Fertiliser prices to rise this week, says Vinachem

22:39' 29/04/2008 (GMT+7)
VietNamNet Bridge – State-owned fertiliser producers will raise prices this week, announced Nguyen Duy Sy, deputy director of the Viet Nam National Chemical Corporation (Vinachem).
Workers arrange bags of fertiliser on a barge at Phu My port in the southern province of Ba Ria-Vung Tau. State-run fertiliser companies plan to raise their prices this week.
Vinachem’s fertiliser-making subsidiaries would decide the level of price adjustment on their own, Sy said.
For instance, Binh Dien Fertiliser Co would decide the price it would charge for NPK fertiliser, currently selling VND12.656mil (US$791) per tonne.
Imported raw material costs were cited as the main reason forcing fertiliser producers to increase prices. Costs had risen in many instances by 15% or more in the month of April alone.
On the world market, the price of diammonium phosphate (DAP) has risen $350-400 per tonne to $1,400-1,500 per tonne over the past month, Sy noted. The price of potassium fertiliser has risen $130 to $1,000 per tonne and that of urea $70 to $450 per tonne. All were expected to continue rising.
While it has been possible to control the price of fertilisers which were dependent on domestic raw materials such as coal and ore, it was more difficult to stabilise the price of fertilisers using imported materials without suffering losses, wrote Hoang Manh Tien, head of Vinachem’s planning and marketing department, on the corporation’s website.
Once receiving the parent corporation’s directive to stabilise prices and boost production, many Vinachem subsidiaries complained about higher raw material prices and their impact on production, according to Tien.
Binh Dien Fertiliser Co reported it cost the company about VND1.2mil to produce one tonne of NPK fertiliser, including costs of DAP and ammonium sulphate as well as cost of other materials and inputs such as electricity, packaging, wages and overheads. Meanwhile, the company has been selling NPK fertiliser at a price of VND11.2mil per tonne.
Lam Thao Fertiliser and Chemicals Co and the Long Thanh Fertiliser Plant have reported similar situations since the price of sulphur, a chemical element mainly used in fertiliser, has increased to $700 per tonne, double last year’s price.
Using stored sulphur has allowed prices to remain stable for a time, said Lam Thao deputy director Tran Ngoc Bach, but it would be difficult to maintain the price once production relied on new supplies of imported sulphur.
In addition to higher input costs, fertiliser companies were also reporting problems obtaining bank financing.
Southern Fertiliser Co claimed that commercial banks were facing a shortage of liquidity and had restricted loans to many enterprises.