Grupa Azoty’s position on the current situation in the fertilizer market

Grupa Azoty confirms the information circulating publicly about the temporary suspension of accepting new March orders for nitrogen fertilizers. We categorically deny reports that production has been halted. Our plants are operating at maximum production capacity. We would like to emphasize that we are fulfilling all orders placed with Grupa Azoty before the announcement of the temporary suspension of accepting new orders.

The decision was driven by the unstable geopolitical situation in the Middle East. On 2 March, the price of gas-the key feedstock for nitrogen fertilizer production-increased by 35-50%. Today, further increases of around 30% are being recorded. These spikes may prove short-term. Fertilizer producers outside Europe (Egypt, Algeria, China and the United States) have decided to immediately raise fertilizer prices (by USD 45-70/mt). We have not decided to pass costs of this magnitude on to our partners. On the other hand, continuing to accept orders on existing terms amid such a sharp rise in costs would expose the Company to adverse consequences. The temporary suspension will allow for rational decision-making. A similar step-withdrawal of offers-has also been taken by producers from other countries in our region, as well as fertilizer importers from third countries.

There is no threat to meeting domestic market demand. Orders from previous periods are being fulfilled, and our Authorized Distribution Network also has a storage infrastructure stocked with fertilizers.

We note that the acceptance of orders for compound (multi-nutrient) fertilizers has not been suspended, as the share of gas costs in total production costs is lower than in the case of nitrogen fertilizers. However, the decision may change depending on movements in the costs of other raw materials.