Fertilizers do not leave – Newspaper Kommersant No. 220 (7421) dated 11/28/2022

The supply of fertilizers from Russia abroad, despite the absence of direct sanctions, will fall by 10% in 2022, the Ministry of Industry and Trade predicts. At the same time, they expect that manufacturers will not suffer too much from this due to high prices. Regarding the potential of the domestic market, estimates differed: chemical companies believe that due to the demand of Russian farmers, the total production of fertilizers will remain at the level of last year, but experts expect a fall of 5-10%.

According to the results of 2022, the export of fertilizers from Russia may decrease by 10%, the Ministry of Industry and Trade believes. “On the one hand, this is due to objective circumstances, on the other hand, due to the good world market conditions, prices in monetary terms will reach approximately the level of last year,” Deputy Minister Mikhail Ivanov told TASS. According to the Russian Association of Fertilizer Producers, 37.6 million tons of fertilizers worth $12.5 billion were exported from Russia last year. Mikhail Ivanov estimated the growth of the domestic market at 7-10%.

The failure of exports began almost immediately after the start of the special operation in Ukraine due to the refusal of major carriers to deliver Russian cargo, although there is no official ban on the purchase of chemical products from Russia – fertilizers were removed from sanctions. Manufacturers had to switch to transportation by smaller vessels, as well as partially reorient deliveries to Asian countries. In addition, companies from the Russian Federation face problems when paying for freight. The export problem is most acute for Uralkali, whose products have traditionally been exported through ports in the Baltics owned by its shareholder, Uralchem. These deliveries were blocked, and the ports of Estonia, Latvia, Belgium and the Netherlands still have more than 400 thousand tons of fertilizers from Uralchem, Eurochem and Akron.

The Russian authorities themselves limit export supplies. A year ago, the government introduced quotas for the export of fertilizers, which are planned to be extended until May 2023. But, market participants note, now the ceiling of these quotas is higher than real supplies, so this measure has no effect in fact.

Despite forecasts for a reduction in exports, fertilizer production, according to market participants and experts, may remain at the level of 2021: 58.6 million tons in physical weight or 26.3 million tons in terms of 100% active ingredient. Such data at a meeting with President Vladimir Putin was called by the ex-owner of Uralkhim, chairman of the RSPP commission on mineral fertilizers Dmitry Mazepin. Although according to the results of January-October, according to Rosstat, the overall decline in output amounted to 5.3%, to 45.8 million tons. At the same time, nitrogen and phosphate fertilizers showed growth – by 6% and 2.5%, respectively, while potash production fell by 33.1%.

As an interlocutor in one of the large chemical companies explained to Kommersant, the production of nitrogen and phosphorus fertilizers in January-October grew due to demand in the domestic market, and this trend continues. The continuing decline in the production of potash fertilizers is a consequence of the lack of port facilities for their export, and in Russia the use of potassium chloride is insignificant, says the interlocutor of Kommersant. Traders say Russian compound fertilizer producers were largely able to adapt to trade barriers in a number of regions and increase shipments in the third quarter. But a further major improvement is unlikely, as major export markets are experiencing a seasonal decline in demand.

According to independent expert Leonid Khazanov, not only exports, but also the production of fertilizers in Russia will still decrease – to 23-25 ​​million tons (in 100% of the active substance) by the end of 2022. In his opinion, the export of potassium is limited not only by the refusal of foreign ports, but also by the arrival of Belarusian potassium in the ports of the Russian Federation. He notes that next year export volumes, although they will depend on the availability of transportation capacities and possible political decisions in this area, will most likely grow against the backdrop of a shortage of fertilizers in Europe. Experts do not undertake to predict prices for fertilizers next year, but so far they remain at high levels, exceeding $820-850 per 1 ton for all major types (potassium, urea and diammonium phosphate).

Olga Mordyushenko