The Integer View 21 March 2017 - Welcome Back and Summit Reflection; China Raises Pressure For Nitrogen; Producer Expands Distribution; India Fertilizer Subsidies Announced - Integer
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The Integer View 21 March 2017 – Welcome Back and Summit Reflection; China Raises Pressure For Nitrogen; Producer Expands Distribution; India Fertilizer Subsidies Announced

Posted On: 05-04-2017 By: Grahame Turnbull

To open this week’s view on the market we’re going to self-indulge somewhat, with a couple of Integer-related features.

By Oliver Hatfield  – Director of Fertilizers and Chemicals

We’ve signed Pogba!

First off, it’s déjà vu all over again as we welcome back a not so new member to the Integer fertilizer analysis team – Alistair Wallace. Alistair first joined the Integer team way back in 2006. He spent around 6 years with us working in our fertilizer and emissions team, building up a solid knowledge of both sectors while developing his analytical capabilities. In 2012, Alistair jumped ship to our competitors down the road, CRU, where he refined his analytical craft and built up a sound reputation as a leading commentator on the global nitrogen business.

And now we’re delighted that Alistair will be joining Integer once again, working alongside Laura Cross, Benjamin Treadwell and Lynn Wang in our nitrogen team. This gives our research capacity a serious boost to what we consider to be an unrivalled level in terms of experience and capability.  As keen followers of English Premier League football, several of the team have likened this to Manchester United re-signing Paul Pogba!

Value Added Fertilizer Summit Asia 2017

Our second indulgence is to reflect on our first Value Added Fertilizer Summit Asia 2017, which took place just over a month ago in Singapore. While the commodity fertilizer sector remains in the doldrums, the more dynamic market for specialty fertilizers is increasingly attracting attention. Although it was our first fertilizer industry conference it gave us a chance to marry up extensive experience of running highly successful conferences in the emissions sector (AdBlue, DEF) around the world, which we combined with our growing base of knowledge of the specialty fertilizer business.

A turnout of more than 110 delegates were treated to some really insightful presentations from a range of experts on the markets for specialties in Asia and beyond, with sessions on slow and controlled release, water solubles, micronutrients  and biostimulants . The summit proved to be an excellent forum for discussion and knowledge sharing as well as a great networking platform, and this was especially evident in our unique interactive session at the end of the summit.


Chinese environment supervision raises pressure on nitrogen production

By Lynn Wang – Research Manager based in China

Already struggling to operate profitably amid a squeeze on weak nitrogen prices and fluctuating coal prices, the Chinese nitrogen sector has also come under increasing environmental pressure. Chinese environment supervision has been strict and frequent since the end of 2016 due to serious problems with smog in the north of China, especially in Beijing. It is reported that the government will inspect 15 provinces in April 2017, including Hunan, Anhui, Xinjiang, Shanxi, Shandong and Sichuan which are all major nitrogen fertilizer producers.

In the middle of February, the Ministry of Environmental Protection of China inspected Beijing, Tianjin and another 16 cities in Hebei and Shanxi provinces, both of which are big urea producing provinces.

During the periods of inspection, some urea producers reduce operating rates to avoid problems, but there were no reports that plants stopped production permanently, and so far, there is only modest direct environmental impact on urea production.

Nevertheless, urea producers are still curtailing output due to challenging market conditions. Significant volumes of inefficient capacity were already closed in 2015 and 2016 due to market weakness and fierce competition. We estimate about 4.4 million tpy of urea capacity was closed in 2016, and 3.3 million tpy the previous year.

Read more on Integer’s Nitrogen Cost and Profit Margin Service, Nitrogen 10-Year Outlook Service and The Chinese Urea Industry.

Russian producer Acron expands distribution network and loading facilities

By Benjamin Treadwell – Nitrogen Analyst

Russian producer Acron announced this week that they will be commissioning a new ammonia loading facility that will have a capacity of 1,500 tonnes/day of ammonia. Ammonia will then be pumped into specialised rail cars at its Veliky Novgorod site for distribution via its rail network. The facility, which came at an undisclosed cost, will improve loading efficiency and reduce rail car tank downtime.

Acron has also recently announced that it is expanding its distribution network with the acquisition of a distribution and logistics facility in Rostov region. The acquisition was of CJSC Millerovo Interdistrict Selhozkhimia, which owns a 20,000-tonne mineral fertiliser warehouse facility. This is Acron’s distribution network’s twelfth facility, bringing the Group’s total storage capacity to 189,000 tonnes.

Acron states that the decision to invest in logistics was partly due to the increase in ammonia production capacity following the July 2016 launch of its fourth ammonia unit at the Novgorod fertilizer complex. Earlier this month, Acron said the new $420m unit had produced more than 500,000 tonnes of ammonia for use in the downstream fertilizer operations or for export.

Ownership and control of logistics in Russia is important. Earlier this year, a six-week shutdown of the key pipeline that carries ammonia from Russian producer Togliattiazot to the port of Yuzhny in Ukraine led to significant disruption in export availability, global pricing and the supply and demand balance.

Read more on Integer’s Nitrogen Cost and Profit Margin Service, Nitrogen 10-Year Outlook Service; and Fertilizer Country Profiles.

All eyes on India as government announces fertilizer subsidies

By Ibi Idoniboye – Lead Phosphate and NPK Analyst

On April 3rd, the Indian government’s Cabinet Committee on Economic Affairs announced a reduction to the 2017-2018 Nutrient Based Subsidy (NBS) for phosphate fertilizers from US$204 per tonne to US$185 per tonne. Buying had stalled through Q1 2017due to subsidy uncertainty, and the confirmation should help boost Indian DAP imports in time for the kharif crop season.

Indian DAP imports have been soft due to relatively high inventories, and a preference for domestic product based on phosphoric acid imports. In early March, OCP and its Indian joint venture partners agreed Q2 2017 phosphoric acid price contracts at US$590/tonne CFR, representing a $40/tonne increase on the Q1 2017 settlement. The deal was based on a DAP parity value of around $380/tonne CFR. The Indian DAP benchmark averaged US$370/tonne CFR in March, around US$30/tonne above the January 2017 average, supported by increased DAP production costs, due to higher ammonia prices.

Import buying should increase through Q2 2017 in line with kharif plantings, and DAP imports are expected to be more competitive than phosphoric acid based domestic supply. Competition between global DAP exporters for Indian market share is likely to exert some downward pressure on DAP price benchmarks, particularly if ammonia prices soften through Q2 2017.

Read more on Integer’s The Chinese Phosphate Industry, addressing the global impactPhosphate Cost and Profit Margin Service and Phosphate Rock Outlook Report.


Nitrogen Market Webinar – The evolving impact of energy

  • webinar-icon-13-2Free webinar: Analysing the latest market developments, the impact of energy, short and long term outlook
  • Register even if you can’t attend: We’ll send all registrants a link to the webinar recording – to watch when it suits you
  • Webinar date and duration: 27th April 2017, expected duration: 45 minutes

Register for free here – simply click the time you prefer below:

>> Register here: 9AM London time
(10AM Berlin / 12 midday Dubai / 4PM Beijing / 8PM Sydney)

>> Register here: 5PM London time
(12 midday New York / 3PM Sao Paulo / 9AM Vancouver)

This Nitrogen webinar will cover:

  • Key changes in marginal nitrogen production costs
  • Gas market liberalisation – the future of low-cost nitrogen production?
  • The impact of falling oil revenues on nitrogen producers in MENA
  • How do these changes shape Integer’s forecasts?
  • Confidential Q&A session at the end

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