Brazil nitrogen and chemical producer Unigel is seeking a partner for its green hydrogen/ammonia project in Bahia (GM July 29, 2022), according to Valor International. This comes shortly after the company announced a delayed restart of its Sergipe nitrogen plant for 90 days starting in June, as well as the postponement in the completion of its new sulfuric acid plant (GM May 26, p. 30).

The news also follows downgrades from two major rating services, Fitch and S&P Global Ratings, which in turn follow Unigel’s recent earnings drop. 

“Proactive measures may be required for Unigel to shore up liquidity, including some combination of shareholder support or asset sales, in the absence of additional funding being supplied by lenders or a sharp recovery of one of its business divisions,” said Fitch.

“Since the second half of 2022, prices for most of Unigel’s products have fallen as the supply chains normalized and demand slowed due to the global economic slowdown,” said S&P. “At the same time, prices for most of the company’s inputs remain relatively high, including those in its take-or-pay contract with Petrobras for natural gas, which is pegged to Brent prices. We believe it will take longer for the spreads of Unigel’s main products to return to average levels, which will pressure its profitability and cash flows for the next quarters.”

S&P added that 2023 urea and ammonia prices will likely be about 50% lower than those in 2022.