Palms & Company,
founded 1934, performs purchasing
agent services in Russia for principals/buyers/users on a retainer fee basis plus
a performance bonus based upon price savings achieved. Palms also provides
Tender Manager Services for government agencies worldwide We accept
introductions to principals from brokers, agents
and intermediaries.
This report provides a brief overview of the nitric fertilizers
industry in Russia and a company profile of the largest manufacturer of
mineral fertilizers in order to outline opportunities for fertilizer users
world-wide to establish supply sources in Russia through Palms & Company
as their buying agent. There are also opportunities to lower product acquisition
cost by acquiring ownership of these production facilities.
Methods of purchasing Russian production involve unique
intricacies and strategies. A combination of factors influence success
including:
denomination of currency in which payment is made
timing of payment
facilitation by Russian customs officials
selection of freight carriers
selection of nationality of the insurance carrier
location at which possession changes hands between seller
and buyer
Use of Palms & Company as Escrow Agent
Based upon Dr. Palms' experience in the Former Soviet Union,
before it became the Russian Federation, as well as his personal participation
as a delegate to the Presidential Summit meeting between The United States of
America and the Russian Federation, he recommends that the uninitiated in these
transactions seek competent advisors.
Equally arduous is the stream of buyer tenders initiated by
various governments such as Vietnam and China, which typically contain
conditions and terms which virtually eliminate 100% of the foreign exchange
arbitrage savings that are
obtainable from Russia's 80 factories by (a) denominating payment in
Russian rubles, (b) substituting Escrow agent wire transfer for Letters of
credit which cannot be denominated in rubles, (c) failure to appoint Palms &
Company as the tender manager. Generally these tenders are comparison
shopping expeditions which are turned over to existing suppliers for a price
renegotiation, but rarely a change in suppliers. Intermediaries can obtain
details by clicking here
1. According to the research conducted, production of mineral
fertilizers is one of the most profitable and financially sound sectors
of Russia's economy. Of the entire range of mineral fertilizers produced
in Russia, the largest share are nitric fertilizers. An estimated 13 percent
of the world's supply of nitric fertilizers is produced in Russia. Among
nitric fertilizers, there is major demand for carbamide, or urea, which
comprises 40 percent of Russia's total nitric fertilizer production. There
is also high demand for ammonium nitrate, which makes up 35 percent of
Russia's production. Ammonia water solution is another prospective product
in the market.
2. After the general decline of Russian production in
1991 - 1994, the chemical industry was recognized as one of the few Russian
industries with increased production: production rose by 20 percent in
1995. In 1995, total Russian production of ammonia and nitric fertilizers
was 9.66 million tons and 4.88 million tons, respectively. In 1996, production
of nitric fertilizers increased, while the production of ammonia decreased.
In 1997, Russian chemical companies produce up to 15 million tons of ammonia
and 8.8 million tons of nitric fertilizers.
3. The relative stability of Russian companies working
in the nitrogen industry is the result of continuous demand for these products,
in both local and international markets. In Russia, the Agro-Industrial
Complex (AIC), supported and partially funded by the Russian government,
is a large user of fertilizers. However, despite the recent increase in
sales of fertilizers to the AIC, fertilizer consumption by Russia's agricultural
sector remains very low: about 1/6th the amount of 1991 consumption. Consequently,
exports provide the most important sales volume, although, according to
manufacturers of fertilizers, they want to expand their domestic market
share because the prices on these products in Russia are higher than export
prices. At present, Russia exports over 70 percent of carbamide, about
50 percent of ammonium nitrate, and 40 percent of ammonia. As compared
to 1991, exports of nitric fertilizers have increased by 70 percent. The
largest importers of Russian fertilizers are China and India. Fertilizers
are also exported to South East Asia, Europe, and South America.
4. Currently, about 20 chemical companies in Russia are
producing about 80 percent of the total volume of nitric fertilizers and
92.4 percent of ammonia. The balance is produced by companies in the petrochemical
and metallurgical industries. However, 10 large companies lead the production
with their total share being 70 percent for nitric fertilizers and 85 percent
for ammonia. These are: Akron (Novgorod); ToliattiAzot (Toliatti); Azot
(Novomoskovsk); Azot (Kemerovo); Nevinnomyssky Azot (Nevinnomyssk); Azot
(Cherepovets); Kuybyshevazot (Toliatti); Minudobrenia (Rossosh); Azot (Bereznyaki);
Dorogobuzh (Smolensk) Phosagro (Alexander Gorbachev, Vice president). Most of these companies are profitable and growing.
At present, their production facilities are employed to a much larger extent
than in the Russian chemical industry as a whole: the average actual load
of their production capacities is 64 percent for the production of ammonia
and 55 percent for the production of nitric fertilizers, as compared to
35 percent in other chemical production facilities. Another remarkable
feature of this sub-sector is that none of these companies owe debts to
the Russian Federal government, which is a rare exception among most large
Russian manufacturers.
5. Due to the stable growth of their production volumes
and an extensive export market for their products, the nitric fertilizers
sector of the Russian chemical industry is financially stable and sound
but special handling of export shipment and customs clearance is required
as well packaging arrangements and bagging for overseas shipments. Rossiysky
Credit Bank advises that the following six companies are considered reliable
supliers: Akron (Novgorod); Minudobrenia (Perm); Nevinnomyssky Azot (Nevinnomyssk);
Toliattiazot (Toliatti); Dorogobuzh (Smolensk); and Azot (Novomoskovsk).
Palms & Company maintains electronic communication with these.
6. Company Profile:
One of the largest, most successful companies producing
nitric and compound fertilizers is Akron, formerly "Azot," located
in Northwest Russia. The firm also manufactures a range of products of
organic synthesis and non- organic chemicals. According to "Expert,"
in 1995, the company's share in the total Russian production of nitric
fertilizers was 23 percent. Akron employs over 4,000 people. Exports represent
almost 80 percent of the company's sales with 30 percent of its exports
to China, over 20 percent to Thailand; and about 10 percent to Columbia.
Since 1993, the company's investments in modernization
have considerably increased. During 1993 - 1995, USD 57.6 million were
invested to upgrade the production facilities. In 1995, the company's management
approved a long-term program for renovation and development. During an
interview with the Commercial Service staff, the managers of Akron reported
that they intend to invest about USD 100 million in modern equipment over
the next 4 - 5 years.
The following investment projects are the firm's development
program:
- Construction of new facilities for the production of
a new brand of resin. Total investment: USD 1.9 million; - Reconstruction
of the methanol factory. Construction is in progress now. The project is
expected to be completed in 1999. Total investment: USD 9.1 million; -
Reconstruction of the ammonia factory. Total investment: USD 13.5 million;
and - Reconstruction of the carbamide factory. Currently, the firm is conducting
a feasibility study. Expected investment: USD 20 million.
Co-investment opportunities exist to acquire ownership
of production at lower costs.
____________
One of Palms & Company's most valued contacts is this
industry is V.T.I. Fertasco Ltd. -(Vneshtradeinvest International Group).
