Zaklady Azotowe Pulawy to see rising fertilizer prices - Citigroup

09 November 2010 15:55  [Source: ICIS news]

PRAGUE (ICIS)--Zaklady Azotowe Pulawy (ZAP), Poland’s largest fertilizer producer, can expect strong nitrogen fertilizer prices following a year of inactivity, Citigroup said on Tuesday.

However, Citigroup analyst Wlodek Giller cautioned that new plants set to come on stream in southeast Asia next year could lead to overcapacities that might hit ZAP’s fertilizer export business.

“The price rise in nitrogen fertilizers continues,” said Giller, upgrading his recommendation on ZAP stock from “hold” to “sell”.

“After a year of stagnant prices, the autumn has brought a more positive environment for nitrogen fertilizers, with prices of the majority of them surging on international markets on the back of strong global grain prices and low grain stocks,” he added.

Citigroup offered the following price comparisons:

  • The urea price was now 44% higher compared with the lows in January of last year and was up 26% year to date
  • Ammonium nitrate rose 63% from the lows in October 2009 and up 53% year to date
  • Urea ammonium nitrate (UAN) gained 84% from the lows in October 2009 and increased 53% year to date
  • Ammonia was 120% higher from the lows in July 2009 and was up 50% year to date


Looking at two other products that ZAP makes, caprolactam and melamine, Giller said prices of the former had stabilised since reaching a peak in May, while prices of the latter were strong – the contract price was up 25% year to date, while the spot price rose 40% as a result of gradually rising demand and decreasing stocks.

Binding bids for a majority stake in ZAP must be submitted to Polish privatisation officials by 16 November.

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By: Will Conroy
+44 20 8652 3214



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