The ratings on Norway-based Yara International ASA reflect our view of its position as the world's largest distributor of fertilizers, with a strong marketing network, and as a leading producer of nitrogen fertilizer. The ratings further reflect the company's operational flexibility with respect to sourcing and production capacity. Yara's production is geographically well diversified: The company runs large-scale plants in Europe and Canada. In addition, it sources low-cost gas supplies through joint-venture operations in Trinidad, Qatar, Australia, Russia, and Libya. The ratings are constrained, however, by the high cyclicality of the nitrogen business--which is very sensitive to supply-and-demand imbalances--exposure to volatile and rising energy costs, and a concentration in European high-cost production areas. Other relative credit weaknesses include strongly increased
