OREANDA-NEWS. February 26, 2010. Ammonia output from Tolyattiazot declined 9.8% y-o-y in 2009 to 1,954,000 tons. The production reported falls 2% short of the 1,992,000 tons we have predicted.

We believe the results posted in the ammonia segment could impair its fundamental value. Most of major Russian ammonia producers posted ammonia production growth in 2009 in the range of 1-5%, or at least reported the maintenance of ammonia production at the previous year’s level. Despite the economic downturn, demand for ammonia remained strong throughout 2009. The production downturn posted by the company, despite a continuing strong demand for the product, is a sign of internal difficulties, the main being sporadic gas supplies. In December 2009, the company was forced to shut part of its production assets due to gas shortfalls. The problem has not yet been resolved and the company still has half of its production facilities halted.

We fear that the production results reported and the current woes with gas deliveries could adversely affect quotes for company shares.