This company is wide known on world mineral fertilizer market with its
branches in U.K., USA, the Netherlands, Bulgaria, the Ukraine, Hong Kong
and Moscow, with its own bank, shipping company and production facilities
in Russia and the Ukraine. The company produces and exports Urea, Ammonium
Nitrate, NPK, UAN Solution, Acetic Acid from Russia, Bulgaria and the Ukraine.
As a counter-trade they accept coal and grain with further delivery to
Russia and Bulgaria and natural gas to the Ukraine.
The branch Palms & Company communicates with is responsible
for promotion of the products all over the world, other branches are responsible
only for local markets. All trade is performed by Commercial Director and
Fertilizer Division which consists of eight persons: Head of Fertilizer
Division, Deputy Head of Fertilizer Division, Two Traders-Fertilizer Brokers
and four assistants.
This branch performs the following activities
1. Worldwide market research and analysis
2. Preliminary negotiations
3. Traveling and meeting with end-buyers
4. Contract conclusions
5. Efficiency calculations
6. Contract supervision
7. Freight operations: creation of shipment programs, nomination of M/Vs,
coordination with M/Vs of cargo plan, demurrage/dispatch calculations loading/unloading
supervision
8. Insurance operations
9. Control over handling of cargoes (inspection, bagging, etc. at factories,
Load & Discharge ports);
10. Bank operations: L/C documents turnover and supervision, financial
loans, financing of contracts
11. Organization of counter-trade operations
12. Tenders: participation, documentations and supervision.
This company is a private company with the management
style and way of thinking of top management inherent to the small private
company in spite of the worldwide scope of its activity.
_
FAQ : Frequently Asked Questions and Answers
Q. Is Carbamide a by-product of the oil and gas refining
industry?
A. Such fertilizers are not a by-product of
the oil and gas refining industry. The only connection is the using of
natural gas as a raw material in production technology.
Q. What is the
annual production of the Former Soviet Union?
A. In accordance with IFA (International Fertilizer Industry
Association) statistics Former Soviet Union has production capacity for
producing 20,831,000 metric tons of Nitrogenous fertilizers per annum.
But at the present time production capability is only 13,748,000 metric
tons per annum. from which 1,200,000 million tons is used for non fertilizer
purposes. Therefore total availability for fertilizer purposes is 11,709,000
metric ton per annum. Fertilizer demand of former Soviet Union countries is 3,093,000
mt p.a. Therefore export potentiality is approximately 8,616,000 mt p.a.
FSU export in 1996 of the main Nitrogenous fertilizer
- Urea - was divided as follows (Millions of mt of N):
Baltic states 0.2, Belarus 0.1, Russia 1.7, Ukraine 1.1,
Uzbekistan
0.1, FSU 3.1
The balance was for other nitrogenous fertilizers such
as Ammonium Nitrate, UAN Solution, NPK, etc.
Q. Where is the fertilizer produced?
A. For Russia the production of Nitrogenous fertilizers
for export come from the following cities - Rososh, Novomoskovsk, Toliatti,
Samara, Nevinnomyssk (our plant is here) Tobolsk, etc. For Ukraine - Odessa,
Dneprodzerzhinsk, Cherkassy, Severodonetsk (our plant is here).
Q. Who is responsible for marketing?
A. Our contact office is responsible for sales on the
markets which are not made to UK, USA, South East Asia, Europe) as well
as for coordination of all sales which are made by representative offices
(all documentation, financial, bank, freight operations are coming through
us). V.T.I.Fertasco Ltd.-Limassol, Cyprus is integral part of International
VTI Group (this group includes Nevinnomyssk Vneshtradeinvest and Severodonetsk
Vneshtradeinvest - our manufacturers).
Q Do you accept barter payment? A. On regular basis anthracite
coal is accepted from Vietnam against deliveries of fertilizers. We had
one precedent of grain counter-delivery. Sometimes we accept fertilizer
industry machinery and equipment. Negotiations of the manufacturer with
respect to counter-deliveries of raw sugar from Cuba, have also occurred.
Q. Does anyone else export products of this type from
Russia?
A. We are not an exclusive agent of Russian producers
in the world fertilizer market and we do not have state monopoly on fertilizer
export in Russia. Therefore there are other participants in the market
such as JSC "Acron", FEJSC "Agrochimexport", "Rosagrochim",
etc.
Q. Is the demand of the other branches a significant portion
of the world total?
A. No. Our company with all branches exports totally about
2 million metric tons of Nitrogenous Fertilizers p.a. All trade is performed
by Commercial Director and Fertilizer Division which consists of eight
persons: Head of Fertilizer Division, Deputy Head of Fertilizer Division,
Two Traders-Fertilizer Brokers and four assistants.
Q. What is the registry of the ships you are using for
transport?
A. Mainly 20-30000 mt (handy-size) and 50-60000 mt (panamax)
for bulk cargoes and 6-12000 mt for bagged cargoes. Our shipping company
owns five vessel approximately 30'000 mt each.
Q. In what nations are the insurance carriers located.
A. We work through VTI Insurance Ltd. which uses re-insurance
program using as underwriters for its policies such companies as AMEV Interlloyd,
O.W.J.Schlencker, Sun Alliance, Knight Scheuer, Nationale Nederlanden (Holland),
Aegon, etc.
Q. Do Russian Manufacturers transport in bulk as well?
A. Yes, mainly. Bagging operations can occasionally require
introduction of bagging equipment.
Q. With whom are your main banking relations.
A. For a list of Russian banks in Moscow, consult Palms
& Company. VTI Fertasco Ltd. has its accounts and relations with the
following banks (VTI Fertasco Ltd. is the only company in the Group responsible
for attracting outside funds for the Group's activity):
VTI Bank Ltd. - Netherlands Dresdner Bank, Frankfurt/Main,
"United Overseas Bank" - Geneva "Banque Paribas" -
Geneva "Banque Indosuez" - Geneva Representative branches have
their accounts in local banks. ABN-AMRO bank - Amsterdam U.S. Bank - United
States Seafirst bank - United States
Q. Is counter-trade your preferred method of payment instead
of cash?
A. Counter-trade is an exception to our usual business
practice. We prefer cash.
Q. Do you participate in Tenders? What have you bid on
such occasions.
A. Yes. Within the last few years our company participated
in tenders in India, Pakistan, Turkey, Syria, Sri Lanka. As all these countries
represent different destinations it means different freight rates from
Black Sea ports where we load our cargoes. Therefore I'll give you prices
on FOB Black Sea Port bulk for Urea (as main indicator of nitrogenous fertilizer
market). January 1994 - USD 105/mt; June 1994 - USD 155/mt; January 1995
- USD 231/mt; June 1995 - USD 209/mt; January 1996 - USD 176/mt; June 1996
- USD 1998/mt; January 1997 - USD 187/mt; June 1997 - USD 126/mt; January
2000- USD 80/mt. January 2001 $80 per metric ton. January 20003 $54 to $90
mt f.o.b. depending upon method of structuring transaction. We act as tender managers
for buyer countries. We do not bid on tenders.
These prices are at official exchange rate of rubles
32 =$1.00. Paying in rubles and buying rubles at market exchange rate can save up
to 40% of factory price quotes
Q. Can you provide us with a Quotation?
A. Only the manufacturer can provide a quotation. We are
buying agents. You can tell us the price you want to pay and as your buying
agent we can locate suppliers and negotiate for you.
