According to VFA, Vietnam needs 1.7mil tonnes of urea a year in total. Every year, the Phu My Fertiliser Plant can provide 800,000 tonnes. Another 800,000 tonnes will be provided by the Ca Mau Fertiliser Plant in three years, enough to meet domestic demand. However, more urea plants are still being built, which may lead to the excess of urea and investment waste. Demand for urea decreasing
Many years ago, urea was considered a very important kind of fertiliser, but the situation is quite different now. High urea prices make agricultural production costs higher, and farmers now tend to use other inorganic types of fertiliser, which are environmentally friendly and can bring high economic efficiency.Statistics provided by VFA showed that five years ago the total demand for urea was 1.5-2.7mil tonnes a year, but the figure has dropped to 1.7mil tonnes. Cultivation area has been narrowed as a result of urbanisation, while there are many more types of fertiliser for farmers to choose from.
The Phu My Fertiliser Plant has the designed capacity of 700,000 tonnes a year, while the Ha Bac plant has the capacity of 150,000 tonnes a year. In normal conditions, the two plants can provide 800,000 tonnes a year to the market. Currently, Vietnam imports 800,000 tonnes a year.
In the past, Vietnamese enterprises imported urea from the Ukraine, Russia or the Gulf, but now they import from China – a supply source that can provide the product at very competitive prices.
Excessive urea will be exported?
Vietnam will still need to import urea for three more years, but after that domestic production capacity will be big enough to meet domestic demand.
In addition to the two said plants, the Ca Mau Fertiliser Plant will provide 800,000 tonnes a year in three years. Two other plants, including the 560,000 tonne/year coal-run Ninh Binh Fertiliser Plant and the Ha Bac expanded project, will also become operational in some years. The Ha Bac expanded plant will have the capacity of 300-320,000 tonnes a year.
If everything goes as planned, the total fertiliser productivity may reach 2.380mil tonnes a year, much higher than the total demand. The productivity may even be higher if the Ca Mau or Phu My plants expand their scale of production.
Experts have said that Vietnam may think of exporting the excess volume. However, the question is, can made-in-Vietnam products compete in the world’s market against ones from the Middle East or Russia?
VFA’s experts have recalled the story of investment in steel mills. Several years ago, 50% of the demand for steel was fed by imports. But just several years later, the total capacity of domestic steel mills had doubled total demand.
Meanwhile, it is very difficult to export steel. The Southern Steel Corporation has successfully exported a consignment of steel to the US recently. Prior to that, Vietnam-made products had only been exported to Laos and Cambodia. But exports remain modest