Fertilizer makers left in cold by national gas campaign

China’s campaign to heat millions of homes this winter by natural gas has left fertilizer producers short of supplies and profits, an industry association said, with urea and ammonia plants halving their operating rates from a year ago.

The feedstock crunch has tightened supplies and boosted prices of fertilizer components in the world’s top agriculture market, and the trouble may carry into spring planting.

Chinese fertilizer and chemical industry associations are considering an appeal to the government to lower natural gas prices once winter is past to allay the effects of the supply shortages, according to two officials from the groups.

“We are losing lots of money every day,” said Huo, a manager at a major gas-based urea and compound fertilizer producer in northwestern China.

Huo declined to give his full name or identify his company due to the sensitivity of the issue.

His firm had to halt production of urea and synthetic ammonia last month to help ensure supplies of natural gas to households in the north.

“Prices of urea and synthetic ammonia went up significantly... We need to buy these raw materials now,” Huo said. “We also still need to pay maintenance fees for the machines and salaries for the workers. The losses are severe.”

Gas-based ammonia and urea plants usually limit operations during winter and ramp them up when gas supplies are ample, but this winter, shortages have been worse than expected. “In previous years, we were also asked to limit usage but suspension was incremental... This year, we were asked to basically shut all lines,” Huo said.

Operating rates at gas-based nitrogen fertilizer plants have plunged to just 15 percent, down from about 31 percent at the same time last year, data from the China Nitrogen Fertilizer Industry Association showed.