Fertilizer producers are yet to feel the impact from the COVID-19 pandemic on sales volumes, with latest company results pointing to solid Q2 demand from a number of key markets. Indeed, global fertilizer values fared much better as the pandemic spread than other commodities.
In their 1H 2020 results, many producers showed that sales volumes had improved versus the same period last year, although in some cases overall profits were lower owing to weaker product prices.
Eurochem’s sales volumes increased 6% to 12.5m tonnes during the first half of the year. The producer sold 9.2m tonnes of fertilizers, a 19% increase year-on-year, while sales were down marginally at 1% to $3bn.
Elsewhere, Nutrien’s net earnings declined by 19% during the period to $730m, from $899m in 2019. However, total sales during the period stood at $12.6bn, a 2% increase from $12.4bn in 1H 2019.
In the US, CF Industries also experienced higher sales volumes during the first half of the year across all segments compared to previously. This was a result of more favourable weather that allowed greater fertilizer application and an increase in planted corn acres in America. However, the firm’s net sales during the period took a hit, falling 12% to $2.2bn, from $2.5bn during 2019.
For the most part, nitrogen focused producers, such as CF Industries, have been aided by lower gas prices, higher deliveries and a stronger US Dollar, which partially offset weaker commodity prices.
In Yara’s case it helped the company achieve an 1H 2020 EBITDA of $1.09bn, up from $1.01bn in 2019, while its operating income stood at $583m during the first half of the year, up 26% from $464m last year.
This is not to say that the COVID-19 pandemic did not hit demand in Q2. Looking to US urea market, a drop in corn values played a major role in preventing a record corn acreage being planted. Earlier hopes that 95m. acres would be sown were hit by a drop in demand from the ethanol sector.
In contrast, demand in India has been at record levels, with record acreages being planted, bolstered by a healthy monsoon and the reverse migration of labour from cities. Indian demand alone represents an increase of more than 5% in global urea import demand. Consequently, Indian purchasing tenders have been a regular feature of the urea market since April with state agencies repeatedly failing to secure big volumes.
By Neha Popat, Nitrogen Market Reporter