Ostchem reports significant rebound in fertilizer production for January-September 2023

In the nine months spanning January to September 2023, Ostchem enterprises, a part of the Group DF holding, announced the production of 1.57 million tons of mineral fertilizers. The production rate exhibited significant growth compared to the same period last year, with specific facilities showing notable spikes.

Cherkasy Azot, one of the Ostchem plants, elevated its output by a staggering 148%, generating 1.22 million tons of mineral fertilizers. Rivneazot, another key player in the Group DF portfolio, marked a 7% increase, contributing 347,300 tons.

Amidst this positive upswing, Ostchem observed dynamic growth in the production of urea, urea-ammonia mixture (UAM), and ammonium nitrate, which surged by 202%, 150%, and 89%, respectively. However, lime-ammonium nitrate (LAN) recorded a significant decline of 72%, bringing down its volume to 36,900 tons.

Serhii Pavliuchuk, the head of Ostchem’s nitrogen business, noted that despite the increase in production numbers, the company has not returned to its pre-war capabilities. “During the year, the utilization of main capacities did not exceed 70-80%,” he stated. Pavliuchuk attributes the shortfall to a marked increase in imported fertilizers flooding the Ukrainian market.

Ostchem plants have met their nine-month production targets without any disruptions and have fulfilled contracts with local farmers punctually. The future operation levels are dependent on market demand for mineral fertilizers, according to Pavliuchuk.

However, there are looming challenges. The demand for mineral fertilizers has slightly tapered since the onset of autumn. Influencing factors include decreased purchasing power of farmers, stockpiling by consumers, and saturation of consumer demand during high-activity spring and summer months.

The situation is further exacerbated by a steep rise in imports. Oleh Arestarkhov, the director of corporate communications at Group DF, highlighted that imports grew by 46.6% in the third quarter of 2023. “This indicates that imports exceed domestic production,” he said, pointing out that products from Russian-friendly countries, notably repackaged Belarusian fertilizers and urea from Turkmenistan, continue to permeate the market under questionable circumstances.

The State Customs Service of Ukraine reported a nearly twelvefold increase in urea imports from Turkmenistan within two years. Arestarkhov emphasizes the need for immediate adjustments in industrial policy to invigorate domestic production.

Ostchem Holding is a subsidiary under the diversified international group of companies, Group DF, which has its business footprint in 11 countries across Europe and Asia. Dmytro Firtash, a prominent businessman, is the founder and owner of Group DF.