Given the foreseen saturated urea fertilizer demand at home and increasing output, companies in the local fertilizer industry will have no other choice but to ship products overseas this year despite the challenging conditions.
Local fertilizer producers including Ca Mau and Ninh Binh fertilizer companies saw 2012 as a successful year as sales increased, while smaller manufacturers also managed to boost exports.
PetroVietnam Fertilizer and Chemicals Corporation and PetroVietnam Ca Mau Fertilizer Company are considered the nation’s largest producers with a combined capacity of 1.6 million tons annually.
Local fertilizer supply in 2012 failed to catch up with domestic demand, which is the first favorable condition, say industry insiders. According to the Ministry of Industry and Trade, total urea fertilizer output reached 1.62 million tons last year while local demand amounted to two million tons.
However, the home market will become tougher this year, with the fertilizer industry expected to provide 2.36-2.4 million tons of urea while the local demand will stay unchanged at two million tons as estimated by the Ministry of Agriculture.
Moreover, the presence of new players in the local market in the near future like an expanded project of Ha Bac Nitrogenous Fertilizer and Chemicals Co. and the Cong Thanh fertilizer project will raise the industry’s annual production volume to more than 3.2 million tons.
Therefore, now is the right time for fertilizer producers to find outlets for an oversupply of nearly 400,000 tons of urea via exports.
Last year, Vietnam exported nearly 1.35 million tons of various types of fertilizers with a total value of US$554 million, up some 25.5% in volume and about 17.5% in value year-on-year.
Of nearly 1.35 million tons of fertilizer shipped abroad in 2012, only around 40% of the total was of well-known brands while the remaining 800,000 tons was exported without bearing any brands, said Le Quoc Phong, vice chairman of the Vietnam Fertilizer Association.
It is forecast that this year’s fertilizer exports will rise but the export activity will be volatile in the long run. As non-brand fertilizers still account for the majority, Vietnamese firms will lose foreign buyers if fertilizer prices of other nations are lower than local products, Phong reasoned.
The importers of Vietnamese fertilizers are Africa, India, and Asia, especially Laos, Cambodia and Myanmar, Phong said.
The Saigon Times Daily