Egyptian urea producers halt output on renewed gas supply disruption

Two leading Egyptian urea producers suspended all production July 16 following renewed gas supply disruption.

Producer Kima said it had halted production due to feedstock supply issues, with a source at the company saying: "Unfortunately...gas pressure is not stable enough."

Helwan Fertilizer Company also suspended production at its 650,000 mt/year urea plant as a result of feedstock disruption, according to market sources. The producer could not be reached for comment.

Abu Qir told S&P Global Commodity Insights July 16 that it had suspended operations on its prilled urea line as a result of gas cuts. The producer has an annual capacity of 550,000 mt/year of prilled urea and 650,000 mt/year of granular urea.

Other producers in the country were so far unscathed from the gas cuts, with Mopco confirming that as of July 16 it was not facing any renewed disruption at its 2 million mt/year plant. The producer is operating at 80% capacity on two of its lines, said a company source.

Alexfert continued to operate at 80% capacity, the producer, which has a daily production rate of 1,750/mt urea, said July 16.

Nasr Company for Intermediate Chemicals did not immediately respond for comment on the status of production at either of its plants.

News of further cuts came as producers in the country had started to ramp up production, following months of unstable gas supply.

Beginning May 20, the Egyptian government announced that gas supply would be diverted to power other industries, due to a bout of severely hot weather. As a result, producers cut production by around 20%, which eventually saw all six key producers suspend production entirely. Disruption ensued throughout June and now into July, dampening hopes earlier this month that gas supply might stabilize.

As of July 9, producers Helwan Fertilizer Company, Misr Fertilizer Production Company, Kima and Alexfert had all resumed urea production to around 80% at their respective plants.

The restarts came following the import of 20 LNG cargoes against a June 26 purchase tender issued by state-owned Egyptian General Petroleum Corp. According to S&P Global Commodity Insights, all 20 cargoes are due to be shipped throughout July-September.

Despite the relatively optimistic news of renewed feedstock supply, some sources in the market doubted how long restarts would last.

Even at the time when production gradually ramped up, one producer, when asked about the sustainability of gas supply by S&P Commodity Insights July 9, said: "Nobody knows what will happen later -- so far production is running well at 80%."

Egyptian urea producers are once again grappling with unplanned outages and as one market source said: "This thing [gas supply disruption] will last throughout July as estimated, the country doesn't have enough gas."

One producer still operational said they expected an order from the government, likely July 16, to suspend production.