A farm in Al Ain, UAE. China has reduced its export volumes of agricultural fertiliser. Photo: Fertiglobe
A farm in Al Ain, UAE. China has reduced its export volumes of agricultural fertiliser. Photo: Fertiglobe
A farm in Al Ain, UAE. China has reduced its export volumes of agricultural fertiliser. Photo: Fertiglobe
A farm in Al Ain, UAE. China has reduced its export volumes of agricultural fertiliser. Photo: Fertiglobe

Fertiglobe expects to benefit from cut in Chinese exports of key fertiliser


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UAE’s Fertiglobe expects to benefit from a tighter urea market as China’s exports of the widely used agricultural fertiliser slow down, the company’s chief executive has said.

China, the world’s second-largest economy, has imposed limits on the export of urea to meet surging domestic demand.

“Typically, they could do three to four million tonnes of exports [annually], but in the first half of this year, they've done less than 200,000 tonnes,” Ahmed El Hoshy told The National in an interview on Thursday.

“China being absent from the market and kind of having a very strong domestic market is definitely constructive.”

Fertiglobe is absorbing a record amount of urea production added in the past 18 months to the global markets, and demand is now “significantly higher” than supply, Mr El Hoshy said.

Ahmed El Hoshy, chief executive of Fertiglobe. Photo: Fertiglobe
Ahmed El Hoshy, chief executive of Fertiglobe. Photo: Fertiglobe

Fertiglobe is a joint venture between Adnoc and the Netherlands-listed OCI. It can produce up to 6.7 million tonnes of urea and ammonia annually at four plants in the UAE, Egypt and Algeria.

The company’s sales volume in the first half of this year grew 1 per cent annually to 2.8 million tonnes, supported by record output in Egypt and Algeria.

However, sales volume in the latest reported quarter fell by 2 per cent year-on-year due to gas supply disruption in Egypt, Fertiglobe said on Thursday.

Egypt has been facing a severe energy crisis amid declining domestic gas production and high temperatures that led to higher power demand in May and June.

“We've seen kind of record amounts of demand for power and, at the same time, you have maintenance in some of the gasfields ... it was a bit of a perfect storm,” Mr El Hoshy said.

The gas supply situation has improved since the second quarter with the company now able to meet its needs effectively, he said.

Soaring temperatures in Egypt, such as here in Giza, led to higher power demand in May and June. Bloomberg
Soaring temperatures in Egypt, such as here in Giza, led to higher power demand in May and June. Bloomberg

Ammonia push

Fertiglobe is also involved in several green hydrogen and ammonia projects in various regions.

The company this year won Germany-based H2Global’s first pilot auction for renewable ammonia.

As the winning bidder, Fertiglobe will supply green ammonia to Europe under a contract worth up to €397 million ($428.4 million) and at a delivered price of €1,000 per tonne until 2033.

Fertiglobe will source renewable hydrogen feedstock from Egypt, where the company is installing 273 megawatts of renewable energy.

Mr El Hoshy said the green ammonia venture offers Fertiglobe more stable financial outcomes due to fixed costs.

“We're a commodity chemicals company … the share price is being impacted by what people perceive as volatility in the pricing,” Mr El Hoshy said.

“Those types of new markets … that can pay a fixed price if we can get either government support or we have a competitive advantage, can help us get into a much better value cash flow stream."

Green hydrogen, seen as a critical low-carbon fuel of the future, can be produced in regions with abundant renewable energy, converted to green ammonia for efficient transportation, and then back into hydrogen at the point of use.

In May, Fertiglobe, in partnership with Ta’ziz, GS Energy and Japan’s Mitsui, made an investment decision on a one million tonne per annum low-carbon ammonia project and awarded the construction contract to Tecnimont, with production expected to start in 2027.

“We are having some discussions on that … it's going to be attractively priced on a delivered basis given the freight advantages we have from the UAE,” Mr El Hoshy said.

"We would look at doing offtakes as the regulations come in place in Singapore, Japan, Korea, as well as other importers like Europe."

The UAE, the Arab world’s second-largest economy, aims to achieve hydrogen production of 1.4 million tonnes annually by 2031, increasing to 15 million tonnes a year by 2050.

The country is planning to develop at least two hydrogen production plants, or oases, by 2031.

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Tearful appearance

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Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow. 

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Did you know?

Brunch has been around, is some form or another, for more than a century. The word was first mentioned in print in an 1895 edition of Hunter’s Weekly, after making the rounds among university students in Britain. The article, entitled Brunch: A Plea, argued the case for a later, more sociable weekend meal. “By eliminating the need to get up early on Sunday, brunch would make life brighter for Saturday night carousers. It would promote human happiness in other ways as well,” the piece read. “It is talk-compelling. It puts you in a good temper, it makes you satisfied with yourself and your fellow beings, it sweeps away the worries and cobwebs of the week.” More than 100 years later, author Guy Beringer’s words still ring true, especially in the UAE, where brunches are often used to mark special, sociable occasions.

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The bio

Who inspires you?

I am in awe of the remarkable women in the Arab region, both big and small, pushing boundaries and becoming role models for generations. Emily Nasrallah was a writer, journalist, teacher and women’s rights activist

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Yoga relaxes me and helps me relieve tension, especially now when we’re practically chained to laptops and desks. I enjoy learning more about music and the history of famous music bands and genres.

What is favourite book?

The Perks of Being a Wallflower - I think I've read it more than 7 times

What is your favourite Arabic film?

Hala2 Lawen (Translation: Where Do We Go Now?) by Nadine Labaki

What is favourite English film?

Mamma Mia

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Fresh faces in UAE side

Khalifa Mubarak (24) An accomplished centre-back, the Al Nasr defender’s progress has been hampered in the past by injury. With not many options in central defence, he would bolster what can be a problem area.

Ali Salmeen (22) Has been superb at the heart of Al Wasl’s midfield these past two seasons, with the Dubai club flourishing under manager Rodolfo Arrubarrena. Would add workrate and composure to the centre of the park.

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How to vote in the UAE

1) Download your ballot https://www.fvap.gov/

2) Take it to the US Embassy

3) Deadline is October 15

4) The embassy will ensure all ballots reach the US in time for the November 3 poll

Updated: August 01, 2024, 2:36 PM`