Q. What is the cost of your services as our Buying Agent.
A. You pay us an annual retainer fee of $2 per metric ton based on
your intended annual volume of purchases. In addition we seek an annual incentive performance
bonus of a negotiable percentage of the spred between the lower price you pay per metric ton,
as the result of our services,
compared to what you have paid formerly.
Q. Can we buy from you a list of Russian manufacturers with
their address, email, tel, fax and name of Managing Director?
A. Yes for $500.
Q. Will it cost less if we pay in rubles instead of in
dollars
A. Yes
Q. Can rubles be paid using a Letter of Credit.
A. No. there is no bank in the world today that issues letters
of credit denominated in Russian rubles Payment in rubles is made through Palms
& Company which acts as escrow agent for the dollars
or other hard currency, paid to us with the order.
Q. Will it always cost less to buy when you are our buying
agent than if we buy if directly ourselves.
A. Yes.
Q. CAN WE TALK ON THE TELEPHONE AND RECEIVE CONSULTATION
AND ADVICE ABOUT THIS?
A. YES. JUST CLICK
HERE AND AND THEN CLICK ON "CONNECT WITH ME INSTANTLY" AND YOU WILL BE
CONNECTED TO US BY TELEPHONE. Your telephone will ring after you provide your telephone number and register. This is for calls from Canada and The United
States
POLICIES
1. We welcome serious inquiries from potential customers/principals
and will at the request of such principals conduct our communications through
confirmed intermediaries. Intermediaries cannot themselves confirm their appointment
as agents of the principal. This also assures compliance with u.S.
Government
2. It is our policy not to enter into transactions with
principals unless it is in conformity with the agreements they have in
existence with their intermediaries.
3. If brokers have no official agreement with principals
we nevertheless will honor their financial interests in making introductions
to principals.
4. We conduct our business with the principal, who is
the only party that can enter into a legally binding purchase agreement.
We are willing to forward documents through designated representatives
of the principal, or agent ackonwledged by the principal to be authorized to
bind the principal.
5. All discussions regarding product availability, performance
bonds, and inspections and other terms and conditions of transactions will
be held only with the principal or its confirmed representative.
As of November 1997 the market for fertilizers suffers
significant softening and intensive price competition. The cause of this
softening is the Chinese absence from the market since March 1997. For
some producers this means the absence of almost 50% of their business,
due to cancellations of as much as 1 million tons in orders. China usually
imports about 4 mln mt nitrogenous fertilizers annually.
Sinochem is still indicating that China will not be in
the market for urea until next year. Urea stocks already in the country
combined with domestic production have covered Chinese demand since mid
year and the next major application season does not start until March 1998.
Therefore it is possible that China would not need additional tonnages
before February.
With the increase in domestic urea production (up 16 %
in the first 7 month this year over the same period last year) the Ministry
of Chemical Industry is keen to see domestic product cover as much of domestic
demand as possible. In the meantime China has placed an import ban on urea.
In view of the Chinese position, producers have been going
to other markets such as India, Latin America, Far East with their unsold
over-stocking of product they had expected to sell to China. As a result
prices have declined drastically in other markets.
India, is also a large customer for fertilizer and regularly
invites tenders. The last three tenders were organized by MMTC, STC and
IPL in September. Due to very low prices only Middle East producers could
compete selling at prices close USD 95/mt FOB (about USD 110/mt CFR FO
One Indian Bank for vessel of 30'000 mt) which was equal to USD 78-80/mt
FOB Black Sea. Black Sea producers were not ready for such low prices.
One Russian company bid USD 98/mt FOB Black Sea port, and all awards were
given to Middle East producers. MMTC has purchased 225'000 mt Urea, IPL
- 50'000 mt and STC - 185'000 mt. Only one or two vessels were sold from
Yuzhny (50'000 mt each) at price 82.50/mt FOB Black Sea port.
TYPICAL FREIGHT COSTS
Average freight prices from Yuzhny to JNPT - 50'000 mt
- USD 2.55/t, Yuzhny/Odessa (25-30'000 mt) - USD 3.55/mt From Middle
East ports - Ruwais - JNPT USD 1.5/mt, Jubail - JNPT USD 1.6./mt, Shuaiba
- JNPT USD 1.7/mt.
There were the following prices at Indian tenders during
the last year: MMTC tender in October 1996 - USD 179-190/mt FOB Black Sea
port; IPL tender in December 1996 - USD 169-172/mt FOB Black Sea port;
MMTC tender in February 1997 - USD 146.50 - 153/mt FOB Black Sea port;
MMTC tender in May 1997 - USD 115-120/mt FOB Black Sea port; MMTC tender
in September 2002 - USD 85-90/mt FOB Black Sea port.
Russian and Ukrainian producers are facing serious problems
finding markets for their products.
Russian Producers fall into three categories:
* Producers who could not find other customers and therefore
have reduced production or closed their facilities since production costs
are sigificantly higher than current prices offered.
* Producers who were able to reduce the cost of natural
gas For example GAZPROM maneuvers with prices as needed, which enables
them to sell in any market situation. Sometimes customers buy elsewhere
above market to meet their short term requirements. Such customers have their
well established connections in the ports of loading. It is practically
impossible to use your own vessel without special agreement.
Producers whose location makes it feasible to sell only
into the domestic market, due to high transportation costs to ports or
to borders.
It is always possible to buy product from producers or
traders on FOB or CFR basis and reselling, with a margin, to end users in
other countries.
Many companies have stopped to sell to end users in such
countries as Pakistan, Syria, Sri Lanka, etc. due to huge losses. If you
do not have really very good connections inside such countries it has been
virtually impossible to recover performance guarantee bond which cost about
USD 10/mt.
Well established international fertilizer traders in these
countries tend to carry their own risk. and engage in counter trade, which
secures their payment.
Many countries require that foreign companies should be
represented in the tender only by local company. In the Malaysian market
this is through Conagra who sell through Ameropa. In the Turkish market
this is through company Kalgay or through other traders such as Sinochem.
In the Pakistan market it is through Cargill or Toepfer. In Vietnam there
are Russian companies doing business on the basis of accepting coal in
counter-trade. All above mentioned companies are experienced international
traders with very good knowledge of international market and with huge
financial resources. A newcomer will find it difficult to earn a margin
against this competition. It is a risky business to attempt to sell end users
in some local markets. It only makes sense if you have well established
connections and other business interests in the country with the possibility
of counter-trade. We will act as buying agents in Russia for such international
traders on a fee basis.
Another possibility is to penetrate into the fertilizer
production business itself. Cheap natural gas allows you to compete. We
can provide advisor service on a fee basis for acquisition of Russian producers.
Ukrainian suppliers with normal supply channels for gas
are offering product above the market at USD 150/mt FOB Black Sea port.
Those with special sources of gas supply offer prices of USD 83-85/mt FOB
Black Sea ports. We have connections that facilitate loading in Ukrainian
ports, making it it possible to offer fertilizers on CFR FO basis.
Consensus
If you have end user fertilizer customers who are capable
of paying, you can afford to buy from Russian companies at market prices
If you intend to sell to intermediary traders, you most likely have to
get into co-production to make a profit.
