Wengfu Australia chief executive officer Damian Heath explained the connection between gas and fertiliser prices.
His company produces about 15 to 20 per cent of fertilisers used in the Australian market, and Mr Heath said Australia was a “price taker” in the market, which were mostly set by the Arab Gulf countries.
He expected another spike in fertiliser prices to arrive soon.
Mr Heath explained the connection between rising gas prices and fertiliser.
“Ammonia is the precursor for all nitrogen fertiliser and a large part of all fertiliser products,” Mr Heath said.
“Natural gas is used to make ammonia, and together with CO2, that makes urea, which is the most common fertiliser used in Australia.
“The cost to produce ammonia depends on the cost of natural gas.”
The biggest fertiliser producers were the Arab Gulf countries, Malaysia, Indonesia, North Africa, Algeria, Egypt and Russia.
A large number of fertiliser plants in Europe had closed down over the past six months as gas prices have escalated.
Victoria was a major consumer of fertiliser and northern Victoria comprised a large share of the state’s market.
He said imports made up a large percentage of the consumption and so import prices dictated the ultimate price.
Not only were fertiliser prices high, they were also volatile.
Mr Heath was speaking at the Committee for Greater Shepparton energy forum.
27°C