That Europe is becoming a huge importer of cheap fertilizers from Russia. We wrote about it on farmer.pl a long time ago, in 2022. Already then, the fertilizer industry was sounding the alarm. At that time, due to high gas prices, subsequent fertilizer factories in Europe were closed and thus fertilizer production was reduced by 70%. At that time, imports from third countries were allowed, and Russia, which attacked Ukraine, was not restricted in this matter, justifying these actions with food security. The effect is that, as Arkadiusz Zalewski from the Institute of Agricultural and Food Economics reported on Linkedin, in 2022, due to restrictions on foreign trade, the share of Russia and Belarus in Polish imports of mineral fertilizers decreased noticeably. Larger imports were carried out, among others, from Oman, Canada, Algeria, Uzbekistan, USA, Nigeria, Turkmenistan. But despite the ongoing war, this trend has reversed and since the beginning of 2023, fertilizer imports from the Russian Federation have increased noticeably (which is supported by competitive prices). In the first quarter of this year import from Russia amounted to 355 thousand. tons and was almost 6 times higher than the year before.
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Poland is the largest importer of fertilizers from Russia in the EU
Europe has become dependent on Russia
As we wrote in 2022, the EU was becoming dependent on Russia.
– In 2019, the European Union produced approximately 16.8 million tonnes of nitrogen fertilizers (in terms of pure ingredient). In 2020, the EU was a net importer of nitrogen fertilizers – imports of approximately 3.6 million tons and exports of 3.0 million tons. The share of imported nitrogen fertilizers in consumption in the EU is approximately 36% according to IFA, which places our region close to the global average (Latin American countries and some Asian countries are in a worse situation). Fertilizer production constraints in the EU are high as global fertilizer prices are below their 2022 or 2021 peaks and gas prices are relatively high. The issue of gas savings on the Old Continent is also important. So Europe is likely to increase its dependence on imports, partly reduced by lower consumption. IFA forecasts quite strong declines in the use of fertilizers, up to approximately -15%, but mainly in Asia and Africa, in Europe they will oscillate around -5% – Maciej Rozkrut, an expert from the Economic Analysis Department of PKO Bank Polski, told the farmer.pl portal at that time. .
And unfortunately, the situation has become even worse, because Zalewski recently reported that Poland imported the most, as much as 232,000. tons – which accounted for 28.9% of the volume of imports of nitrogen fertilizers from the Russian Federation to the EU. France is in second place with almost 106,000. tons, then Germany – 97 thousand. tons and Belgium – 56.5 thousand tone. – Recorded in the first quarter of this year. volume of imports from Russia at the level of 355 thousand. tons was the highest in 4 years (in the first quarter of 2020 it amounted to 382 thousand tons). In the structure of fertilizer imports from Russia, nitrogen fertilizers predominated, while imports from Germany concerned mainly potassium fertilizers. The volume of imports of nitrogen fertilizers from Russia in the first quarter of this year. (almost 240 thousand tons) was record-breaking. 44.7 thousand tons were imported from Belarus (where the import of mineral fertilizers containing potassium chloride is currently banned). tons of nitrogen fertilizers and 18.8 thousand tons of compound fertilizers, which accounted for 6.8% and 7.8% of the import of nitrogen and compound fertilizers, respectively – Arkadiusz Zalewski reported on Linkedin.
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Is it profitable to produce fertilizers in Europe? What about Nord Stream?
Cheap gas from Russia and fertilizers
Others also see this difficult situation. The inflow of cheap fertilizers from Russia reduces the competition of our European producers.
– Currently, we are flooded with fertilizers from Russia, which are much cheaper than our fertilizers, for the simple reason that they pay pennies for natural gas compared to us, European producers – said Petr Cingr, general director of SKW Stickstoffwerke Piesteritz (the largest in Germany ammonia producer) quoted by the Financial Times. He added that if politicians do not act, Europe's production capacity will "disappear".
As we read further on the FT website, one third of urea imported to the EU comes from Russia, and the amount imported in 2023 is close to record levels, according to Eurostat data.
– Years of crisis are coming for the European fertilizer industry – said Benjamin Lakatos, CEO of MET Group, a Swiss energy company that in June announced its intention to acquire majority shares of the Baltic fertilizer producer Achema, quoted by the FT. Why? Because, as calculated, 70-80 percent The fertilizer company's current costs come from natural gas, so this industry will experience rising gas and energy costs faster than other sectors.
We would like to remind you that chemical giants have been fleeing the European market in recent months. The German company BASF moves part of its production to China because there are no bureaucratic and climatic burdens and production costs are lower.
– Sooner or later everyone, most likely including us, will follow in their footsteps, Cingr from SKW told the Financial Times. His company is negotiating an option to install an ammonia line in the US, where gas is much cheaper.
Fertilizer companies, including Grupa Azoty Puławy, are calling for the introduction of tariffs on Russian and Belarusian fertilizers. What does the market say? According to the FT, according to Chris Lawson, head of fertilizers at the consulting company CRU, it is unlikely that Brussels will respond to calls to impose sanctions on Russian nutrients.
