Egypt's Fertilizers Industry Update | New chapter in the fertilizers story
​Long awaited price increase finally implemented by the government: The Egyptian government announced the raising of the subsidized fertilizer price from EGP 2,000/ton of urea to reach EGP 2,959/ton. Meanwhile, nitrate prices have been raised from EGP 1,950/ton to reach EGP 2,860/ton. The price increase comes a as a relief for fertilizer producers who have been recording losses due to the increase in production cost. Following the floatation natural gas cost, which is valued at USD 4.5/mmbtu witnessed a n increase with exchange rate (EGP/USD) reaching EGP 18.0 compared to EGP 8.88 pre floatation. This led to cost/ton reaching EGP 3,400-3,500 causing companies to witness negative gross profit of EPG 1,400/ton. The latest increase comes in support of our view in the latest coverage of the fertilizers sector which argued that a 50% price increase would be the only way forward for fertilizer producers. Due to the unfavorable margins for fertilizers producers it would have been impossible for them to maintain operations at previous price levels.
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