OREANDA-NEWS. December 16, 2010. Stirol, the major Ukrainian fertilizer producer, plans to load its capacity by 100% by end-2012, as Dmitriy Firtash (Group DF), the new owner of the plant, announced at the press-conference Dec 15. He also pointed out that Stirol currently operates with frequent interruptions due to technical issues that are to be fixed in the near future. At the same time Mr. Firtash confirmed that RosUkrEnergo (RUE) will sell all the natural gas (12.1 bcm) received from Naftogaz to Gazexport for further resale to European consumers at 338-358 USD /mcm. Mr. Firtash went on to add that Group DF will participate in the privatization tender of Odesa Portside Plant (OPP) if the one is announced.

Millennium Capital considers the news as NEGATIVE for Stirol. Both Mr. Firtash statements regarding Stirol support Millennium Capital’s pessimistic view on the plant’s near-term outlook. Since the gas of RUE is to be sold to Gazexport, Stirol will most likely have to source the natural gas from Naftogaz at the high regular tariff. It is also doubtful that Gazexport will buy the RUE gas at such a high price (338-358 USD /mcm). Taking into account the issues with operations stability at the plant (the launch of Ammonia Nitrate workshop having been postponed till Jan at least), Millennium Capital expects the company to produce weaker financials in 2011 than many expect. After all, Millennium Capital confirms its recommendation to SELL (PT USD  6.09) the stock and see the sharp share price contraction ahead.