Fertilizer producers predict export recovery to 2021 peaks

Russian fertilizer producers are gradually restoring exports and will reach record levels in 2021 in the second quarter of this year, Andrey Guryev, president of the Russian Fertilizer Producers Association (RAPU), said on May 23. But in general, according to the results of the year, according to his forecasts, the export of fertilizers will be lower than in 2021, when 37.6 million tons were delivered abroad. for the second-third-fourth quarters, exports should recover until the second-third-fourth quarter of 2021, which was the highest in terms of exports,” Guryev said at the Russian-Chinese business forum in Shanghai (quoted by TASS).

The head of the RAPU explained that now “some decrease” in exports is due to the supply of potash, but the RAPU sees “good prospects” for the recovery of the market.

According to the Federal Customs Service (FTS) of Russia, fertilizer exports in 2021 increased by 10% compared to 2022. In monetary terms, it amounted to $12.5 billion (+78.6%). Deliveries of potash fertilizers abroad increased by 24.2% to 11.9 million tons, nitrogen – by 5.3% to 14.6 million tons, mixed – by 3.2% to 11.2 million tons. 9.09 million tons of all types of fertilizers were exported, in the second – 9.43 million tons, in the third – 9.32 million tons and in the fourth – 9.74 million tons, according to the data of the Federal Customs Service.

At the end of 2022, the Federal Customs Service did not publish statistics on deliveries in physical terms; in monetary terms, fertilizer exports from Russia increased 1.5 times, to $19.3 billion. According to the RAPU, fertilizer exports in 2022 decreased in physical terms by 15 %. The association’s data on exports for 2021 coincides with the statistics of the Federal Customs Service (37.6 million tons). The fall last year was primarily due to a decrease in the export of potash fertilizers, a representative of the RAPU explained to Vedomosti earlier. This is a consequence of the continuing shortage of port facilities for their export, he said.

According to Rosstat, in 2022, Russian enterprises reduced the production of mineral fertilizers by 11% to 23.5 million tons (in terms of 100% nutrients, and not by the actual weight of the product). At the same time, the output of potassium chloride decreased by 32% to 7.3 million tons. In physical weight, according to the RAPU, its output fell by 35%. The negative dynamics is explained by the reduction in exports due to sanctions and the low demand for the product in Russian agriculture. The production of nitrogen and phosphate fertilizers last year, according to Rosstat, on the contrary, increased by 3.5% to 11.8 million tons and by 1% to 4.4 million tons, respectively.

Analyst of FG “Finam” Aleksey Kalachev notes that while the official data of the Federal Customs Service on the volumes and directions of export of fertilizers remain closed, therefore, the estimates of RAPU “should be trusted.” The analyst adds that Russian fertilizers remain in demand on the world market. The largest consumers are Brazil, India and China, which are not among the unfriendly countries that have joined the sanctions because of the NWO in Ukraine. Head of Analytics Department for Securities Markets Alfa Bank Boris Krasnozhenov clarifies that India, North Africa, Latin America and Asian countries “demonstrate good demand for fertilizers.”

According to Krasnozhenov, in the past few months, the world market has seen a decline in prices for fertilizers, which was caused by a fall in the cost of gas and agricultural products. In particular, the price of nitrogen-phosphorus fertilizers (diammonium phosphate, DAP) fell from last June to May 2024 from $1,000/t to $502/t on a FOB basis (“loaded on board”) in Chinese ports, from the beginning of 2023 The price has dropped by about 30%. Urea fell from $700/t in September 2022 to $300/t at the end of the first quarter of 2023 on an FOB New Orleans basis. Now the price has risen to about $400/ton.

“Now the prices look attractive for the largest importing countries, and we can expect an increase in demand for nitrogen, phosphorus and complex fertilizers in the second half of 2023,” the expert believes. Potash, he says, is an exception, as “relatively high prices can deter buyers.”

According to Kalachev, the volume of exports of potash fertilizers from Russia will also be largely influenced by the transit of Belarusian fertilizers, the supply of which is under sanctions. According to the Institute for Problems of Natural Monopolies (IPEM), the transit of Belarusian fertilizers through Russia in 2022 increased 76 times compared to 2021 to 3.54 million tons (Vedomosti wrote about this on April 27). In the first quarter of 2023, it increased by more than 18 times compared to January-March last year to 2.13 million tons. “The drop in our exports may reflect friendly assistance to a brotherly country in the form of the provision of transshipment capacities of Russian sea terminals,” – suggests Kalachev. But Krasnozhenov points out that Russian fertilizers are exported through ports on the Black and Baltic Seas.

According to Kalachev, the growth of export volumes to a record level in 2021 is possible only if the problems with logistics caused by sanctions are resolved and quotas for fertilizer exports are canceled. In March, the Russian government increased the volume of the fertilizer export quota valid until May 31 by 300,000 tons. As a result, the total volume of the fertilizer export quota until May 31 will exceed 12.6 million tons. export of fertilizers, is the introduction of new transshipment capacities.