* Gas-based fertilizer plants cut operating rates to 15 pct
* China urea prices hit four-year high this week
* Producers planning to appeal for lower gas prices in spring
BEIJING, Jan 11 (Reuters) - China’s campaign to heat millions of homes this winter by natural gas has left fertilizer producers short of supplies and profits, an industry association said, with urea and ammonia plants halving their operating rates from a year ago.
The feedstock crunch has tightened supplies and boosted prices of fertilizer components in the world’s top agriculture market, and the trouble may carry into spring planting.
Chinese fertilizer and chemical industry associations are considering an appeal to the government to lower natural gas prices once winter is past to allay the effects of the supply shortages, according to two officials from the groups.
“We are losing lots of money every day,” said Huo, a manager at a major gas-based urea and compound fertilizer producer in northwestern China. Huo declined to give his full name or identify his company due to the sensitivity of the issue.
His company had to halt production of urea and synthetic ammonia last month to help ensure supplies of natural gas to households in the north.
“Prices of urea and synthetic ammonia went up significantly ... We need to buy these raw materials now,” Huo said. “We also still need to pay maintenance fees for the machines and salaries for the workers. The loss is severe.”
Gas-based ammonia and urea plants usually limit operations during winter and ramp up when gas supplies are ample, but this winter, shortages have been worse than expected.
“In previous years, we were also asked to limit usage but suspension was incremental ... This year, we were asked to basically shut all lines,” Huo said.
Operating rates at gas-based nitrogen fertilizer plants have plunged to just 15 percent, down from about 31 percent at the same time last year, data from the China Nitrogen Fertilizer Industry Association (CNFIA) showed.
Chinese urea prices as of Wednesday were at 2,044 yuan ($314.11) per tonne, the highest in four years. Synthetic ammonia has jumped 8 percent to 3,242 yuan a tonne in the past 30 days, according to Zhuochuang, a commodity consultancy based in Shandong province.
“The supply gap in natural gas is hitting gas-based urea producers harder this year. Many plants may not reopen once they halt production,” said Gao Li, vice secretariat of CNFIA, told Reuters over the phone, and that could pull down fertilizer supplies during spring planting.
CNFIA said oil majors like China National Petroleum Corp and Sinopec should sell gas at cheaper prices in the second and third quarter of the year to help fertilizer producers survive.
The association is also working with China Petroleum and Chemical Industry Federation on a plan to submit to the government that will include a suggested price cut and a total volume of gas to be on special offer, the officials said.
Meanwhile, the plant where Huo works remains shut.
“We are still hanging in here, but I don’t know how long we’ll be able to last,” he said.
$1 = 6.5072 Chinese yuan Reporting by Hallie Gu and Josephine Mason; Editing by Tom Hogue
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