Buying urea from Ukraine (Debunking the myths)
Buying urea from Ukraine
(Debunking the myths).
Recently, we`ve been contacted by hundreds of entrepreneurs from the EU,
Asia and North America, who want to import urea from Ukraine. They say
that saw lots of advertisements all over the internet to export urea
from Ukraine in unlimited quantities. Because we have very good
relations with all major Ukrainian urea producing plants and know this
market, we decided to debunk some myths and reveal the truth on
Ukrainian urea market as well as to teach buyers how to avoid most
common mistakes.
General
overview.
As it is well known, Ukraine is one of
the leading producers and exporters of nitrogen fertilizers in the
world. Currently, chemical industry products amount up to 10% of
Ukrainian exports (around 90% - nitrogen fertilizers). Ukrainian share
of global mineral fertilizer market is about 10%. Ukraine sells
fertilizers to about 70 countries all over the globe (main export
destinations are Brazil, Turkey, Mexico, Vietnam and India). Urea
amounts to 70% and ammonia nitrate - 20% of Ukrainian nitrogen
fertilizer exports.
1
Myth: We can easily buy millions of tons of urea from Ukraine.
Truth: There are 8 big mineral fertilizer
producers in Ukraine. 6 of them specialize in production of nitrogen
fertilizers and form a foundation of Ukrainian chemical export: plants
from Horlivka and Odesa possess around 24% of production; Cherkasy,
Dniprodzerzinsk - about 22% and Severodonetsk - up to 10%. Annually they
produce only 3,6 million tons of urea. Some part of this urea is sold
internally, i.e. on Ukrainian domestic market. Currently, Ukraine
exports about 280.000 tons of urea and 130.000 tons of ammonia nitrate
per month. The average Ukrainian urea plant exports only around 300.000
tons of urea per year. These figures are very stable and annually
fluctuate very slightly.
When we see an
URGENT!!! order for 2-3 million tons of urea, it is clear that this
people sell the air, they’ve never seen the product and never worked in
the filed. So, if you see an advertisement that someone can export a few
millions tons of urea from Ukraine – for sure this is a fraud. Stay away
from these people.
2
Myth: Ukrainian urea is very cheap.
Truth: All
you need to produce cheap fertilizers is cheap gas, which is used in
production. Till 2004 Ukrainian plants paid almost the same price for
Russian gas as Russian producers – around 35-55 USD for 1.000 cubic
meters, which is extremely cheap. In 2004 Russia unilaterally terminated
contract on gas supply with Ukraine and raised the gas prices 2-3 times.
This dramatically increased the urea production costs and consequently
the end product price.
In addition, every month
the Ministry of Economy sets up the indicative price for exports of urea
and ammonia. Producers are obliged to sell the products not cheaper than
the indicative price.
There`s no indicative
price for export of ammonia nitrate, but the international supply
contract is to be registered with the Ministry of Economy.
For example, the indicative price for exports of
urea in July is 257 USD per ton, the price for ammonia – 225 USD per
ton. So, if anyone claims to sell you Ukrainian urea or ammonia cheaper
than the indicative price – for sure this is a fraud. Stay away from
these people.
3 Myth: We
will pay by letter of credit and require performance bond.
Truth: Forget it! All urea producers require
100% advance payment and no one accepts performance bond. A plus is that
you can visit the plant, meet the people in person and sign the
contract.
4 Myth: We
will buy urea under CIF terms.
Truth: Forget it!
All urea producers work under FOB or DAF terms. In exceptional cases
they may accept CPT, but only to neighboring countries.
Conclusion. Ukraine is a
net exporter of mineral fertilizers, especially nitrogen fertilizers.
Because demand greatly exceeds offer, it will be very hard to get a
contract for a foreign company without professional aid of Ukrainian
agent. Typical payment methods as well as terms of delivery are not
applicable. Promise to export millions of tons of Ukrainian urea at
price below 200 USD is a myth, which will cost you lots of money and
time.
Should you need
any help on import of mineral fertilizers from Ukraine, feel free to
contact us through our web site – www.kpl.net.ua. Our professional
managers are always ready to assist you in this matter. Because we know
Ukrainian market like the palm of our hand, we can save you a great deal
of time and money, help you to make right decision and prevent fraud.
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UkrRos LLC.
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