Stocks remain attractive on record fertiliser prices (BFC)
Stocks remain attractive on record fertiliser prices (BFC)
As prices of fertilisers keep soaring to all-time highs and showing no signs of cooling down, the World Bank expects that the uptrend will continue next year.
In the international market, the Green Markets North American Fertiliser Price Index ended last week at US$1,081 a tonne, up 160 per cent for the year, while in China, spot urea jumped more than 200 per cent this year to a record level.
In the Vietnamese market, the prices of local products and imported fertilisers of all kinds, including urea, DAP potassium also increased by 80-150 per cent compared to the beginning of the year.
The gains were mainly due to higher prices of input materials. Of which, prices of natural gas doubled, while prices of coal rose 3-4 times. This has caused many fertiliser plants to stop working or cut output, affecting supply.
The complex development of COVID-19 may cause many fertiliser factories to halt production unexpectedly, while countries increase production and hoard food. The market has been tighter as leading fertiliser exporters including China, Russia and Egypt stopped or limited exports.
According to fertiliser importer Vinacam, domestic fertiliser prices will continue to stay high according to global prices. The price of potassium powder will remain stable at VND13-13.5 million per tonne, and the trend is likely to last until February 2022. Particularly, potassium flakes will stand at a high level of VND17-17.5 million per tonne and are on track to hit VND18 million a tonne by the end of the first quarter of 2022 due to scarce supply.
Meanwhile, after China's decision to ban exports, Russia has moved to tighten quotas for nitrogen fertilisers and nitrogen-containing synthetic fertilisers, so prices of DAP fertilisers will maintain its growth momentum. Of which, brown colour DAP fertiliser price is expected to soon breach VND23 million per tonne, while Hong Ha green DAP and Korean DAP fertilisers will be traded around VND24-25 million a tonne. The domestic production of DAP fertiliser remained low due to difficulties in mining apatite ore.
Analysts from Bank for Investment & Development of Vietnam Securities Company forecast that global fertiliser prices will remain high in late 2021 and early 2022 because of uncertain fluctuations in prices of gas, crude oil and coal raw materials, while freight rates stayed high.
Fertiliser stocks benefit from big profits
Despite higher transportation and raw material costs, the sharp increase in finished product prices has helped fertiliser producers gain. It is forecast that fertiliser enterprises will have business results over expectations in the fourth quarter of 2021 and continue to grow impressively in 2022.
A series of members of Viet Nam National Chemical Group (Vinachem) also recorded great profits. Statistics showed that DAP - Vinachem JSC (DDV)'s profit in the first 11 months of the year reached 277.3 per cent of the yearly plan. Lam Thao Fertilisers and Chemicals JSC (LAS)’s profit was nearly 228 per cent of the yearly plan. The South Fertiliser JSC (SFG) reached 768.8 per cent of the year’s plan, while Binh Dien Fertiliser (BFC) achieved 153.6 per cent of its yearly plan.
The skyrocketing trend of fertilisers lasted throughout 2021 and is expected to continue into 2022, brightening the profits of businesses’ outlook in the industry. This also supports fertiliser stocks on the stock market.
Since the beginning of the year, many fertiliser stocks have performed well, typically Petrovietnam Fertilizer & Chemicals Corporation (DPM), Petro Viet Nam Ca Mau Fertiliser JSC (DCM), Duc Giang Chemicals Group (DGC) and DDV.
Accordingly, DDV shares have surged by 216 per cent since the beginning of the year, from VND8,800 a share to VND27,800 on Wednesday. Other fertiliser stocks posting outstanding performance compared to the beginning of the year are DPM, up 180 per cent, DCM (178 per cent), and LAS up 200 per cent.
Although many fertiliser stocks have soared dramatically since the beginning of the year, thanks to the market's favorable conditions and business results in 2022, which have not been fully priced in, fertiliser stocks are still attractive.
Therefore, experts believe that investors should take advantage of the declines of the market to accumulate more fertiliser stocks, expecting an uptrend in price in the near future.
