Title BSC Fertilizer Sector Outlook 2022_EN
Report Type Phân tích ngành
Source BSC
Detail Date : 20/09/2022
Total pages : 0
Language : English
File Type : .PDF
FileSize : 1710 Kb
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Short Content

SUMMARY

A. About the world fertilizer market:

High gas prices caused a wave of fertilizer capacity cuts in Europe, which reduced the world fertilizer supply.

  • Natural gas prices in the US and Europe tend to increase rapidly again when the gas crisis in Europe is taking place more and more seriously, the price of natural gas in Europe is currently 4.5 times higher than svck. The sky-high energy prices have forced fertilizer companies to reduce production scale, even to suspend operations.
  • Coal prices in China tend to move sideways after a sharp correction from peaks in March and April. Currently Chinese coal is anchored at $171/ton (+17% YoY, +24% YTD).

Urea price variation in markets around the world. Urea has adjusted, analyzed developments in the regions.

  • Urea prices in the US, Middle East and Baltic Sea peaked in April, then bottomed in June and recovered from the bottom in June. Currently, Urea in the US trades around $710/ton (-9% YTD) , +43% YoY) respectively +51% from the bottom.
  • Urea prices in China and India maintained a downward trend until March, then returned and peaked in June, then maintained a downtrend until the end of August. Chinese urea is currently recovering slightly and is priced at about $480. /ton (-43% YTD, +4 YoY).

A. About the domestic fertilizer market:

Changes in domestic urea prices and input material prices

Domestic urea prices and input material prices (Singapore FO oil) are moving in favor of gas companies such as DPM and DCM. The average Urea price in 8M/2022 is >60% higher than the average in 2021, this figure for Singapore FO oil is only 38%. Currently, the domestic urea price is around 14,350 VND/kg (~ 610 USD/ton), +5% compared to the end of August.

China - Vietnam's main fertilizer import market loosened exports from June 2022, however, the export volume is still low, svck 2021 and 2020. In August 2022, the amount of fertilizer imported from China decreased by 42% svck, reaching ~150,000 tons.

Update business results in the first 6 months of 2022:

Fertilizer businesses are positive in 1H/2022 thanks to: (1) The average selling price of main products increased sharply and faster than the input gas price and (2) with the high consumption of the main product, Urea, helped the profit of fertilizer enterprises. sudden growth. Specifically, in the first half of 2022, the average domestic urea price is 85% svck higher while this increase for FO oil is 57% svck and the urea consumption volume of DPM and DCM in 1H/2022 is higher than the same period last year. period is 8% YoY and 3% YoY, respectively .

Business outlook for the last 6 months of 2022: BSC maintains a POSITIVE view in 2022 for the fertilizer industry based on (1) improved fertilizer demand at the start of the year's biggest crop and improved rice prices stimulate people to use fertilizers and (2) signs of recovery in world Urea prices due to the gas crisis Burning in Europe and new bids from India are expected to boost domestic urea price recovery. We believe that Urea price recovery and improved consumption volume will be positive factors for fertilizer businesses in 2H/2022.

Business Outlook 2023: BSC holds a NEUTRAL view on the fertilizer industry in 2023 due to the high selling price base in 2022. BSC expects urea price to cool down from 2023 but a new price level will be established.

Investment perspective: BSC maintains its POSITIVE view in 2022 for the fertilizer industry and recommends BUY for DPM and POSITIVE for DCM.