Ostchem Enterprises Reduce Production Of Mineral Fertilizers By 66.9% To 1.8 Million Tons In 2022
In 2022, Ostchem enterprises reduced their production of mineral fertilizers by 66.9% to 1.754 million tons compared to 2021.
This is indicated in the statement of the Group DF, which includes Ostchem, Ukrainian News Agency reports.
"In 2022, Rivneazot and Cherkasy Azot, part of Ostchem, produced 1.754 million tons of nitrogen products. Cherkasy Azot produced most of the total volume - 1.117 million tons, Rivneazot - 0.592 million tons. By February 27, 2022, Severodonetsk Azot, also part of the group, produced 0.05 million tons of nitrogen fertilizers, later its activities were blocked due to military actions. Plants produced the most popular fertilizers on the market - ammonium nitrate, urea, UAM and LAN," the message says.
In 2022, Ostchem enterprises produced: ammonia - 529,700 tons, ammonium nitrate - 521,000 tons, UAM (urea-ammonia mixture) - 248,900 tons, urea - 182,600 tons, LAN (lime-ammonium nitrate) - 204,200 tons, ammonia water - 68,000 tons.
At the same time, in 2021, the total production of Ostchem enterprises amounted to 5.3 million tons.
The main reasons for the decline in production were: the loss of control over Severodonetsk Azot; destruction of logistics and sales chains; lower export volumes due to regulatory and logistical constraints; power outages due to massive destruction of energy infrastructure facilities; high price of natural gas; a fall in solvent demand from farmers by at least 40%.
"This year is another test of the strength of our business. Despite all the tests that the war brought to business in 2022, our factories have fulfilled their obligations to farmers and large agricultural holdings and today continue to ship finished products, remaining an important link in ensuring the country's food security. The 2023 strategy for our business is to continue to develop our industrial sites and create new jobs. We will continue to modernize production and increase the production of those fertilizers, the demand for which will grow the most. The Ukrainian agricultural producer was and remains a priority for us," said Serhii Pavliuchuk, head of the Ostchem nitrogen business.
According to him, Cherkasy Azot and Rivneazot optimized the production process by introducing a number of technological solutions for energy saving.
In particular, the installation of its own power generation system made it possible to reduce electricity costs by 40%.
"In September-November, we saw a gradual recovery in demand for nitrogen fertilizers: farmers are actively concluding contracts and making prepayments for the spring season of 2023. The recovery in demand was due to the "grain agreement," which somewhat restored the purchasing power of farmers, as well as stabilized prices for natural gas and, accordingly, for mineral fertilizers. Although the pre-war level is still far away, and the war remains a significant factor affecting the consumption of fertilizers in Ukraine, we are optimistic about the future - I am sure the fertilizer market will grow. In an optimistic scenario, growth is expected plus 15-20% for the year. But the war and the "grain agreement" will remain the determining factors for the Ukrainian fertilizer market," said Oleh Arestarkhov, head of Group DF's corporate communications department.
Group DF estimates that the fertilizer market decreased by 45-50% in 2022 from 4.75 million tons to 2-2.9 million tons.
As Ukrainian News Agency earlier reported, Ostchem Holding unites Group DF nitrogen chemistry enterprises.
Group DF is a diversified international group of companies whose business is represented in 11 countries in Europe and Asia.
The main activities of the group are nitrogen, titanium and natural gas businesses.
The founder and owner of Group DF is businessman Dmytro Firtash.