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2019 - 2021

INTERNATIONAL MARKETING ASPECT AND MARKET SHARE 

Marketing Policy and Strategy

In 2019, the Company has established its focus and strategy which is the elaboration of the Vision and Mission as well as the Long-Term Plan established by the Shareholders. Such strategy was devised to anticipate the influence of external and internal conditions having significant impact on the Company’s performance. A number of main strategies executed include the following:
• Increase domestic and foreign market share, both through strategic cooperation with
  customers, market penetration through retail networks and markets.
• Secure the guarantee of supply of raw materials and renegotiate raw material prices.
• Optimize business revenue sources that produce better margins.
• Improve HR competence.
• Perform operational cost efficiency.

 

International Market Share

Urea
Urea export sales increased significantly by 63% to 1.3 million tons from 786.0 thousand tons in 2018. This represents the Company’s success in seizing the momentum of price increases in mid-2019. Nevertheless, Urea market also experienced volatility due to price instability. International Urea market price in 2019 began with a downward trend until the second quarter of 2019. Prices increased in the third quarter of 2019 until reaching its peak and then declined again in the fourth quarter of 2019.

 

The biggest market share in 2019 was arising from India which accounted for 36% of total export sales, followed by sales to the Philippines 20% and Australia 20% of total export sales. The decrease in sales was noted in Vietnam, which was previously the Company’s major market share. In 2019 the country’s market share was only 6% of total sales, decreasing by 76% from prior year which was 25% of total sales. Such decrease was due to the flood disaster in the country that affected the market demand for Urea.

 

Nevertheless, in 2019 the Company managed to sell cargo to new markets such as Colombia and Mozambique. In addition to having a new market, the increase in export sales in 2019 was due to an increase in sales in two major Urea importing countries, namely India and Australia. Such condition was supported by an increase in Urea production in 2019 from prior year as well as the decreasing allocation of subsidized Urea fertilizer from the government compared to 2018. In terms of market share, the Company remains the largest urea exporter in Indonesia in 2019. As for the Southeast Asian market, the Company’s urea export sales reached 32% of total exports from Southeast Asia countries in 2019.

 

Ammonia
In 2019, Ammonia export sales slowed down by 4% from 531.3 thousand tons in 2018 to 508.1 thousand tons due to the slow-down in global market demand. The slow-down in demand was due to various matters. Overall Ammonia prices tend to weaken compared to prices in 2018. In the first quarter of 2019 ammonia prices were generally less stable than the price range in the first quarter of 2018. The weakening of prices on all price indicators was largely due to the high supply and relatively low demand at global level.

 

Other supporting factors include several turnarounds in January, low demand from US due to extreme bad weather in the Midwest in February/March, which led to a fall in Tampa prices and weakening downstream product prices which contributed to the worsening of Ammonia prices. In the third quarter of 2019, Ammonia prices began to stabilize as indicated by a recovery in prices, supported by higher gas prices in Europe and favorable demand for Ammonia in India. Increasing supply from Russia (EuroChem) and Indonesia, namely PT Panca Amara Utama (PAU) and the expansion of downstream factories in Brazil, Turkey, China had also contributed to the increasing demand for Ammonia.

 

The potential demand for Ammonia imports would be higher than India as the production of Diammonium Phosphate (DAP). Meanwhile, the Ammonia supply would potentially be higher than Egypt. In addition,  the price of natural gas in Western Europe has  gradually increased potentially leading to higher local import demand. However, the month of August was the end of several turnarounds in Saudi Arabia and Algeria, resulting to an increase in supply in the market.

 

 

DOMESTIC MARKETING ASPECT AND MARKET SHARE

Urea

The realization of non-subsidized Urea sales in 2019 was 796.4 thousand tons, decreasing by 32% from prior year ‘s sales of 1.2 million tons. The largest market share of such product is Kalimantan, which accounted for 40% of total sales. The second largest is Java Island with a percentage of 33% of total sales, followed by Sumatra Island which accounted for 22% of total sales.

 

Kalimantan serves as the major market share since the Company has a competitive advantage in terms of proximity to the location and the number of oil palm plantations in Kalimantan, as well as in Sumatra which is the center of oil palm plantations in Indonesia. Meanwhile, Java island has a vast number of agricultural lands and industrial locations that require urea as their raw materials. The Company has the largest market share among fertilizer factory subsidiaries under PT Pupuk Indonesia group, which reaches 50% of the total domestic non-subsidized Urea sales of PT Pupuk Indonesia in 2019.

 

Ammonia

Ammonia’s domestic market share is largely dominated by Bontang buyers by 62% of total domestic sales of ammonia for petrochemical industrial needs, and 32% by Gresik buyers. Actual sales in 2019 reached 223.2 thousand tons, decreasing by 17% from 267.6  thousand tons in 2018.

 

NPK

Non-subsidized NPK fertilizer sales in 2019 reached 23,934.4 tons, decreasing by 10% from 26,520.9 tons in prior year. The largest market share of NPK fertilizer sales in the country was from Kalimantan island, which accounted for 29% of total sales, followed by Sulawesi which accounted for 27% of total sales and Java accounted for 21% of total sales.

 

Similar to Urea, the largest NPK sales was noted in Kalimantan and Sulawesi since the Company has a competitive advantage in terms of proximity to the location. As for Sumatra market, it is not easy to reach due to high shipping costs resulting to less competitive price of goods arriving in Sumatra.

 

With the realization of sales in 2019, the Company’s NPK fertilizer market share was only 8% of the total sales of PT Pupuk Indonesia in 2019, and the Company accordingly needs to expand its non-subsidized NPK fertilizer market.

 

RINGKASAN KINERJA 2019

 

 

 

 

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2015 - 2018