reported on Oct. 20, citing the country’s private radio RMF FM. The radio report did not cite any sources.
Grupa Azoty SA, one of the country’s two key fertilizer producers, already is prioritizing access to its fertilizers for the domestic market and has limited exports, with the exception of long-term contracts (GM Oct. 15, p. 28). Fellow fertilizer and chemicals producer Anwil SA even in normal times typically sells some 70 percent of its fertilizers to the domestic market.
The government over the weekend said it may look at alleviating some of the rising price pressure in the domestic fertilizer market through subsidies or intervention purchases if fertilizer prices keep soaring, the Polish Press Agency (PAP) reported on Oct. 16, citing the country’s Prime Minister Mateusz Morawiecki.
Poland’s fertilizer prices have increased three-fold of late, Morawiecki noted, attributing the situation to high natural gas prices.
Azoty said earlier this month in order to keep production going, it was inevitable that the rising natural gas prices and CO2 emission allowance prices be passed on in the price of fertilizers. Azoty reported that it was taking “all possible measures” not to limit production despite “the record-breaking” gas prices.
But Warsaw-based Pekao Bank SA analyst Krzysztof Kozieł warned the realization that high gas prices will continue may be especially negative for Azoty given that the company has rejected cutting output, a step taken by many of its European peers, Bloomberg reported.
BDM SA, Poland, Equity Research Head Krystian Brymora expects the weakening of Azoty’s earnings due to rising gas prices in the third quarter may even deepen in the fourth quarter, which is a key period for fertilizer production.
The Polish analysts believe potential government support to the country’s farmers could improve sentiment for Azoty’s stock.
Anwil last week experienced a road blockade of its plants by representatives of agricultural organizations protesting rising prices of the company’s nitrogen fertilizers. The company warned the blockade could lead to a production stoppage if finished product was prevented from leaving its storage facilities.
Anwil early this week confirmed to Green Markets that all its plants were “running smoothly,” although the company did not comment on capacity utilization levels. But a spokesperson for Anwil said the company was meeting “100 percent” of its contractual obligations.
“We emphasize that the company, while bearing the increasingly higher costs of fertilizer production [due to escalating natural gas costs] is making every effort to ensure the recipients of the fertilizers, i.e., the farmers, feel the changes as little as possible,” said the Anwil spokesperson.