US/EU continue to buy Russian fertilisers
Now as you are all aware the US and the EU have imposed more than 20 thousand sanctions on Russia over the past 3 years. Now one of the products they have not sanctioned is fertilisers, this is because of their hypocrisy. They cannot replace Russia fertilisers from other sources so buy it direct. This is at the same time imposing secondary sanctions on countries still trading with Russia. But hey when was there ever a politician in the West who was not a lying hypocrite of had moral standards.
The figures are in monetary terms US imported $1.8 billion worth in 2023 and $2.6 in 2024 while the Eu spent 2.5 billion euros on and 3.2 billion euros imports from Russia in 2024
From January to November 2024, the supply of fertilisers to the US and the EU from Russia increased to over 4 millions tons between them with the US taking 1.8 million tons and the US 2.4 million tons . This increases is attribute to the higher cost of gas, chich has led EU chemical companies to suspend their own production.
In the US its because the gas to produce the fertiliser is in the wrong place and there are not the requeried pipelines in place plus to move the gas around plus the Jones act stops the shipping of LNG from Texas to other parts of the USA. The Jones act stipuates that all American goods transported between American ports must be carried in American owned ships and given the US does not actually own any LNG tankers so it cannot ship LNG between different ports in the USA.
This is unlike in Europe which is criss crossed with gas delivery pipelines that were built to distribute gas around Europe after the start of Russia gas supplies during the days of the Soviet Union back in the 1970's.
Now before I continue I would like to make an appeal,if you like and enjoy my videos you can help me fund the channel and my websited sco brics insight .com and to further develop it. You can do this by making a small donation which you can do by clicking on the thanks button at the bottom of the video screen. Everybody who donates does get a personal thank you from me.
Now natural Gas is a major ingriedient of nitrogen fertiliers and since Poland stopped the Yamal -Europe Pipeline,the US blew the Nord Stream Pipeline and the EU decided to stop buying Russian pipleline gas it has been ruinously unprofitable to make ferlisers in Europe,every company in Europe has given up, infact most are now relaocating to countries in either Asia or the USA where gas is cheaper.
Lets s into the reasons behind this increase in exports and the potential longevity of this trend.
Which fertilizers does Russia export?
Nitrogen fertilizers dominate the structure of European purchases, accounting for 57% of the total. Demand growth was 39%, or 1.1 million tons, in the first eeleven months of 2024. The countries that have purchased the most Russian nitrogen fertilisers are Poland (25%), France (12%), Germany (11%) and Italy (10%).
However, the Strategy Director at Finam Investment Company, Yaroslav Kabakov, has stated that the primary increase in exports was from potash and complex fertilisers. According to the company's analysts, potash fertilizer supplies increased fourfold in the first five months of 2024, reaching 182.5 thousand tons. Exports of complex plant nutrition doubled, reaching 619.6 thousand tons.
The European statistical agency attributes this to the fact that high gas costs have compelled EU chemical companies to discontinue their in-house production, leading to a significant increase in the cost price of fertilisers to such an extent that the fertiliser business has become unprofitable. Despite the logistics costs, importing Russian nutrients is more cost-effective for European agricultural producers than producing their own.
How much fertiliser does Europe import?
Over the past five years, EU countries have accounted for approximately 20% of global fertiliser imports. However, in 2023, there was a significant reduction in both global and EU imports in value, and in 2022, there was a very sharp increase in fertilizer prices, according to Alexander Daniltsev, Director of the Institute of Trade Policy at the National Research University Higher School of Economics.
"This could contribute to high import statistics this year due to the lower 2023 base," he says.
Yaroslav Kabakov, an expert in the field, has identified several key factors contributing to the growth in Russian fertilizer exports to the EU during the initial months of 2024. Firstly, the absence of anti-Russian sanctions on fertilizer trade has facilitated unimpeded supply to the EU. Secondly, the competitive nature of Russian fertilizers on the global market, attributable to their low production costs, has played a role. Finally, the sustained high demand from European agricultural producers has maintained a robust demand for Russian fertilizers.
A review of global fertiliser exports reveals Russia's long-standing role in the market. Over the past five years, the Russian accounted for almost 15% of the world market, and in 2023, despite reduced supplies from key players like Canada, Morocco, the USA, and China, it exceeded 16%.From 2018 to 2021, Russia's share of fertilizer imports to the EU was approximately 13%. In 2022–2023, while supplies continued, their share decreased to 8–9%, according to data from the HSE Institute of Trade Policy.
Consequently, it is not feasible to entirely substitute Russia as a fertiliser supplier on the European market. The next major EU suppliers from among third countries, Egypt and Morocco, together provided less than 11% of the EU countries' import needs in 2023, according to Daniltsev's data.In the first quarter of 2024, Russian mineral fertilizer producers produced 15.9 million tons of products, which is 13% more than last year. The production of nitrogen fertilizers increased by 2.5% (7.5 million tons), phosphorus fertilizers by 14.7% (155 thousand tons), and potash fertilizers by 74.8% (4.1 million tons).The volume of ammonia, a raw material for fertilizers, increased by 5% (to 4.6 million tons).
Conversely, the production of complex fertilizers decreased by 2.3% (4.2 million tons).
When viewed in the context of these general results, the group of potash fertilizers is particularly noteworthy, according to Ekaterina Kosareva, managing partner of the analytical agency VMT Consult.
— High growth rates are attributed to the low base effect. However, the rates are encouraging: we anticipate growth to reach the pre-crisis level — the expert informed the publication.
According to Russian Railways, 8.2 million tons of fertilisers were shipped in the first quarter of 2024. This represents a 25% increase compared to the same period last year. A similar amount, totalling 8.9 million tons, was distributed within the domestic market. The Association of Sea Ports has reported that 10.2 million tons of fertilizers were shipped abroad by sea.
Exports of Fertilizers from Russia
The Ministry of Industry and Trade anticipates that Russian producers will produce 60 million tons of fertilizers in 2024, with more than half of this amount — 35 million tons — destined for international markets. These figures are considered modest estimates by Kosareva. According to calculations by the VMT Consult agency, at the current production rates, this figure could be increased to 63-64 million tons.
"However, geopolitical pressure, rather than market forces, will be the determining factor in export volumes. The European Union has often taken restrictive measures against Russia to its own detriment. The decision on gas, for instance, is likely to be counterproductive, and the issue of fertilisers is merely a minor detail," she says.
The fifth EU sanctions package, therefore, included a refusal of Russian fertilisers (a decision made in April 2022), but these restrictions were finally lifted in the autumn of the same year, after a number of vague formulations were changed, as Ms Kosareva clarifies.The market outlook will largely depend on price fluctuations, which have fallen significantly after their rise in 2022, but remain above average pre-pandemic levels. Alexander Daniltsev has stated that the primary factor influencing prices is the cost of raw materials for the production of nitrogen fertilisers, specifically natural gas.
Forecasts for the end of the year remain positive, and Yaroslav Kabakov aligns with this perspective, stating, "According to our calculations, total supplies of Russian fertilisers abroad will reach 44 million tons, which is 10% higher than the 2023 figures."
