Russia's bellicose language is causing additional turmoil in the fertilizer market. The fertilizer sector was already dealing with high energy costs and logistical issues. In the tense market, the Belarusian company Belaruskali now announces that it can no longer meet all its customers' obligations and invokes the force majeure clause.
Due to the sanctions imposed by the United States and the European Union against Lukashenko's regime, Belarus is struggling to get potash out of the country. The country does not have its own seaport, but transports the potash by rail to the port of Klaipėda in Lithuania. The first measures of the policy have been in force since December and the export route via Lithuania has been closed as of February 1. All measures announced by the West must come into effect on April 1. In a letter to customers, Belaruskali writes that, partly because of this, it can no longer meet all obligations.
According to sources, Belarus is being driven further into Russia's arms by the sanctions. A foretaste of this was given on Friday, February 18. Lukashenko and Putin said they were working on a new port under Saint Petersburg, specifically for the export of potash from Belarus. Lukashenko expects to export millions of tons of potash from that port within one to one and a half years. Because of the sanctions, the regime expects that trading in dollars and euros will become difficult. Belaruskali is therefore also considering accepting other currencies. India - which has placed an order with Belarus for 1 million tonnes of potash outside sanctions through a bilateral agreement - has suggested payment in rupees through a state-owned bank.
Other suppliers are filling the gap
Canadian Nutrien - the largest fertilizer manufacturer in the world - has already announced that it will increase potash production. Last year a new record was set, with a production of 13,6 million tons. This year it expects to sell 13,7 million to 14,3 million tons, according to interim CEO Ken Seitz. The CEO indicates that it is mainly customers in Southeast Asia who want to be assured of potash, in view of the unrest in Russia. Nitrogen is mainly required in North America.
No major problems with the potash supply are expected in the Netherlands in the short term. Prices are historically high, but demand is limited. "The demand for potash mainly picks up after a few days of frost," according to a trader. "That has not happened so far this year and it does not look like there will be another real frost period. We therefore expect demand to remain limited. We do not expect any problems with delivery."