Background Fertilizer
Fertilizer industry sees opportunities for agriculture
Fewer sales and, above all, lower prices. That is the picture that emerges from the 2023 annual accounts of various fertilizer manufacturers. That was somewhat expected after the madness on the fertilizer market in 2022.
Exact figures are of course different for every manufacturer, but the trend in 2023 is that turnover has fallen much faster than the volume of fertilizer sold last year. For example, OCI saw its turnover almost halved from $9,7 billion in 2022 to $5 billion in 2023. The company sold 11% less fertilizer, namely 14,5 million tonnes in 2022 compared to 9,4 million tonnes in 2023. At Yara, turnover increased back from $24,1 billion in 2022 to $15,5 billion in 2023. The volume of products sold remained virtually the same at 30,1 million tons in 2023, compared to 31,6 million tons in 2022. Another major player in the European market K+S even saw the volume sold grow by 2,9% to €7,3 million tons. Nevertheless, turnover declined by 2022% to €39 billion compared to 2,7. The traditionally more American-oriented companies such as Nutrien, Mosaic and CF show fairly comparable figures. Fertilizer prices and margins are under heavy pressure, while volumes sold are holding up well.
The industry is fairly clear about the reason for the lower fertilizer prices. Farmers have postponed the purchase of fertilizer in a market with falling grain prices. This created price pressure. With falling fertilizer prices, buyers were even less in a hurry to secure fertilizers. The concerns about the availability of fertilizer that arose after the corona years have now definitively disappeared.
Energy remains expensive in Europe
Where a trend break can be observed are the higher energy prices in Europe. Natural gas is the most important raw material for nitrogen fertilizers and although the European gas price has fallen sharply, we are not at the level before 2022. OCI is the most outspoken about this. The focus for the production of ammonia is in the US. For Europe, the company sees more potential in expanding the import terminal in Rotterdam. CF Industries expects that relatively high gas prices will continue to hinder European nitrogen factories. According to CF, nitrogen production in Europe will lag behind the long-term average in the near future and more will be imported.
In addition to the figures for 2023, the companies also look to the future. Manufacturers are generally fairly optimistic about sales expectations for 2024. Global grain stocks are relatively small and prices are at a reasonably high level, although many growers will think differently after the extremes in 2022. Mosaic writes: “Crop production, threatened by geopolitical unrest, weather extremes and reduced fertilization, is struggling to keep pace with strong demand driven by demographic changes and growing consumption of renewable fuels. As a result, global supply usage ratios for grains and oilseeds are tight. The healthy economic prospects for agriculture will encourage growers to maximize yields by, among other things, applying fertilizer."
Jurphaas Lugtenburg
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