BAGGING
In Russia the ability to deliver product in bags does
not normally exist. Generally that means you have to have your own bagging
equipment at the port of embarkation. There are mobile models which can
be transported in 20' containers.
When product is available bagged it is usually in 50 kg
WPP/PE bags, and occasionally in 500 kg WPP/PE During transportation on
the Russian (Ukrainian) rail road, subsequent reloading from railcars
into warehouses, and finally loading on the vessel, many of this bags can
be damaged resulting in claims from the buyer. Also bagged shipments are
subject to more expensive quality and quantity inspection charges. Bagged
shipments are usually limited to small vessels (maximum 12-13'000 mt).
Bagged shipments require freight geared vessels which involves higher freight
costs than those for for gearless vessels. The loading and discharge rates
are lower for bulk cargo.
Extra cost for bagging is about USD 8/mt.
It is recommended to transport in bulk to save on freight,
and on time for loading and discharging, and on inspection and to bag cargo
at the port of discharge.
MANUFACTURING
The raw material for urea and others nitrogenous fertilizers
is natural gas. Natural gas is delivered to the factory and combined with
heat and power station (HPS).
HPS producers electricity and steam and delivers it to
the factory;
The factory using natural gas, steam and electricity to
produce ammonia and from that urea and ammonium nitrate. From urea and
ammonium nitrate the factory produces UAN Solution;
Ammonium Nitrate, UAN Solution, NPK, etc. are used for
different types of crops and demand for them differ from market to market.
The price can be calculated using the urea price as a basis for 1 Nitrogen
unit as follows:
UAN Solution - 32 pct Nitrogen min., current price - (X/46)
* 32. Any way it should be considered in every case separately.
A complete market report on China is available for $2,400.
We welcome monthly fee based representation of buyers
world-wide
Palms & Company, Inc.
We never HAVE anything to sell . We are buying agents.
We always are able to buy for principals. We obtain everything we are asked
to buy and assure our clients of obtaining it delivered
without risk at the prices and quality they specify. In
Russian language
When we are engaged to purchase, we present our clients
specifications for the various products directly to the manufacturers in
Russia.
We also can provide manufacturing equipment and financing
to Russian manufacturers so they can meet their delivery commitments to
customers. Repayment of this compensator investment is made to us in the
form of discounts of fertilizer.
Palms & Company, Inc. acts as a Buying Agent in Russia
for companies who want to buy Russian products in Russia from Russian companies.
We are retained with a fee for performing these services. We have performed
such services since 1934.
SPECIAL SERVICES REQUIRED FOR SECURE BUYING IN THE FORMER
SOVIET UNION
Subject: Buying agent services in Former Soviet Union
for Buyers World-wide
WHY YOU NEED A BUYING AGENT IN RUSSIA
The 15 newly independent states of the former Soviet Union
have a two tier pricing systems. One within the former USSR and one for
sales made to customers outside the former USSR, foreigners (you). This
pricing reflects the strange viewpoint that exports are a national treasure
for which "foreigners" should pay more than Russians. This is
a general policy reflected in hotel and airfare pricing as well. I can
buy for much less than a foreigner (you) can.
Many Russian companies do not know how to export or are
denied export privileges by the government in order to to expropriate the
profits of export to well connected Russian "intermediaries".
Russian manufacturers sell their products to intermediaries in Moscow for
a fraction of the price these intermediaries will subsequently charge you.
We can buy for you at this "internal" price directly from manufacturers.
Russian companies receive only a fraction of the price you pay when you
pay them by Letter of Credit. The government keeps the hard currency and
gives the manufacturers rubles. We eliminate that disappointment and foreign
exchange loss for Russian manufacturers We understand that it is difficult
for foreign (international) companies to find reliable suppliers in the
former USSR, of the best quality Urea at the much lower prices available
to nationals of the countries. For that customers need the buying agent
services of our company. We welcome introductions to companies who wish
to engage us to perform such services.
We also provide marine refueling services to Russian ocean
going vessels and land based utilities and therefore, in reciprocation
are accepted as exporters and have close relations with the petrochemical
industry who provide $800 million in marine gal oil and marine fuel
oil annually, and which also manufactures carbamide fertilizer.
__________
WHY PALMS & COMPANY, INC. ?
Palms & Company, Inc. was established in 1934 and
has worked in the former Soviet Union since 1989 . Palms & Company
was the first United States corporation to be licensed in 1989 by the Ministry
of Foreign Economic relations of the Soviet Union as well as government
agencies which regulate trade. In 1989 Palms & Company was authorized
by the Chief of Staff of the USSR military to travel freely within the
closed secret military cities of the USSR. We have experience, a track-record
and we are competent and qualified.
Our staff consist of nationals who are presently or were
formerly highly placed government officials, some of who are currently
the "owners" of large industries and who are able to obtain exemptions
from various government regulations regarding export, VAT. tariffs, duty,
Customs and regulations which give rise to barriers to trading with you.
Our references, credentials, testimonials and history
can be found at the WWW URLs:
We can represent your company as
buying agent of the products of the former USSR's most prominent manufacturers
of commodities such as metals, chemicals. forest products, fertilizers,
oil & gas, trains, vehicles, machinery, as well as other manufactured
products and can help you buy the products you need at the best prices
and quality from the most reliable manufacturers eliminating the risks
commonly associated with such activities.
Palms & Company acts as a purchasing agent in Russia,
The Baltics, Central Eurasia and the Former Soviet Union for publicly owned
Asian, European and American corporations traded on major stock exchanges
and privately owned companies which provide evidence of financial credibility.
Our duties include
1. Negotiating acceptance by Russian seller of purchase
prices offered by the buyer.
2. Assuring that the quality of exported good corresponds
to samples and expectations of the buyer and that no quality substitution
occurs in transit.
3. Making certain that the product has been delivered
to Rotterdam Holland and quality has been checked before payment is made
to supplier of the funds given to us by the buyer.
4. Securing waiver from Russian laws which would interfere
with attaining the objectives set forth.
5. Arranging payment to suppliers that permit them to
avoid the reductions in prices they receive and the higher taxes, which
result from remitting payment in "letter of credit form"
6. Assisting all parties in avoiding demands made upon
them for bribes, "fees", "permits", "licenses"
and border crossing facilitation.
7. Reducing prices through "foreign exchange"
"spreads" and discounts.
8. Making arrangement for most economical costs of transportation
of the cargo and Western insurance of cargo while in transit to destinations
chosen by you.
9. Provide samples
10. Making arrangements with buyers for design of labels
on products and printing of text on labels in accordance with the buyer's
requirements.
11. Receiving wire transfers of cash from buyers for making
payment for goods, but only after delivery has been received outside of
Russia into a bonded warehouse outside the former USSR, such as for instance
Rotterdam. ( equivalent to c.o.d. delivery)
12. Providing suppliers with our guarantees of payment
after delivery, which are acceptable to these suppliers.
13. Creating new methods of financing including mechanisms
for using counter-trade, barter, currency exchange, and government financed
credit.
14. Establishing lines of credit for with suppliers,
15. Arranging direct credit for with the supplier companies
without the necessity for arranging bank credit.
