Ostchem is reducing fertilizer production: how volumes have changed and the reasons for the decline

According to the results of nine months of 2024, the nitrogen holding Ostchem reduced the volume of production of mineral fertilizers by 15.3%, producing a total of 1.33 million tons. This is significantly less than last year, when the indicator reached 1.57 million tons. According to the company's official release, the reduction applies to almost all types of fertilizers produced at the group's enterprises.

Among the plants, Cherkasy "Azot" demonstrated the largest decrease in volumes, which reduced production by 13.1%, producing 1.06 million tons. The Rivneazot plant also reduced production volumes by 12.2% to 304.9 thousand tons. The overall decrease is explained by fluctuations in demand on the mineral fertilizer market, which forces Ostchem to adjust production volumes.

The most noticeable reduction is observed in the production of urea, the volume of which decreased by 20.1% and now amounts to 263 thousand tons. There is also a noticeable drop in the production of ammonium nitrate - by 16.1%, to 547.6 thousand tons. The production of complex nitrogen fertilizers decreased by 11.7%, and the volume of commercial ammonia decreased by 11.4%.

Serhiy Pavlyuchuk, director of production at Ostchem, explains that the reduction in production is due primarily to market demand. Now the enterprises of the holding are focused on the real consumption of fertilizers, so the output of products is adjusted according to the needs of the market. According to Pavlyuchuk, factories work at partial capacity utilization, which allows for stable, albeit reduced, production output.

The current situation with uneven capacity utilization and lack of full equipment utilization indicates that the mineral fertilizer market is in a state of decline, which may have a long-term impact on Ostchem's production plans. Despite this, production targets remain under control and the company continues to maintain a manufacturing pace in line with demand.

A reduction in production volumes at Ostchem may also affect the prices of mineral fertilizers in Ukraine, as a decrease in market supply often leads to higher product prices. Further development of the situation will depend on changes in demand both on the domestic and foreign markets.