Nitrogen prices to rise in 2017 – Acron group

Although not a company name known widely among Irish farmers, the Russian fertiliser group Acron has issued a bullish forecast for fertiliser prices in 2017.

In its annual market outlook, Acron said the fertiliser industry was “optimistic” for 2017 as prices have moved off the floor in recent months, particularly as we enter the high sales point of the season.

Along with continued demand growth from the primary production sector, Acron said it does not expect as much nitrogen fertiliser capacity to come on stream this year, which should help boost prices.

Acron, which produced almost 6.5m tonnes of fertiliser last year, has been a major supplier of prilled 27-2.5-5 nitrogen fertiliser for much of the last two decades to Irish fertiliser importers. About 1.2m tonnes of fertiliser are sold in the Irish market every year, with nitrogen fertilisers accounting for about half of this volume.

Declining market

Last year was challenging for fertiliser producers, as global supply far outpaced demand. These oversupply pressures saw prices fall across every market segment, with certain products such as ammonia hitting record lows since 2005.

Nitrogen prices also fell to multi-year lows in 2016, as extra production capacity and supply from the US and Russia in particular weighed on prices. However, the decline in nitrogen prices eroded the performance of less-efficient and high-cost fertiliser producers in Ukraine and China, where exports shrank between 30% and 40% to help rebalance the market.

In particular, rising coal prices in the second half of last year led to an upsurge in fertiliser prices in the back end of 2016, with urea prices leading the recovery.