Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-04
PRICE OF N|TRATES
STUDIED AT PARIS.
New Compact to Fix Figure
Above Production Costs
Looms Outside U. S.

BY Cable to The Star.
PARIS. France, June 4.-Negotia-
tions for a nitrate cartel affecting world
markets outside the United States are
under way in Paris between Cnllsah
nroducers and European synthetic
Nitrate manufacturers. AS with other
commodities, there is overproduction OF
nitrogen products in the Chilean mines
and wartime synthetic equipment is
turning out more nitrogen than can De
consumed in agriculture or industry.
Except for last years agreement, prices
might have fallen below the proouc-
ton cost, and even with the agres-
ment they are now much below the pre-
war level.
Chile has a monopoly on natural
nitrate. The orr Is dug out in the
natural state and treated by new, eco
nomical low temperature processes A
merger of virtually all Chilean com.
panf-s has just been completed ana
permits the most economical proouc-
ton of nitrate of soda. The ore can
be taken where it can be most conVen-
iently treated at lowest cost plants, ana
it is easier for one management to mar
ket the product The high cost OF pro-
duction and destructive competition
among Chilean producers have been
eliminated.
Chile Lift. Export Tax.
The Chilean merger has resulted in
the Compania de Salitre de Chil2, or
Nitrate Corporation of Chile. 1t in
cludes SO per cent of the Chilean COM
panies. The Chilean Congress has
passed the necessary legislation per-
hitting the combine and the govern
ment has become one Of the stock
holders. The new company has been
released from the former export tax OF
$3.50 ton. The Chilean government
expects to obtain an equivalent in rev.
enueS as a stockhold.r.
The new company was financed in
New York and London, but market
conditions caused the New York issue
to be placed privately. New financing
is not required so rumorS OF French
financing can be denied.
The price agreements reached with
European synthetic producers for all
countries except the United States will
expire June 30. The Paris negotiations
are for a new agreement for the next
few years.
Rivals on Equal Terms.
Other things being equal, Chilean
natural producers and European syn
thetic manufacturers work on equal
terms. The production costs of natural
Chilean nitrate and synthetic nitrogen
in a we'll designed plant are probably
substantially the same, although two
new plants of the Chilean company,
with a capacity of 100000 tons an
nually and operating under new
process, probably have a considerably
lower cost of production. Chile exports
normally between 100000 and l.4O0,-
600 tons to Europe annually.
Important in Defense.
There are IL European countries
producing synthetic nitrogen-NorWay
and Italy, with abundant hydroelectric
power British Imperial Chemicals:
GERMANY the Ig and fredericksburg;
Holland, Poland, Czechoslovakia: Bel
GUM, with several big private plants;
France. with government and private
plants, and other countries with minor
production. France is an important
user of nitrogen fertilizers.
In the early stages of manufacture,
the Chilean product can be turned INTO
nitric acid for use in the making OF
high explosives. Germany had stock
of 1000 900 tons when the war started
and was able to fight the war two years
on this supply.
Because it is possible to use nitro
gen production as a matter OF ma
tional defense. the negotiations have
been conducted doubtless with this I'M
portant factor in mind. European gov
thetic plants operating. Recent de-
crees and laws passed in some coun-
tries like France were for this purpose
and also to give local producers better
trading position. 1t is possible that the
terms of the new agreement will include
the carrying of stocks where national
defense is considered.
will Ask Price Accord.
Last year the producers contributed
$4,000 900 which was used to indem-
nifty European producers for their cur
tailment TO prevent overproduction. The
object of the present negotiations is to
have European synthetic producers
agree on prices and quotas. They will
then approach the Chilean company
with the view of arriving at price
arrangement. The United States is not
included in the area discussed.
The agreement might not be perma-
nent, but its object will be to organ
ize orderly marketing under the pres
ent distress conditions and to prevent
disastrous selling below cost. The plan
is expected to be reasonable for all
concerned and should be advantageous
to Chilean bondholders.
Copyright, 1917