How did sharp increase in global demand and urea prices affect Azerbaijan?

Last year, the production volume at the urea plant of the State Oil Company of Azerbaijan (SOCAR) tripled due to a sharp increase in demand and prices for carbamide in world markets, while the plant’s income increased six times over the year, Director of SOCAR carbamide plant Khayal Jafarov said, Report informs.

He noted that in 2020, the total revenue of the urea plant amounted to 35 million manats, and in 2021 this figure exceeded 225 million manats: “The plant was put into operation in 2019. In the same year, full-scale commissioning was carried out. For the first four months of 2020, after the elimination of identified flaws, the plant reached full capacity. Today, the plant uses 94% of its capacity. In 2021, production tripled compared to 2021.”

Jafarov noted that in 2020 the plant produced about 120,000 tons of carbamide, and in 2021 this figure was 355,000 tons: “In 2020, about 70,000 tons of products were exported, in 2021 this figure exceeded 323,000 tons. That is, the export of the plant’s products grew over four times.”

He reminded that in 2020 the selling price of carbamide on the world market was $220-$230 per ton, and in the fourth quarter of 2021 the price of the product had already exceeded $750-$850: “For us, the most important factor is to cover domestic demand. Only after the domestic market is secured, the products are exported abroad. With the launch of production at the plant, local farmers receive urea at low affordable prices, and this product doesn’t need to be imported from abroad. If the world market price for urea has reached $750-$850 per ton, the price of carbamide in the domestic market remained at the same level and amounted to 420 manats per ton, which is about $250. The increase in prices for carbamide in foreign markets didn’t lead to an increase in prices in the domestic market.”

Jafarov stressed that in 2021, the export of the non-oil sector in Azerbaijan increased by more than 40%: “The urea plant has contributed to this process.”