[T.S.R:16819] Fertilisers-Afro-Asian Headwinds

Civil unrest in Egypt and Tunisia could lead to hike in nitrogen and phosphate prices. Egypt is a key supplier of Nitrogen (urea) while Tunisia is a major supplier of phosphate rock and other fertilizer products.

Positive for Urea / Nitrogen Prices

Egypt accounts for roughly 3 percent of global urea production and 8 percent of global urea exports. Supply concerns could firm up the market and help stabilize prices, which had started to soften recently. There are no reports of production being affected, however dispatches are getting affected.

Positive for DAP / Phosphate Prices

Egypt accounts for 2 percent and Tunisia accounts for roughly 4.4 percent of global phosphate rock capacity. Tunisian rock deliveries have been impacted due to rail disruptions and could impact finished phosphate fertilizer (mainly DAP) production, and Groupe Chimique Tunisien. This could further tighten what is already a very tight market. as of the end of December 2010, North American DAP inventories were 41 percent below the 5-year average.

Impact on Indian companies: Negative

Tunisia is one of key market (though much smaller than Morocco, but important) from where Indian companies source Phosphate Rock / Phosphoric acid. Supply disruptions for short term could impact utilization levels of DAP / complexes plants in India. Rising rices of DAP, Urea, Ammonia will put more pressure on margins of complex fertiliser makers. Unrest in Egypt / Tunisia is negative for Indian players for short term as the prices of key raw materials go up due to unrest, which is affecting supplies

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