Fertilizer exports are heating up

Problems with the export of potassium were the main reason for the reduction in the export of mineral fertilizers in the first half of the year. According to the Ministry of Industry and Trade, exports in the first half of the year decreased by 7.2%. According to Kommersant’s interlocutors, in the second half of the year this decline will hardly be able to catch up, since building new supply chains due to the inability to use the Baltic ports will take time.

Export of mineral fertilizers in the first half of 2022 decreased by 7.2%, to 17 million tons, said in an interview “Interfax” Deputy Prime Minister and Head of the Ministry of Industry and Trade Denis Manturov. According to him, the fall is primarily due to the shutdown of the Togliatti-Odessa ammonia pipeline (which transports the products of the Uralkhim plant Togliattiazot to the port of Odessa), restrictions on the transshipment of Russian fertilizers through the ports of neighboring states, as well as the refusal of foreign buyers to pay for Russian products and payment problems.

At the same time, the Ministry of Industry and Trade expects that by the end of the year, fertilizer exports will remain at the level of 2021.

Last year, according to the Federal Customs Service, Russia exported 37.6 million tons of fertilizers (including 14.5 million nitrogen, 11.9 million potash and 11.2 million tons of complex fertilizers) worth $12.5 billion.

Kommersant’s sources on the market and among traders also attribute the drop in exports to the logistical problems of Uralchem, which owns Uralkali. The main transshipment assets of the company are located in the Baltic States and are currently stopped. In addition, Kommersant’s interlocutors note that at the beginning of the year Uralkali did not conclude contracts with the largest consumers of its products in China and India. In addition, there is competition with Belarusian potash, which is traded at a 30-50% discount and also transshipped through Russian ports.

At the same time, export quotas for fertilizers, which the government introduced at the end of last year, had little effect on shipments. The restrictions were in effect from December 1, 2021 to the end of May 2022, the quotas were 5.9 million tons for nitrogen fertilizers and 5.35 million tons for complex fertilizers. Later, they were increased to 8.3 million tons for nitrogen fertilizers and 5.9 million tons for complex fertilizers, and their validity period was extended until the end of the year.

Deliveries of ammonium nitrate abroad were completely stopped from the beginning of February to the end of April, that is, during the sowing season, against the background of its shortage in Russia. In addition, according to Kommersant’s sources close to the manufacturers, companies still have difficulties with shipping cargo after the largest maritime carriers leave the Russian market.

Export problems also affected fertilizer production in Russia in the first half of the year, despite strong domestic demand. According to Rosstat, the output (in 100% of the active ingredient) of phosphorus fertilizers increased by 3.3%, to 2.2 million tons, nitrogen – by 2.9%, to 6 million tons. At the same time, potash production fell by 23.3% to 4.1 million tons. Mainly because of this, in general, for all fertilizers for the half year, the output indicator decreased by 7.6%, to 12.3 million tons (the data differs from the figures of the Ministry of Industry and Trade, since they are indicated in 100% of the active ingredient).

However, experts consider such a decrease uncritical. According to Nina Adamova from the CEP, given the restrictions on exports, the impact of the general crisis and problems with the shipment of products for export, the drop in production does not seem so dramatic.

But, according to Kommersant’s sources on the market, during the first half of the year too large volumes fell out so that they could be made up for in the remaining months. Logistics problems in the industry cannot be resolved quickly. Therefore, Kommersant’s interlocutors doubt that exports by the end of the year will approach the level of 2021.

Olga Mordyushenko