A leading Irish fertiliser importer will not commit to the normal large-scale importation of product this autumn under the current market conditions.
Liam Woulfe of Grassland Agro said it was “not credible” for companies to risk importing historic fertiliser volumes given the current level of volatility and uncertainty in global energy markets generally and the European market in particular.
The Grassland Agro managing director accepted that gas prices had eased back to €260-€270/mWh this week, but he pointed out that this was up from a low of €62-€65/mWh in May.
Industry sources have estimated that current gas price levels would equate to import prices of close to €1,200-1,300/t for products such as urea.
Woulfe maintained that gas prices, and therefore fertiliser prices, could hopefully be impacted by the EU Commission’s drive to curb energy costs.
However, he argued that such an eventuality could potentially be disastrous for importers who had significant quantities of expensive commodity fertiliser purchased based on current gas prices.
“I can’t afford to take that risk,” Woulfe said.
“The price of gas is puffed up because of the ongoing political gyrations and cannot be credibly sustained,” he explained.
“The Commission is concerned with the price of gas from an energy generation and home heating perspective, but any actions taken by Brussels could beneficially impact fertiliser prices,” Woulfe said.
“I would hope that the intervention of the Commission would assist in deflating gas prices, but the timing of this action potentially increases the risk in the medium-term for companies such as ours that import fertilisers,” he maintained.
He pointed out that fertiliser purchased now will not be spread by farmers until next spring. “This industry is all about confidence in the marketplace, and it is too early to commit to prices for fertiliser that will not be spread for six months,” he said.
The latest spike in natural gas prices has seriously curtailed EU fertiliser output, with production stopped or reduced at plants belonging to Yara, CF Fertilisers, Azoty, and Achema.