The fertilizer market has a number of factors to weigh up at the moment. Imports of Russian fertilizer – at rock-bottom prices and made with cheap gas – are putting the EU in a quandary. Ongoing tensions in the Middle East are also not helping pricing.
The import of Russian goods – and in particular natural gas – is a thorn in the side of the European Union. Since 2022, when the country invaded Ukraine, the EU has been trying to hurt the Russians with sanctions. This has not had much effect on gas imports. In the first six months of this year, 20% of the volume that came to Europe before the war was exported. And this while the EU would prefer to close the gas tap completely. Nitrogen fertilizers also form a back door for the Russians.
Pressing import
Natural gas is the main component of nitrogen fertilizer. Low gas prices allow Russian producers to produce at very low prices. In addition, they do not have to deal with cost-increasing greening measures, as is the case in the EU. According to figures from industry association Fertilizers Europe, fertilizer imports from Russia increased by 117% this season compared to last season. This amounts to 1,78 million tons. Most fertilizer goes to Poland (857.000 tons), France (380.000 tons) and Germany (375.000 tons). In 2023, €1,4 billion worth of Russian fertilizer products were imported by the EU, according to Eurostat data. This ranks it sixth among the largest products. In 2022, this was €2,6 billion.
Russian figures show a 43% increase in imports this year through August, to 3,3 million tons. This data comes from market agency MMI. More nitrogen fertilizer was sent to Europe in particular, but phosphate imports also rose by almost 2,5 times. According to Rosstat, Russian fertilizer production rose by 12% to 18,8 million tons in August.
Bought little
Despite the fact that Russian ships with fertilizer continue to visit European ports, this does not encourage farmers to stock up on fertilizer. Agrifirm reports in a message to its members that to date, only a third of the fertilizer volume has been traded in Europe compared to last year. Companies are probably adopting a wait-and-see attitude and hoping for falling prices, while the chance that prices will continue to rise is high, according to the cooperative. In the meantime, many suppliers reportedly have their storage facilities full of fertilizers.
Agrifirm also points to the ongoing tension in the Middle East, which is already driving up prices and giving the market an uncertain character. Various international market agencies agree with this. The nitrogen market in particular is sensitive to tensions in that part of the world. Shipping traffic could also be affected.
So far, the conflicts on the African continent have had relatively little impact on direct pricing, but that is now changing. Half of the world's urea production comes from North Africa, making the region essential to the global fertilizer market.
Factories close
In Europe, producers are not only faced with cheaper Russian fertilizers, but also with increasingly stringent requirements for their production facilities. BASF closed an ammonia plant in Ludwigshafen, Germany, last year, and Yara announced last month that it would stop producing the same product at its Tetre plant in Belgium. Ammonia production is shifting elsewhere in the world.
By 2040, European producers must have reduced greenhouse gas emissions by 70% compared to 2020. Another ten years later, they must produce completely climate-neutrally. During the annual conference of Fertilizers Europe, held in mid-October, the emphasis was on food security, the affordability of food and independence in the access to fertilizers. The sector expects a lot from the so-called carbon capture and storage-technology (CCS), which makes it possible to capture CO2 from the air and convert it into fertilizer, thus creating a cycle in the fertilizer chain. Denmark and the Netherlands are relatively advanced within the EU with this technology. Other member states are cautious. The industry organization is asking for help from member states to accelerate this process.
Price remains stable
Despite the necessary unrest among producers, politicians and analysts, hardly any price increase is visible in Dutch fertilizer prices. Farmers4All has been using the same price level for KAS, potassium 60 and triple superphosphate for three months. Also in the prices that WUR publishes monthly, hardly any price increase is visible.