16. Assisting buyers to become part owners of the supplier
companies, 17. Assist in identifying Russian firms which can be suppliers
of Urea
18. Identify supplier which will accept payment in barter
form.
19. Identify suppliers that are eligible for U.S. Government
or European Government sponsored capital investment to modernize their
production capabilities and further reduce cost and prices.
20. Providing technology and "know-how' and management
and accounting and "total quality management" services to suppliers
when necessary and desirable and on such basis as is mutually agreed upon
as necessary to meet buyer's objectives and concerns.
provide supplier information to companies who are not
clients
represent more than one buyer of a given
product(s)
Our Compensation
Is negotiable and takes the form of a combination of the
following
basic monthly retainer to cover expenses
percentage of savings effected in purchase prices
performance bonuses
stock options
We find it useful that negotiations be preceded by a detailed
presentation of the market, economic, political and manufacturing conditions
existing within the industry and pertinent SIC codes, to acquaint first
time buyers with the unique traps and pitfalls which exist in the markets
of the former Soviet Union and the security mechanisms required to do business
safely.
Common specifications are:
NITROGEN: 46.00% MINIMUM MOISTURE: 0.50% MAXIMUM BIURET
CONTENT: 1.0% MAXIMUM GRANULATION: 90.0% MAX MIN. BETWEEN 1-4MM 3.0% MAX.
LESS THAN 1MM Color: Pure White Melting Point: 132╟ C Physical: Free Flowing,
Treated Against Caking 100% Free From Harmful Substances
Production of mineral fertilizers is one of the most profitable
and financially sound sectors of Russia's economy. Of the entire range
of mineral fertilizers produced in Russia, the largest share are nitric
fertilizers. 13 percent of the world's supply of nitric fertilizers is
produced in Russia. Among nitric fertilizers, there is major demand for
carbamide, or urea, which comprises 40 percent of Russia's total nitric
fertilizer production. There is also high demand for ammonium nitrate,
which makes up 35 percent of Russia's production. Ammonia water solution
is another potential product for the market.
After the general decline of Russian production in 1991
- 1994, the chemical industry was recognized as one of the few Russian
industries with increased production: production rose by 20 percent in
1995. In 1995, total Russian production of ammonia and nitric fertilizers
was 9.66 million tons and 4.88 million tons, respectively. In 1996, production
of nitric fertilizers increased, while the production of ammonia decreased.
In 1997, Russian chemical companies will be able to produce up to 15 million
tons of ammonia and 8.8 million tons of nitric fertilizers.
The relative stability of Russian companies working in
the nitrogen industry is the result of continuous demand for these products,
in both local and international markets. In Russia, the Agro-Industrial
Complex (AIC), supported and partially funded by the Russian government,
is a large user of fertilizers. However, despite the recent increase in
sales of fertilizers to the AIC, fertilizer consumption by Russia's agricultural
sector remains very low: almost 80% times less than in 1991. Consequently,
exports provide the most important sales volume, although, according to
manufacturers of fertilizers, they want to expand their domestic market
share because the prices on these products in Russia are higher than export
prices. Recent Chinese bans on imports and a policy of developing self
sufficiency in domestic production have brought about significant changes
in world market prices from highs of 147 per ton to as low as $40 per ton. At present, Russia exports more than 70 percent of carbamide, about
50 percent of ammonium nitrate, and 40 percent of domestic ammonia production.
As compared to 1991, exports of nitric fertilizers have increased by 70
percent. The largest importers of Russian fertilizers have until recently
been China (Sinochem, Beijing) and India. Lately China has boycotted imports
and seeks to manufacture its needs domestically. This has caused a drop
of almost $80 per ton in world market prices. Russian fertilizers are also
exported to South East Asia, Europe, and South America.
Currently, about 20 chemical companies in Russia are producing
about 80 percent of the total volume of nitric fertilizers and 92.4 percent
of ammonia. The rest is produced by companies in the petrochemical and
metallurgical industries. We have storng relations with the pertochemical
industry since we buy $800 million in Marine Gal Oil and marine Fuel Oil
from Russian refineries. 10 large companies lead the production with their
total share of 70 percent for nitric fertilizers and 85 percent for ammonia.
These are: Akron (Novgorod); ToliattiAzot (Toliatti); Azot (Novomoskovsk);
Azot (Kemerovo); Nevinnomyssky Azot (Nevinnomyssk); Azot (Cherepovets);
Kuybyshevazot (Toliatti); Minudobrenia (Rossosh); Azot (Bereznyaki); Dorogobuzh
(Smolensk). Our relationship with these companies is good and for the right
buyers we could negotiate credit as well as favorable prices and offer
tax advantages.
These companies are profitable and growing. At present,
their production facilities are employed to a much larger extent than in
the Russian chemical industry as a whole: the average actual load of their
production capacities is 64 percent for the production of ammonia and 55
percent for the production of nitric fertilizers, as compared to 35 percent
in other chemical production facilities. Another remarkable feature of
this sub-sector is that none of these companies owe debts to the Russian
Federal government, which is a rare exception among most large Russian
manufacturers.
Due to the stable growth of their production volumes and
an extensive export market for their products, the nitric fertilizers sector
of the Russian chemical industry is attractive for acquisition which would
provide a source of supply at considerable below world market rates (significantly
less than $80 per ton). The following six companies are considered possible
opportunities for investment: Akron (Novgorod); Minudobrenia (Perm); Nevinnomyssky
Azot (Nevinnomyssk); Toliattiazot (Toliatti); Dorogobuzh (Smolensk); and
Azot (Novomoskovsk). Palms & Company can perform due-diligence in connections
with such overtures.
Company Profile:
One of the largest, most successful companies producing
nitric and compound fertilizers is Akron, formerly "Azot," located
in the town of Novgorod, Northwest Russia. The firm also manufactures a
range of products of organic synthesis and non- organic chemicals. The
company's share in the total Russian production of nitric fertilizers was
23 percent. Akron employs over 4,000 people. Exports represent almost 80
percent of the company's sales with 30 percent of its exports to China
(Sinochem Corp), over 20 percent to Thailand; and about 10 percent to Columbia.
Since 1993, the company's investments in modernization
have considerably increased. During 1993 - 1995, USD 57.6 million were
invested to upgrade the production facilities. In 1995, the company's management
approved a long-term program for renovation and development. From 1995-1999
there was intended investment of about and additional USD 100 million in
modern equipment. We haven't attempted to confirm that since we haven't
done any business with them lately.
The following investment projects were the firm's intended
development program in 1996.
- Construction of new facilities for the production of
a new brand of resin. Total investment: USD 1.9 million; - Reconstruction
of the methanol factory. Construction is in progress now. The project is
expected to be completed in 1999. Total investment: USD 9.1 million; -
Reconstruction of the ammonia factory. Total investment: USD 13.5 million;
and - Reconstruction of the carbamide factory. Currently, the firm is conducting
a feasibility study. Expected investment: USD 20 million.
For details, interested U.S. equipment suppliers and investors
should contact Palms & Company. We do not recommend that the uninitiated
deal directly in Russia with Russian companies. Caveat Emptor applies.
