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February 22 – February 28, 2016

Gas prices will reduce competitiveness of Belarusian nitrogen fertilizers

The situation has not changed
Gas prices will reduce competitiveness of Belarusian nitrogen fertilizers

The difference in the price for natural gas in Ukraine and Belarus has decreased to 35%. In 2015, due to lower prices for natural gas, Grodno Azot increased exports of nitrogen fertilizers to Ukraine by 16 times in value terms; gas costs make more than 50% of the nitrogen fertilizers production cost. Due to the overall fall in prices on natural gas in Ukraine and in the world, the price of nitrogen fertilisers is likely to reduce and Belarusian producers may lose their positions on the neighbouring markets. Since natural gas prices for Belarus would remain at the level of 2015, fertilizers’ production costs will grow, proceeds will fall, and enterprises modernisation investment projects will be put off. In December 2015, Grodno Azot net profits reduced by more than BYR 200 billion. If such trends persist, Grodno Azot will no longer be among the 10 most profitable companies in Belarus.

Photo: Reuters

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