Ukraine gas price hike could boost urea market prices

A report from Bloomberg suggests that Ukraine's government may increase natural gas prices by 50% as it bows to IMF pressure. Urea prices could rise, according to an analyst at Alembic, because Ukraine is the marginal producer of urea and therefore the price setter. This could benefit urea producers globally including Sabic, Industries Qatar, Orascom Construction, SAFCO, CF Industries and Yara.  

Alembic says: "According to our estimates the marginal cost of urea production currently sits at around USD280 per ton - above current trough-ish prices of USD250 per ton which already implied an upside potential to pricing. If this natural gas price is implemented we could easily see urea prices rally above USD300 per ton."

Ukraine promised to raise its utility tariffs and prices paid by households to unblock for a new $14.9 billion loan program with the IMF. The nation's National Commission for Energy Regulation decided  to double from Aug. 1 the price paid for gas.

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