Akron Mr Dmitry Kantor, Chairman of the Board of Directors
Mr Valery Ivanov, Director General Akron, 173012, Novgorod, Russia tel:
7 (8162) 196-555 fax: 7-(8162)-196-100
Azot Mr Vladimir Ilyin, Director General Azot, 162610,
Cherepovets, Vologda Region, Russia tel: 7 (82022) 77739 fax: 7 (82022)
53683
ToliattiAzot Mr Valery Spitsa, Director ToliattiAzot,
445022, Toliatti, Samara Region, Russia tel (local): 291-021
Kuybyshevazot Mr Viktor Gerasimenko, Director 6, ul.Novozavodskaya,
Toliatti, 445652, Russia tel (local): 291-010 fax: 234-551 ____________
Our advice and assistance is available on a hourly rate
basis. Depending upon the client's history and references we consider equity
participation of up to 80% of our hourly rate when requested to do so.
________________________________________________________________________
China Fertilizer Market Review & Outlook
1998-2000.
Background
Since 1996 China's fertilizer market has experienced a
recession. Both producers and suppliers have suffered falling returns.
To revive the sluggish market, the Chinese government carried out a series
of reforms in 1998 to cut middle links in supply, increase supplying channels
and lower the cost of distribution. The agent service of fertilizer imports
has been reformed, which ended the monopoly of Sinochem. Nitrogen imports
will be subject to VAT. Nitrogen imports in 1998 was suspended. Fertilizer
prices are to be determined by the market. Expansion of fertilizer production
will be mainly achieved through ways of economical investment such as technical
innovation, capacity improvement, energy-saving and cost reduction.
Taught a lesson by the unprecedented floods in the summer
of 1998, the Chinese government decided to return 10% of arable land to
lake waters. Does this decision affect the total fertilizer consumption?
How does the national grain distribution system reform affect farmers'
income and farmers' incentive in fertilizer purchase?
The 3rd session of the 15th Committee of Chinese Communist
Party reassured farmers of continuous lease of land to them for 30 more
years. This policy encouraged farmers to switch from short-term pursuit
to long-term systematic investment in agricultural production.
The above elements made the 1998 fertilizer market very
complicated. Therefore, it is important for world major fertilizer producers
and traders concerned to have a good understanding of the market as well
as the future trends.
Objective of the Study
This study reviews and analyses the production, distribution,
market prices, imports & exports of fertilizers and government policy
changes in 1998-1999. On the bases of detailed analyses, we will present
our prediction of the market trends in 2000.
China Fertilizer Market Review & Outlook 1998-1999
Preliminary Study Outline
1. China's Fertilizer Market Review 1998 1.1 General situation
of production and features 1.2 Imports & exports 1.2.1 Changes in import
policies 1.2.2 Changes in import quantity & price 1.2.3 Changes in
the product-mix of imported and exported fertilizers 1.3 China's fertilizer
demand 1.3.1 Changes in the demand structure 1.3.2 Impact of floods on
fertilizer demand 1.3.3 Impact of "returning arable land to lake"
policy on fertilizer demand 1.4 China's fertilizer distribution 1.4.1 Reform
in the distribution system 1.4.2 Fertilizer distribution 1.4.3 Features
of fertilizer market price changes 1.5 Readjustment of China's 9th Five-Year
plan for fertilizer 1.6 Started and completed projects and proposed projects
preliminarily approved for construction in 1998 2. China's Fertilizer Market
in 1999 2.1 Estimates of production and consumption 2.1.1 Estimate of production
2.1.2 Estimate of consumption 2.2 Estimates of imports and possible policy
changes 2.2.1 Estimate of imports 2.2.2 Possible changes in the import
policies 2.3 Fertilizer projects scheduled to be completed in 1999 3. N-Fertilizer
Market Review&Outlook 1998~1999 3.1 Features of nitrogen production
in 1998 3.1.1 Features of nitrogen production in 1998 3.1.2 Operational
situation of small nitrogen plants and their stock in 1998 3.2 Analysis
of nitrogen imports in 1998 3.2.1 Policy changes concerning nitrogen imports
in 1998 3.3 Nitrogen consumption and changes in the consumption structure
in 1998 3.4 Urea production, consumption and market price changes in 1998
3.4.1 Urea production in 1998 3.4.2 Urea consumption in 1998 3.4.3 Features
of market price changes for imported and home-made urea in 1998 3.5 ABC
production, consumption and market price changes in 1998 3.5.1 Role of
ABC in China's fertilizer market 3.5.2 ABC production in 1998 3.5.3 ABC
consumption in 1998 3.5.4 Features of ABC market price changes 3.6 Strategic
changes in China's nitrogen development plan 3.7 Progress in the restructuring
of small nitrogen plants in 1998 3.8 Outlook of China's nitrogen market
in 1999 3.8.1 Estimates of nitrogen production, imports and consumption
in 1999 3.8.1.1 Estimate of nitrogen production in 1999 3.8.1.2 Estimate
of nitrogen imports in 1999 3.8.1.3 Estimate of nitrogen consumption in
1999 3.8.2 Estimates of urea production, consumption and imports &
exports 3.8.2.1 Estimate of urea production in 1999 3.8.2.2 Estimate of
the possibility of urea imports in 1999 3.8.2.3 Estimate of urea consumption
in 1999
4. P-Fertilizer Market Review&Outlook 1998~1999 4.1
Phosphate fertilizer production in 1998 4.1.1 Operational situation of
small phosphate plants and their stock in 1998 4.2 Analysis of phosphorus
imports in 1998 4.3 Phosphorus consumption in 1998 4.4 Features price changes
in the SSP market in 1998 4.5 Outlook of China's phosphate market in 1999
4.5.1 Estimates of phosphorus production, consumption and imports in 1999
4.5.1.1 Estimate of phosphorus production in 1999 4.5.1.2 Estimate of phosphorus
consumption in 1999 4.5.1.3 Estimate of phosphorus imports in 1999 5. Potash
Market Review & Outlook 1998~1999 5.1 Progress in China's potash industrial
construction 5.2 Potassium production in 1998 5.2.1 Potassium production
using domestic raw material 5.2.2 Potassium sulfate production using imported
potassium chloride as the raw material 5.3 Analysis of potassium imports
in 1998 5.3.1 Policies governing potassium imports in 1998 5.3.2 Changes
in the prices of imported potassium in 1998 5.4 China's potassium consumption
in 1998 5.5 Features of price changes for potassium chloride and potassium
sulfate in 1998 5.6 Outlook of potassium market in 1999 5.6.1 Estimates
of potassium production, consumption and imports in 1999 5.6.1.1 Estimate
of potassium production in 1999 5.6.1.2 Estimate of potassium consumption
in 1999 5.6.1.3 Estimate of potassium imports in 1999 5.6.2 Policies China
