Vietnam Overseas

Farmers are becoming increasingly concerned with rising fertilizer prices and a possible shortage, especially as cultivation for the winter-spring crop nears.

The price of urea fertilizer on the world market increased by US$10-15 a ton in early September, according to the Viet Nam Fertilizer Association.

Companies now import the commodity mainly from China for around $260-270 a ton, while supply from the Baltic and Middle East has slowed considerably due to maintenance at key production facilities only exacerbating global prices.

The association forecasts that prices will continue to rise in the coming months. Some overseas producers are already quoting fertilizer at $275-280 a ton, though importers remain reluctant to buy at this price for the time being.

Prices in the domestic market have also increased. Fertilizer sells for around VND4,500-4,800 a kilogramme in most areas, and VND6,500 a kilogramme in rural communities.

The price hike can be attributed to more costly input materials, according to the Viet Nam Chemical Corporation. For example, sulphur is now bought at $230 a ton, up 50% compared to last year.

Despite rising domestic prices, locally manufactured fertilizer is still cheaper than imports, said the association’s General Secretary Nguyen Dinh Hac Thuy.

The price discrepancy would normally encourage local companies to ramp up manufacturing as they can undercut their overseas competitors, but have instead added to the depletion of reserves with firms reluctant to import fertilizer at this time.

According to the Ministry of Industry and Trade, imports of various fertilizer products reached 226,000 tons in August, down 7% in volume from July and 16% over the same period last year. At the same time, prices have increased 3.2% and 11.4% respectively.

Reserves have declined considerably, with melt phosphate fertilizers at only 53% of last year’s peak level. At some companies, reserves of certain fertilizers are down to around 40%, while Ha Bac Co is reporting zero reserves.

Despite the unfavorable conditions, experts appear optimistic.

Do Duy Phi, chairman of the Viet Nam Fertilizer Association, says supply will be sufficient if producers and importers coordinate.

Demand for urea fertilizer for the winter-spring crop is estimated at about 750,000 tons. Local companies can produce about 415,000 tons from now until February 2008, so the country only needs to import 250,000 tons, Phi argues.

“Companies should also keep tight controls on distribution to avoid speculation and artificial price hikes, which could create chaos in the market and harm farmers,” said Thuy.

Trinh Thanh Binh, general director of Petroleum Chemical and Nitrogenous Fertilizer JSC, assures urea fertilizer imports are still around 60,000 tons a month, which will ensure sufficient supply for the coming crop and create a degree of price stability in the local market.

Source: Viet Nam News, September 25, 2007, VietNamNet Bridge

Domestic fertilizer prices have gone through the roof and are set to continue their upward trend, based on an extreme shortage caused by rising global prices and stockpile mismanagement.

Since early this month, fertilizer prices have surged by VND1,000(US6¢) per kg, while the price of urea fertilizers imported from China have spiked to up to VND6,000 (37¢) per kg.

Notably, DAP fertilizer has seen its price rocket by VND1,800 (11¢) to VND7.000 (43¢) per kg.

The root causes

The surge in global prices fueled the domestic price increase, heard a conference on the topic held Wednesday in Ho Chi Minh City.

While prices of urea fertilizer have hit a 50-year high of up to $370 per ton, global suppliers are also set to increase imported prices of potassium fertilizer by up to $20 after a recent increase by $10, spelling a further price hike in Vietnam.

Vietnam’s rigid policies on fertilizer import were also attributed to the price surge.

With Vietnamese businesses allowed to import DAP 18-46-0 fertilizer only, Chinese suppliers have cashed in on this restriction, raising prices on their version of the fertilizer as demand surges.

Businesses also pointed the finger at inefficient preparation to deal with domestic demand, which led to the serious supply crunch.

Estimates show that around 430,000 tons of fertilizer is needed for the forthcoming summer-autumn crop, but the Vietnam Fertilizer Association admitted only 280,000 tons had been stockpiled.

They warned the shortage would continue hurting Vietnamese fertilizer markets in the next several years if no effective demand forecast measures were adopted.

Source: Tuoi Tre

Vietnam imported nearly 2.6 million tons of fertilizers worth 622 million U.S. dollars in the first nine months of this year, posting respective year-on-year rises of 8.6 percent and 19.1 percent, according to the country’s General Statistics Office on Tuesday.

Vietnam spent 113 million dollars importing 439,000 tons of urea, mainly from China, Indonesia, Russia and the Middle East in the nine-month period, down 24.4 percent and 28.6 percent, respectively.

Vietnam’s total demand for fertilizers in 2007 is estimated at nearly 7.9 million tons, including 1.8 million tons of urea, and domestic supplies are likely to stand at 4.7 million tons, according to the country’s Ministry of Industry and Trade.

Vietnam needs about 440,000 tons of urea in the last quarter of this year, when domestic fertilizer plants are estimated to produce 240,000 tons, the ministry’s Trade Information Center said, noting that there are currently some 150,000 tons of urea in inventory in the country.

Vietnam is expected to stop import urea from 2012 when some new urea production projects become operational. From the year, half of the country’s annual demand for diammonium phosphate fertilizer, and all of its demand for kalium fertilizer will be met by imports, according the industry’s prediction.

Vietnam imported over three million tons of fertilizers, including 708,000 tons of urea, totaling 673 million dollars in 2006, posting respective rises of 5.9 percent and 5.1 percent against 2005, said the statistics office.

The country, home to over 150 fertilizer producers with each annual capacity ranging from 500 tons to one million tons, has planned to build four major fertilizer plants with a combined annual capacity of nearly 1.8 million tons in the 2005-2010 period, according to the Vietnam Fertilizer Association.

Source: Xinhua, October 03, 2007

Domestic fertilizer prices will continue to increase slightly in April this year due to increased imports caused by higher demands and increasing gas prices in Vietnam, according to the Ministry of Trade on March 29.

The prices of urea in the world market, which Vietnam largely imports, began to rise to around USUS$238-240 a ton FOB basis, USUS$225-227 a ton in the Middle East and increased USUS$15-17 a ton in Ukraine. Chinese urea also increased USUS$30-32 to USUS$255-257 a ton in recent days.

The higher imported fertilizer prices were attributed to the increasing demands from Latin American and East Asia, the ministry said.

Meanwhile, the price of a liter of gasoline grades A92 and A90 on March 29 raised to VND8,000/liter and VND7,800 from VND7,500 and VND7,300 respectively. Diesel oil, kerosene and fuel oil also increased from VND5,500, VND4,900 and VND4,000 to VND4,850, VND4,800 and VND3,570, respectively.

Domestic wholesale prices of urea were also up by VND50-100 a kilo to around VND4,200 a kilo in Ho Chi Minh City, VND4,100 in Dong Thap, VND4,500 a kilo in Can Tho while other provinces were around VND4,200-4,500 a kilo. (USUS$1=VND15,786).

In related news, the Ministry of Finance recently rejected a bid to lower fertilizer import tax from 5 per cent to 0 per cent, saying that although prices of imported fertilizer to Vietnam remain high domestic paddy indexes are also high.

Vietnam imported around 468,000 tons of fertilizer worth USUS$92 million in the first three months of this year, of which, around 145,000 tons of urea constituted the largest amount, valued at USUS$35 million.

Friday, November 02, 2007