FT: Russia’s income from fertilizer exports grew by 70%

Revenues of Russian fertilizer exporters in 2022 increased by 70% due to rising prices and despite a 10% drop in sales and analysts’ forecasts for a decrease in February supplies, informs newspaper Financial Times (FT).

The newspaper, citing UN data, writes that fertilizer exports grew by 70% over the 10 months of last year to $16.7 billion compared to 2021 levels. Supplies of food and fertilizers from Russia were excluded from Western sanctions in order to support food security, notes FT. Among the importers were India, Turkey and Vietnam.

“Obviously, countries like India have been the biggest beneficiaries of [с точки зрения импорта удобрений]”, said Josef Schmidhuber, Deputy Director of the Markets and Trade Division of the Food and Agriculture Organization of the United Nations (FAO).

However, in the new year, Russia may no longer benefit from rising prices, the newspaper notes. A milder winter in Europe led to a drop in gas prices, which led to a decrease in fertilizer prices, and producers in the region began to increase their production. “This means EU imports will drop significantly, which is good news for farmers around the world,” Schmidhuber said.

Experts say the world’s nitrogen reserves are sufficient and expect further declines in phosphate and potash prices. With the rise in prices for Russian fertilizers, the export of ammonia, a raw material for nitrogen fertilizers, did not recover, writes the FT. This is due to the closure of the Togliatti-Odessa pipeline through Ukraine. Ammonia supplies down 76% in 9M 2022

Since June-July last year, Russian producers began to increase supplies to the markets of friendly countries, the press service of the Russian Association of Fertilizer Producers (RAPU) reported earlier. Thus, the export of Russian fertilizers to India almost tripled to 3.6 million tons, mainly due to an increase in the supply of phosphate fertilizers. Also, Russian producers almost 1.5 times increased their exports to the Middle East (primarily to Turkey) to 700,000 tons. In addition, according to RAPU, “the share of Russian fertilizers in the African market has significantly increased.” Deliveries of Russian potash to Europe decreased in 2022 by 1.2 million tons to 0.7 million tons, exports of phosphate fertilizers fell 1.5 times to 2 million tons.

In general, the export of mineral fertilizers from Russia decreased by 15% in 2022, this was primarily due to a decrease in the export of potash fertilizers, a representative of RAPU explained to Vedomosti.

On November 15, the Financial Times reported, citing sources, that the West was ready to provide Russia with security guarantees for the resumption of ammonia supplies through the pipeline as part of a grain deal extended on November 18 for another 120 days. In the nine months of 2022, ammonia production in Russia, according to Rosstat, decreased by 14.1% to 12.7 million tons.

Dmitry Mazepin, co-owner of Uralchem, asked the President of the Russian Federation to help the company “under a grain deal, temporarily open and provide drainage and transportation of ammonia in Odessa,” which, according to him, “can also go to developing countries, including Africa.”

Shortly after the start of the special military operation, the EU imposed sanctions on the shareholders of Russia’s largest fertilizer producers, causing the companies to face problems in transportation, insurance and receiving payments from international customers.