Now Reading: Ammonia price relief lifts fertiliser stocks outlook
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Ammonia price relief lifts fertiliser stocks outlook
The benchmark Tampa ammonia contract fell $110 per metric tonne month-on-month in late June, followed by a further $30 cut for August, signalling a shift from scarcity to surplus, according to Systematix…
The Story in Brief
The benchmark Tampa ammonia contract fell $110 per metric tonne month-on-month in late June, followed by a further $30 cut for August, signalling a shift from scarcity to surplus, according to Systematix Institutional Research. Analysts say the decline eases pressure on non-urea fertiliser makers like Coromandel International and Paradeep Phosphates.
However, elevated sulphur costs continue to squeeze margins. Varun Gogia of Icra noted that ammonia prices are still 20% above pre-West Asia crisis levels and that constrained sulphur availability keeps demand under check. For complex fertiliser companies, ammonia contributes less than 20% of input costs, limiting the relief, said Elara Capital.
The Indian Opinion
The falling ammonia price is welcome, but it is only one ingredient in the cost recipe. Sulphur remains stubbornly high, and ammonia accounts for less than a fifth of costs for complex fertiliser makers, as Elara Capital points out. The narrative of a full turnaround ignores this reality. Watch sulphur prices over the next quarter, if they stay elevated, the relief will remain partial, and stock valuations may not hold.
Source: livemint.com
This story was synthesised by AI from the source linked above.
