Poland’s fertilizer firms face likely 13% gas price hike - ING

02 November 2011 17:36  [Source: ICIS news]

LONDON (ICIS)--Poland's fertilizer producers should expect a 13% year on year increase in the average gas price in 2012, ING Bank said on Wednesday.

“Given the recent weakening Polish zloty against the US dollar, we expect [monopoly] gas supplier PGNiG to apply for gas price increases,” said Warsaw-based ING analyst Adam Milewicz.

“Among the fertilizer stocks, Zaklady Azotowe Pulawy (ZAP) is the most sensitive to gas price hikes - with gas making up 33% of its operating costs - which are very likely, in our view,” he added.

Milewicz - who in a recent analysis said ZAP not only had to brace itself for a fertilizer price correction next year, but also for a likely 15% year on year decline in melamine and caprolactam prices - also observed that upcoming diversification in the supply of gas to Poland would not place much downward pressure on the gas price.

Supplies are to be diversified through new interconnectors linking Poland's gas grid with those of Germany and the Czech Republic.

“Yes, a good step is being taken towards the diversification of gas supplies,” said Milewicz.

“However, the scale of gas supplies from these interconnectors is relatively low in terms of meeting the gas needs of local chemical and industrial companies,” he added.

Fertilizer and titanium dioxide (TiO2) producer Zaklady Chemiczne Police (ZChP), for instance, would only meet 67% of its gas requirements through the interconnector with Germany from January 2012, Milewicz said.

By: Will Conroy
+44 20 8652 3214

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