Fertilizers are tired of rising in price – Newspaper Kommersant No. 6 (7451) of 01/16/2023
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Prices for the main types of fertilizers corrected at the end of 2022 against the backdrop of a recovery in their production in Europe and may continue to decline in 2023. At the same time, Russian producers also hope to restore deliveries to Europe, whose exports have fallen, according to various estimates, by 10-15%. In the meantime, they have to redirect their products to Asia. Experts note that the export and revenue of chemical companies in the Russian Federation in 2023 will be influenced, in addition to the global situation, by the growth of taxes in the Russian Federation.
The cost of fertilizers, which remained high throughout 2022, corrected by 10-25% by the beginning of 2023 for different types of fertilizers. Thus, prices for carbamide fell to $420-520 per ton, the cost of diammonium phosphate fell to $620-720 per ton, standard potassium chloride fell to $590-680 per ton on various sales bases. Experts say that the main reasons for the fall in quotations are a decrease in consumer activity and a gradual recovery in supply, as European chemical plants return to work due to lower gas prices.
Due to the high cost of fertilizers, Russian companies were able to achieve record revenues during 2022. According to the Food and Agriculture Organization of the United Nations (FAO), revenue from the export of Russian fertilizers in 2022 increased by 70%, while its volumes fell by 10%. In ten months of 2022, the value of fertilizers supplied abroad reached $16.7 billion.
The Russian Association of Fertilizer Producers (RAPU) believes that exports sank more – by 15% – due to Western sanctions. There is no direct ban on the supply of Russian chemical products to Europe, but they are limited by the departure of international carriers and logistical difficulties. So, for example, transshipment of potash fertilizers went through the ports of the Baltic States, which were closed for Russian companies. At the same time, the RAPU explained to Kommersant that even in the summer the forecast for a fall was higher – 20%. The figures turned out to be better due to the development of alternative supply channels, including the growth of shipments through the ports of the Russian Federation.
India is the leader in the growth of imports of Russian fertilizers. According to preliminary data, the export of Russian fertilizers there almost tripled, to 3.6 million tons, mainly due to phosphate fertilizers. Exports to the Middle East and Turkey increased by almost 1.5 times, to 700,000 tons, and deliveries to Southeast Asia also increased, RAPU notes. In particular, in 2022 Vietnam canceled the countervailing duty on DAP/MAP supplies from Russia ($43.5 per ton).
At the same time, in Europe, RAPU sees a pronounced reduction in the consumption of fertilizers, especially phosphorus and potash, the supply of which has decreased by a third from last year’s level. Including the supply of potassium from the Russian Federation to Europe decreased by almost three times, to 0.7 million tons, and phosphate fertilizers – by 1.5 times, to 2 million tons, of which half was supplied before the imposition of sanctions.
“This year we hope for the removal of sanctions barriers that cause significant damage to global food security, as well as for the easing of export quotas for certain types of mineral fertilizers,” the RAPU says.
Experts differed in assessing the prospects for the fertilizer market in 2023. Nina Adamova from Gazprombank’s CEP believes that given that the availability of all types of fertilizers remains extremely low for most consumers in the world, a reduction in fertilizer application below the recommended levels will inevitably affect crop yields in the near future. “In this regard, it is logical to assume that the global food crisis will continue, prices for agricultural products and fertilizers will remain high at least in 2023-2024,” the expert notes. Ms. Adamova notes that, in addition to price, the volume of exports from Russia and the financial performance of chemical companies will be affected by the growth of the regulatory and tax burden on the industry: export quotas, the introduction of export duties from the beginning of 2023, as well as direct regulation of domestic prices by the Federal Antimonopoly Service.
At the same time, foreign experts expect a decrease in quotations for the main types of fertilizers against the backdrop of increasing domestic production in Europe. “Issue (nitrogen fertilizers.— “b”) is becoming profitable in Europe,” said Chris Lawson, head of fertilizer at consultancy CRU.
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