may adopt in developing potash industry
6. Compound Fertilizer Market Review &Outlook 1998~1999
6.1 Policies on China's development of compound fertilizer 6.2 Analysis
of compound fertilizer production in 1998 6.3 Analysis of compound fertilizer
imports in 1998 6.4 Compound fertilizer consumption in 1998 6.5 Market
price changes for imported and home-made NPK and DAP in 1998 6.6 Outlook
of compound fertilizer market in 1999 6.6.1 Estimate of compound fertilizer
production in 1999 6.6.2 Estimate of compound fertilizer consumption in
1999 6.6.3 Estimate of compound fertilizer imports in 1999
Appendix I: Major Events in China's Fertilizer Market
in 1998 Appendix II: Tables Table 1.1, China's Fertilizer Balance Sheet,
1991~2000 Table 1.2, China's Fertilizer Production by Province, 1991~1998
Table 1.3, China's Fertilizer Production by Major Plants in 1998 Table
1.4, China's Fertilizer Imports by Product, 1991~1998 Table 1.5, China's
Fertilizer Consumption by Province, 1991~1998 Table 1.6, China's Fertilizer
Productive Capacity by Province in 1998
Table 3.1, China's Nitrogenous Fertilizer Balance Sheet,
1991-2000 Table 3.2, China's Urea Balance Table, 1991~2000 Table 3.3, China's
Nitrogenous Fertilizer Production by Product, 1991-1998 Table 3.4, China's
Nitrogenous Fertilizer Production by Province,1991-1998 Table 3.5, China's
Nitrogenous Fertilizer Production by Major Plants in 1998 Table 3.6, China's
Nitrogenous Fertilizer Imports by Origination Country and by Month in 1998
Table 3.7, China's Urea Imports by Origination Country and by Month in
1998 Table 3.8, China's Nitrate Ammonium Imports by Origination Country
and by Month in 1998 Table 3.9, China's Ammonium Sulfate Imports by Origination
Country and by Month in 1998 Table 3.10, Destination Ports of Imported
Urea, 1996-1998 Table 3.11, Destination Ports of Imported Nitrate Ammonium,
1996-1998 Table 3.12, Destination Ports of Imported Ammonium Sulfate, 1996-1998
Table 3.13, China's Urea production by Major Plants in 1998 Table 3.14,
China's ABC Production, 1991-1998 Table 3.15, China's Nitrogen Consumption
by Province, 1991-1998
Table 4.1, China's Phosphate Fertilizer Balance Sheet,
1991-2000 Table 4.2, China's Phosphate Fertilizer Production by Product,
1991-1998 Table 4.3, China's Phosphate Fertilizer Production by Province,
1991-1998 Table 4.4, China's Phosphate Fertilizer Production by Major Plants
in 1998 Table 4.5, China's Phosphate Fertilizer Imports by Origination
Country and by Month in 1998 Table 4.6, China's Phosphate Fertilizer Consumption,
1991-1998
Table 5.1 China's Potash Fertilizer Balance Sheet, 1991-2000
Table 5.2 China's Potash Fertilizer Production by Product, 1991-1998 Table
5.3 China's Potash Fertilizer Production by Province, 1991-1998 Table 5.4
Monthly Potash Fertilizer Production by Qinghai Potash Fertilizer Plant
in 1998 Table 5.5 China's Potassium Imports by Origination Country and
by Month in 1998 Table 5.6 China's Potassium Chloride Imports by Origination
Country and by Month in 1998 Table 5.7 China's Potassium Sulfate Imports
by Origination Country and by Month in 1998 Table 5.8 Destination Ports
of Imported Potassium Chloride, 1996-1998 Table 5.9 Destination Ports of
Imported Potassium, 1996-1998 Table 5.10 China's Potash Fertilizer Consumption
by Province, 1991-1998
Table 6.1 China's Compound Fertilizer Balance Sheet, 1991-2000
Table 6.2 China's Compound Fertilizer Production by Province, 1991-1998
Table 6.3 China's NPK Production by Major Plants in 1998 Table 6.4 China's
DAP Production by Major Plants in 1998 Table 6.5 China's Compound Fertilizer
Imports by Supplying Country and by Month in 1998 Table 6.6 China's NPK
Imports by Origination Country and by Month in 1998 Table 6.7 China's DAP
Imports by Origination Country and by Month in 1998 Table 6.8 Destination
Ports of Imported NPK in 1998 Table 6.9 Destination Ports of Imported DAP
in 1998 Table 6.10 China's Compound Fertilizer Consumption by Province,
1991~1998
AVERAGES
OF VARIOUS OFFERS
TO SELL PRILLED UREA FERTILIZER AT DOLLAR DENOMINATED PRICES WHICH ARE
10-40% ABOVE RUBLE DENOMINATED PRICES USING ESCROW
PAYMENT INSTEAD OF LETTER OF CREDIT PAYMENT
Shipment
Quantity
UREA
Prilled
in Bulk
UREA
Prilled
in 50 kg Bags
12,500
MT
USD 122/MT
USD
124/MT
25,000
MT
USD 118/MT
USD
120/MT
50,000
MT
USD 116/MT
USD
118/MT
100,000
MT
USD 114/MT
USD
116/MT
200,000
MT
USD 112/MT
USD
114/MT
300,000
MT
USD 110/MT
USD
112/MT
1.)
Origin:
Russia, Ukraine or Middle East.
2.)
For CIF
add USD 1/MT.
3.)
Payment:
By an Irrevocable, Transferable, Revolving, Confirmed and Divisible
Documentary Letter of Credit Payable 100% at Sight against presentation
of loading documents. Discount 10-40% for Escrrw payment by
wire transfer to Palms & Company to facilitate payment in Russian
rubles by Palms & Company.
4.)
The
above indicative prices are based on
Asia, Europe and North Africa ASWP, CFR.
5.)
For Australia,
Americas, South Africa add USD 10/MT.
6)
Our Buying agent fee is $2 per MT paid concurrently with
hiring Palms & Company as your Purchasing Agent, plus a negotiable
percentage of what we save you, compared to what you are paying now.
The manufacturers can
conduct business with you directly. To take advantage of foreign exchange
arbitrage discounts Palms & Company must serve the function of escrow
agent.
Specifications
for prilled urea 46%N
Nitrogen:
46% min.
Moisture:
0.3% max.
Biuret:
1% max.
Granulation:
1 - 4 mm 90-94 %
min.
Melting Point:
132 Degrees Celsius
Colour:
Pure White Prilled
Radiation:
Non - Radioactive
Free Ammonia:
160pxt ppm max.
Prilled,Free
Flowing, Treated against caking, 100% free from harmful substances
Specifications
for granular urea 46%N
Nitrogen:
46% min.
Moisture:
0.5% max.
Biuret:
1.4 % max.
Granulation:
2 - 4 mm 90-94 %
min.
Melting Point:
132 Degrees Celsius
Colour:
Standard White or
Pure White
Radiation:
Non - Radioactive
Free Ammonia:
160pxt ppm max.
Free
Flowing, Treated against caking, 100% free from harmful substances
AVERAGES
OF VARIOUS OFFERS
TO SELL GRANULAR UREA FERTILIZER AT DOLLAR DENOMINATED PRICES WHICH ARE
10-40% ABOVE RUBLE DENOMINATED PRICES USING ESCROW
PAYMENT INSTEAD OF LETTER OF CREDIT PAYMENT
Shipment
Quantity
UREA
Granular
in Bulk
UREA
Granular
in 50 kg Bags
12,500
MT
USD 124/MT
USD
126/MT
25,000
MT
USD 120/MT
USD
122/MT
50,000
MT
USD 118/MT
USD
120/MT
100,000
MT
USD 116/MT
USD
118/MT
200,000
MT
USD 114/MT
USD
116/MT
300,000
MT
USD 112/MT
USD
114/MT
UREA
FACTS
Urea
is a white crystalline substance with the chemical formula CO(NH2)2; it
is highly water soluble and contains 46% nitrogen. Urea is considered an
organic compound because it contains carbon. It was the first organic
compound ever synthesized by chemists; this was accomplished in the
early 1800s.
