Chemical fertilizers in Bulgaria in the years of financial and economic crisis (2008-2011).

Chemical fertilizers in Bulgaria
in the years of financial and economic crisis (2008-2011).
Manufacture, marketing and consumption. Challenges.
(Summary)

Associate Professor. Dr. Engineer Kiril Petkov, Associate Professor Engineer Zornitsa Kirova, Professor Ioncho Pelovski, Associate Professor Margarita Nikolova, Economist Ventsi Goergiev

The same authors prepared a 130 page-long Analysis * with nearly the same title in April 2011 covering the years of transition (1989-2010). Significant pre- and post-fertilizer sector privatization (2000-2010) findings and conclusions were derived based on statistical and analytical information with a considerable scope, volume and depth. Key trends, issues and challenges were outlined for individual time periods.
In this Analysis we have focused our attention on the years of entry into and exit from the crisis which did not spare our country, including manufacture, trade and use of chemical fertilizers (CF). Analyzing further the information for 2011 (and the nine month period of 2012 for some indicators), we have identified the following key findings and trends for the period under review:

1. The agricultural use of chemical fertilizers is not affected by the crisis (Figure 2). A progressive growth is in evidence – more pronounced in 2010.
2. There is a spectacular collapse in exports (around 4 fold) in 2009 compared to the preceding 2008 due to reduced demand in the key countries for Bulgaria’s CF export and stronger marketing standing of importers with less expensive natural gas in those countries.
3. Production in 2009 was 44% down compared to 2008, but recovered relatively quickly in the following two years enjoying a growth rate of 15% compared to the pre-crisis 2008. This is proof of the market sector stability and perspectives.
   
4. During the period under review, the local manufacturers of chemical fertilizers – Neohim and Agropolyhim - made their largest market-oriented transition period investments  with some of the investment projects slated for commissioning by the end of 2012 and in 2013.

These are investments in response to the current challenges for the sector, namely:

• Increasing the technical reliability, safety and competitiveness of the chemical fertilizer production, primarily through energy efficiency improvements;
• Reducing emissions, in particular those generated through greenhouse effects;
  
• Improving the quality of currently produced fertilizers and producing more specialized (NP and NPK) chemical fertilizers.

At the same time, the competent governmental authorities are facing the following challenges:

• Minimum 10% reduction in prices of natural gas (basic raw material for nitrogen CF) starting from 2013;
• Taking advantage of the existing opportunities for "partial resumption of urea production at Chimco".
  

* The Summary and Contents of the Analysis  „Chemical fertilizers in Bulgaria in the years of transition (1989-2010)”  are posted on the web-site of the SFB Capital Market.

October 2012

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TABLE OF CONTENTS

1.	Manufacture and manufacturing capacity utilization.
2.	Technological level: quality, energy efficiency, environmental emissions. Investments in upgrading and development.
3	Marketing - domestic market, export, import.
4.	Use in agriculture. Pattern.
5.	Key financial and economic indicators. Price trends.
6.	Challenges.

The total volume of the Analysis is about 16 pages, including 8 tables, charts and diagrams.