The market for fertilisers has several factors to consider at the moment. The import of Russian fertilisers - at rock-bottom prices and made with cheap gas - puts the EU in a dilemma. Persistent tension in the Middle East also does not bode well for price formation.
The import of Russian goods - especially 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. However, 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 still exported. And this is despite the Union's preference to completely shut off the gas tap. Nitrogen fertilisers also provide a backdoor for the Russians.
Pressing import
Natural gas is the main component of nitrogen fertilisers. Low gas prices enable Russian producers to produce at very low prices. Moreover, they do not have to deal with cost-increasing greening measures, as is the case in the EU. According to figures from the industry organization Fertilizers Europe, fertiliser imports from Russia increased by 117% this season compared to the previous season, amounting to 1.78 million tons. Most fertilisers go to Poland (857,000 tons), France (380,000 tons), and Germany (375,000 tons). In 2023, the EU imported Russian fertiliser products worth €1.4 billion, according to Eurostat data, ranking it sixth among the largest products. In 2022, this figure was €2.6 billion.
Russian figures show a 43% increase in imports this year - up to 3.3 million tons by August. This data comes from the market bureau MMI. More nitrogen fertilisers were sent to Europe, and the import of phosphate nearly doubled. According to Rosstat, fertiliser production in Russia increased by 12% to 18.8 million tons in August.
Limited purchases
Despite Russian ships continuing to deliver fertilisers to European ports, this does not prompt farmers to buy a lot of fertilisers. Agrifirm informs its members that only a third of the fertiliser volume has been traded in Europe compared to last year. Companies are likely taking a wait-and-see approach, hoping for falling prices, while the cooperative believes there is a high chance that prices will rise further. Meanwhile, many suppliers reportedly have their storage facilities filled with fertilisers.
Agrifirm also points out that persistent tension in the Middle East is already pushing prices up and giving the market an uncertain character. Various international market bureaus agree with this assessment. The nitrogen market is particularly sensitive to tensions in this part of the world. Shipping traffic could also be affected. So far, conflicts on the African continent have had relatively little impact on direct price formation, but this is now changing. Half of the global urea production comes from North Africa, making the region essential for the global fertiliser market.
Factories closing
In Europe, producers not only face cheaper Russian fertilisers but also increasingly stringent requirements for their production facilities. BASF already closed an ammonia plant in Ludwigshafen, Germany, last year, and Yara announced last month that it would stop producing ammonia at its factory in Tetre, Belgium. Ammonia production is shifting to other parts of 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-neutral. During the Fertilisers Europe annual conference held in mid-October, emphasis was placed on food security, food affordability, and independence in the availability of fertilisers. The sector has high expectations for the so-called 'Carbon Capture and Storage' technology, which captures CO₂ from the air and converts it into fertilisers, creating a circular system in the fertiliser chain. Denmark and the Netherlands are relatively advanced in this technology within the EU, while other member states are proceeding cautiously. The industry organization calls for assistance from member states to accelerate this process.
Price remains stable
Despite the unrest among producers, politicians, and analysts, there is hardly any price increase visible in Dutch fertiliser prices. Farmers4All has maintained the same price level for AN, potassium 60, and triple superphosphate for three months. The prices published monthly by WUR also show little sign of a price increase.
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