Questions
Answers
How
is urea made?
Urea
is made by reacting carbon dioxide (CO2) with anhydrous ammonia (NH3)
under 3,000 psi pressure and at 350╟ F.
CO2
+ 2NH3 ╜> CO(NH2)2 + H2O
The
removal of water that occurs during the reaction is referred to as
"dehydration." The resulting molten mixture is further
processed into either prills or granules.
What
is the difference between granular urea and Prilled urea in term of
physical appearance and application?
Granular
urea is somewhat larger in size than are prills, but the color will be
the same as is the application technique.
Is it related to how the spreader machines/ applicators use bigger
granulation, and hand/manually spread use prill /smaller granulation?
Is
urea use increasing?
Urea
use is up substantially. In the western U.S., for example, urea use has
increased from 28,000 tons in 1955 to 390,000 in 1989, a 15-fold
increase. Urea is the fastest growing dry nitrogen fertilizer used by
farmers.
What
role does urea play in world commerce?
Urea
is the major fertilizer traded in international commerce. In the very
near future urea is expected to account for more than 50% of the
nitrogen fertilizer in world trade. When compared to other dry
fertilizers, urea has captured more than 65% of the world trade.
Why
is there such a shift to urea in world trade?
Urea
has a number of advantages over other nitrogen fertilizers. Urea is
safer to ship and handle, it is less corrosive to equipment, it has a
higher analysis than any other dry nitrogen fertilizer and it can be
used on virtually all crops. Urea can be stored and distributed through
conventional systems. It can be applied in many different ways from
sophisticated aerial application equipment to a farm spreading urea by
hand. Urea is also highly water soluble so it moves readily into the
soil. The high analysis means a reduced transportation and application
cost per pound of nitrogen.
How
much nitrogen does urea contain?
Urea
is 46% nitrogen. This is the highest concentration dry nitrogen
fertilizer available.
How
much nitrogen does urea supply?
Urea
supplies more nitrogen per ton of product than any other dry fertilizer.
It contains 46% nitrogen; this means that each ton of urea supplies 920
lbs. of nitrogen. For comparison, a ton of ammonium sulfate supplies
only 420 lbs. of nitrogen and a ton of ammonium nitrate supplies only
670 lbs. of nitrogen. The higher nitrogen content means lower
transportation and application costs per pound of nitrogen.
Does
urea "tie-up"
in the soil?
Urea
itself is very mobile because it is a neutral molecule, it has no charge
and is not attracted to soil particles. This means it can rapidly move
into the soil following irrigation or rain. Once in the soil, however,
it is rapidly converted into ammonic nitrogen, which is attracted to the
soil particles, thus preventing leaching loss.
What
is biuret?
Biuret
is formed during the manufacturing of urea. It is two urea molecules
joined together accompanied by the removal of an ammonia molecule.
Biuret is of little concern for soil-applied nitrogen fertilizers, but
it can be toxic when nitrogen fertilizers containing biuret are
foliar-applied to sensitive crops such as citrus or pineapple.
What
is the best nitrogen fertilizer for aerial applications?
Urea
is the best source of nitrogen for aerial application. Because urea has
the highest analysis (46% nitrogen), it has the lowest application cost
per pound of nitrogen. The uniform area granules mean that applications
can be accurately calibrated and evenly spread. Urea can be practically
dust-free and, under most conditions, it does not absorb moisture and
cake up.
How
does urea compare with ammonium sulfate?
Urea
has over twice as much nitrogen as does ammonium sulfate; 46% versus
21%. That means there is more than twice as much nitrogen per ton of
fertilizer. In addition, urea is less acid forming, is more water
soluble and less corrosive. Ammonium sulfate does supply sulfur, but it
is usually less expensive to apply urea and a sulfur material such as
elemental sulfur.
How
does urea compare with ammonium nitrate?
Urea
contains about one-third more nitrogen, is less corrosive than ammonium
nitrate and is less prone to caking. In addition, all the nitrogen is in
the ammonic form and, until nitrification occurs, it is less subject to
leaching or de-nitrification than the nitrate portion of the ammonium
nitrate.
Is
the nitrogen in urea different from nitrogen in "organic
fertilizers" in terms of plant nutrition?
No;
the ammonic nitrogen or nitrate nitrogen taken up by plants is
chemically identical regardless of the source. Nitrate or ammonium that
results from urea application is indistinguishable from the nitrate or
ammonium that results from manure application. A plant utilizes
inorganic ions, and the source of these nutrients is irrelevant to
either the yield or quality of the fruit, grain, or vegetative matter
produced by the plant.
Ammonium
nitrate
Ammonium nitrate is a
highly effective mineral fertilizer, containing no less than 34,4 % of nitrogen.
It is applied for the
major part of crops in soils of various kinds and is characterized by high
assimilation of nitrogen.
Ammonium nitrate
advantageously differs from all known analogues by higher strength of pellets,
good friability, flow ability, stable granulor-metric composition. It does not
cake in storage.
In appearance the ammonium
nitrate is a granulated product without foreign inclusions.
PHYSICAL-CHEMICAL
PROPERTIES OF AMMONIUM NITRATE, B- MARK, ACCORDING TO GOST 2-85
Item
Standard
Nitrate-nitrogen
+ ammonium nitrogen mass fraction, in total (as N on dry weight basis),
%, min
34,4
Water
mass fraction, %, max
0,3
pH of
10%, water solution, min
5,0
Granulor-metric
composition:
mass fraction of granules of various sizes:
1-4 mm,
%, min
95
2-4 mm,
%. min
80
under 1
mm, %, max
2
more
than 6 mm
none
Static
strength of granules, N/gran, (kg/gran.), min
8 (0,8)
Flariability,
%, min
100
Ammonium nitrate is an
oxidizer, which possesses the ability to support combustion.
Can be carried by any
transport.
AVERAGES
OF VARIOUS OFFERS
TO SELL AMMONIUM NITRATE FERTILIZER AT DOLLAR DENOMINATED PRICES
WHICH ARE 10-40% ABOVE RUBLE DENOMINATED PRICES USING
ESCROW PAYMENT INSTEAD OF LETTER OF CREDIT PAYMENT
Palms & Company, Inc. Founded 1934
Palms Bayshore Building, Penthouse Suite #408 West Wing
6421 Lake Washington Boulevard North East, Kirkland (Seattle)
State of Washington, United States of America, 98033-6876
Phone: 1-425-828-6774 & 1-425-827-5528
Branches: 41 World-wide
email: Marketing@PeterPalms.com
Consulting telephone: click HERE
Created 1995 Last Revision: 7/23/2013
Copyright 1995-1996, Palms and Company, Inc., All rights reserved
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