From IPL, AEV to FTZ: ASX fertiliser stocks to mull over amid rising prices

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From IPL, AEV to FTZ: ASX fertiliser stocks to mull over amid rising prices

 From IPL, AEV to FTZ: ASX fertiliser stocks to mull over amid rising prices
Image source: ID 19114856 © Meryll|Megapixl.com

Highlights

  • Fertiliser prices are soaring amidst production woes, rising oil & gas prices, and supply constraints.
  • Natural gas is a key ingredient for the production of urea-based fertilisers.
  • Higher fertiliser prices could impact the prices of food grains and drive inflation figures further north.

The Russia-Ukraine conflict is taking a heavy toll on several commodities. The latest in the series are fertilisers.

Fertiliser prices are breaking new records. The soaring fertiliser prices could force farmers to reduce the usage of fertilisers, thus impacting overall crop yield. Lower crop production will have a long-lasting effect on global economies and their efforts to control inflation.

Related read: NUF & IPL: ASX stocks in focus amid skyrocketing fertiliser prices

Higher natural gas prices and supply constraints are impacting the production of urea-based fertilisers. Moreover, the ongoing Russia-Ukraine war is adding to the rising fertiliser prices as Russia is a key exporter of nitrogen, potash, and potash-best fertilisers. The embargoes on trade with Russia are impacting the supply chain.

Ukraine is a global leader in the export of wheat and sunflower oil. Due to the ongoing war, it is pretty reasonable to assume that it won’t be able to supply these commodities in the near future.

Related read: Explained: How Russian economy is holding on despite heavy sanctions

On that note, let us flick through some of the ASX players active in the fertiliser industry.

Data source: ASX, as of 13 May 2022

Incitec Pivot Limited (ASX:IPL)

An ASX 100 company, Incitec Pivot has more than 100 years of legacy of providing fertilisers for the Australian agricultural sector. It is Australia’s largest supplier of fertilisers and produces around two million tonnes of products annually.

Shares of IPL have given a handsome return of 60% in the last one year, as of 13 May 2022. The Company paid a dividend of AU$0.083 per share in December last year. The stock has an annual yield of 2.48%.

Avenira Limited (ASX:AEV)

Avenira owns the Wonarah Project in the Northern Territory, one of the largest phosphate projects in Australia. The project has a Measured and Indicated Resource of 111Mt @ 24.5% P2O5. The Company is currently progressing with the Wonarah Definitive Feasibility Study (DFS).

Avenira also owns an exclusive licence for Novaphos Technology, a proprietary phosphate processing technology for the production of super phospheric acid.

AEV shares have yielded a return of 62% in the last one year, as of 13 May 2022.  

Related read: WPL to BPT: 4 ASX stocks under the spotlight as Energy index reaches multi-year resistance

Strike Energy Limited (ASX:STX)

Strike Energy is in a low-carbon emissions energy and fertiliser business. The Company operates natural gas projects and a fertiliser production facility in WA. The in-house natural gas supply could help in derisking the supply risks for fertilisers.

The Company is advancing a 1.4Mtpa urea fertiliser plant under the Project Haber. The project has the potential to replace the country’s dependency on over AU$1 billion of fertiliser imports each year.

Fertoz Limited (ASX:FTZ)

Fertoz Limited is a certified organic manufacturer and a phosphate fertiliser supplier in the Australian market. The Company aims to become an integrated global fertiliser marketer and producer in North America and Australia.

The Company received AU$1.74 million in cash receipts during the December 2021 quarter, backed by its fertiliser business.

Shares of FTZ yielded an impressive return of 260% in the last one year.

Related read: Crude oil rises on China's economic stimulus plan

Highfield Resources (ASX:HFR)

Highfield Resources is engaged in developing a potash project in Spain. The Company recently secured financing of AU$329.6 million for the construction and development of its flagship Muga Potash Project.

In the last one year as of 13 May 2022, shares of HFR have yielded a decent return of 19%.

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