We waste plenty of food

| Foreign Markets |

While one eight of the human population suffers from malnutrition, 1.6 billion tonnes of food worth c. 750 billion USD are thrown away annually. The figures come from the latest report published by Food and Agriculture Organization of the United Nations (FAO).

Food which has not been consumed would cover 1.4 billion hectares or 30% of farmland on Earth. To produce this food, it was necessary to use 250 km3 of water, an acutely lacking resource for inhabitants of many parts of the world. The quantity is the same as the annual water flow in the Volga and three times as big as the volume of Lake Geneva. Regrettably, such wasteful activity must lead to depletion of natural resources available to us.

Uneven access to food results in a situation in which the industrialized Asian countries which are also large agricultural producers, such as China, Japan and South Korea, waste the most vegetables (c. 11%) and cereals (c. 8%) in the world. At the same time, 13 million inhabitants of East Africa are in dire need of food aid.

Proper management of goods meant for immediate consumption ought to result in a more efficient use of the food produced. Such trend would firstly benefit the natural environment, and secondly help the local economy, provided that less food is thrown away. We ought to give this some serious consideration, starting as of today, from economical management of the contents of our fridges.

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Destination China?

| Foreign Markets |

Before merging into Grupa Azoty, Zakłady Azotowe “PUŁAWY” S.A. and Zakłady Azotowe S.A. from Tarnów had already been planning a joint investment in the production of caprolactam in China. The decision regarding this matter is due by the end of 2013.

Caprolactam is essential…

…for the manufacturing of resins and textile fibers. Consequently, in China the consumption of the substance is huge. The country is the biggest importer of caprolactam, with c. 1.3 million tonnes imported annually and the demand rising by 8% every year (globally – only by 3%). Therefore, China is an important partner for such enterprises as Grupa Azoty and Grupa Azoty “Puławy”, the leading European manufacturers of the product.

China has it its way

Seeing how important caprolactam is for the national economy, Chinese authorities are becoming increasingly determined to bet on domestic production. At the moment c. 21% of the output capacity of the resource is located in China. By promoting domestic manufacturers and by using anti-dumping duties for EU countries and the USA, Beijing authorities aim at becoming self-sufficient at producing caprolactam.

Not such a newcomer to the Asian markets

Before joining Grupa Azoty, “PUŁAWY” had cooperated with East Asian markets and had been selling caprolactam to clients in China, Thailand, India and Taiwan. As a result, Grupa Azoty boasts staunch business contacts in this region of the world. Additionally, having completed a feasibility study for the new investment, the Company is getting nearer the completion of the new enterprise. However, the dynamics of caprolactam market necessitates yet more structural analysis, indispensable for taking the correct decision as to the construction of a factory in Asia.

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“PUŁAWY”, China and caprolactam

| Prospects & Investment |

Caprolactam is an intermediate chemical product useful in the production of a number of construction plastics and nylon fibers. This explains why it is one of important import goods for the Chinese market.

Caprolactam from “PUŁAWY”

Grupa Azoty “PUŁAWY” is capable of manufacturing 70,000 tonnes of caprolactam per year. As a result, we are a leading manufacturer of this compound. It is manufactured basing on a Polish license and 35 years of experience our Company has gained in the sector. This is why “PUŁAWY” is a well-known and respected provider of caprolactam on a global scale.

Chinese market

Demand for caprolactam is constantly growing in China. While 3 years ago this one country bought up 25% of the global caprolactam production volume, this value is forecast to reach 40% in 2015. Consequently, the Chinese market is crucial for European manufacturers, including “PUŁAWY”. In 2011 as much as 5% of caprolactam imports came from Poland. However, China is struggling towards self-sufficiency in manufacturing of the compound, so as to satisfy as much as 80% of demand using domestic production.

Activity of “PUŁAWY”

Seeing that caprolactam market is changing dynamically, Grupa Azoty “PUŁAWY” is striving to remain very active both with respect to production and trade, but also on the forum of international organizations of chemical companies. We belong to China International Polyamide & Intermediate Forum and Nylon Promotional Group 6, the global associations of caprolactam and polyamide manufacturers. Owing to membership in international bodies and activities aimed at boosting manufacturing efficiency, “PUŁAWY” remains an important player on caprolactam market and a serious trade partner for Chinese companies.

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2013/2014 Season – A time of stockpiling

| Foreign Markets |

Relying on numerous pieces of news coming from various countries in recent weeks, it has become possible to prepare a forecast regarding the situation on global markets in 2013/2014 season.

Import plans of China

We have learned that People’s Republic of China is going to import as much as 66 million tonnes of soy in 2013/14. Compared to data from previous years, this figure will constitute a record high. However, the quantity of imported soy is lower than USDA estimate. The figure will be higher by 7 million tonnes than in the preceding season, where soy imports reached 59.2 million tonnes.

The situation of wheat market

Following the publication of USDA report, the price of wheat is currently falling. This results from the fact that the 2013/14 wheat harvest forecast is 701.1 million tonnes. Another factor pushing prices downward is the promising crops in Russia, Australia, Canada and the European Union.

USDA forecast is higher than an earlier prognosis by United Nations Food & Agriculture Organization, which mentioned 695 million tonnes as well as a forecast of The International Grains Council, which was announced last Thursday and spoke of 680 million tonnes.

Influence on food safety

Stockpiling of agricultural produce is absolutely indispensable in the context of safeguarding the food resources for the world population. At the moment, global grains stock would suffice for around 70 days of consumption. Such inventory is an attempt at protecting the global market from fluctuations of demand for grains. Current reserves are fairly low, which will influence the prices of grains on the market, especially combined with optimistic forecast concerning harvest and production.

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Chemistry on the rise

| Products |

The situation of the global economy is worrying and the prices on global chemicals market are low. However, market analysts are forecasting a reversal of trends and improvement of the situation in the business. “PUŁAWY” are also expected to benefit.

China protects its manufacturers

Decreased activity in the sector of caprolactam and melamine production and sales results from anti-dumping duties imposed by the Chinese government. The duties have been introduced to protect and give a boost to domestic manufacturers, who are able to step up production volume. However, this poses a challenge for “PUŁAWY” Company on whose goods a 4,4% duty is applicable.

AdBlue® still in the game

Our hope for the near future is high quality urea with a registered trademark, used in catalytic converters of vehicles to reduce the quantity of nitric oxide in exhaust fumes. Both in Poland and other European countries there are more and more stations where users may tank AdBlue®. The expansion follows the growth of consumption of the substance, a growth by 20% year-to-year. Further growth is forecast in the foreseeable future.

Expected demand for caprolactam

American automotive market is slowly returning to the condition from before the recession, while in Japan the economic activity has slowed down owing to the tsunami wave and high exchange rate of the yen. And still, caprolactam, which is used for the production of plastic elements fitted in cars will continue to be in demand. The eyes of the world are directed at China and India, who are expected to produce growth in the business. Seeing that the government in Beijing is planning to launch domestic production of caprolactam, India is now an important destination for “PUŁAWY”.

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Understanding the Chinese market

China is a partner of strict importance for our business. Our company has been actively present in the Far East for over 10 years, selling caprolactam that we manufacture. The compound is used for the production of polyamide, which is then used to produce e.g. surgical packaging or nylon. Another use of caprolactam is in the automotive factories.

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