Fertilizer prices have risen nearly 30% since early 2022, after rising 80% in 2021. Higher prices are driven by a combination of factors, including: rising input costs, supply disruptions due to sanctions (Belarus and Russia), and export restrictions (China). Urea (urea) prices have surpassed the 2008 peaks, while phosphates and potassium prices are approaching 2008 levels. Market concerns about affordability and availability are increasing. Due to the war in Ukraine, there was a supply of fertilizer.
The MAP price has recently reached a new all-time high, with an average price at the beginning of May 2022 of $1,081/ton. Other fertilizers also spiked to new all-time highs, with an average DAP of $1,057/ton (all-time high), MAP $1,081/ton (all-time high), potash USD 881/ton, 10-34-0 USD 906/ tons, anhydrous USD 1,534/ton (all-time high), UAN28 USD 631/ton and UAN32 USD 730/ton (all time high)…
Compared to the same period last year, most grades have increased significantly in price, of which 10-34-0 is 47% more expensive, MAP 53% higher, DAP 67% more expensive, UAN28 76% more expensive, UAN32 is more expensive 83% higher, urea 95 % higher, potassium 102% higher and anhydrous 115% more expensive than last year.
The sharp rise in fertilizer prices in the world makes the domestic fertilizer market inevitable. Accordingly, fertilizer prices in the Mekong Delta have increased by 1,000-1,900 VND/kg in the past month from the previous month, reaching their highest level in 50 years. Currently, the domestic sales price of DAP fluctuates around 22,400 VND/kg, 19,500 VND/kg potassium, 18,200 VND/kg urea. Vietnam uses more than 10 million tons of industrially produced fertilizers annually.
Fertilizer prices on the world market rose to record highs.
Record high import costs
Rising natural gas prices, especially in Europe, have led to widespread production cuts for ammonia, an important input for nitrogen fertilizers. Similarly, the price of coal – the main raw material for producing ammonia – shot up in China, forcing fertilizer factories there to cut production, which in turn contributed to the rise in urea prices. The rise in ammonia and sulfur prices also contributed to the rise in the prices of phosphate fertilizers.
Import costs in the fertilizer industry.
Export Sanctions and Restrictions
Fertilizer prices rose as if they were “flashing up” when the conflict between Russia and Ukraine broke out, resulting in economic sanctions and disruption of trade routes to and from the Black Sea. Since March 10, Russia has completely stopped exporting fertilizers to the world. This leads to an imbalance in the global supply of fertilizers.
Russia accounts for about 16% of global urea exports and 12% of DAP and MAP exports, while Russia and Belarus together account for 2% of global MOP exports.
Another factor making the market more concerned about supply is that China has suspended fertilizer exports until at least June 2022 to ensure domestic supplies.
Fertilizer prices in the past period.
Delivery interruption
While urea and DAP prices fell at the start of 2Q2022 due to lower bid prices in India as buyers await clarity on India’s fertilizer subsidy policy, potassium prices show no signs of declining. Potassium shortages and uncertainty about the future of the market have increased following new sanctions against Belarus and Russia (in addition to those imposed on Belarus last year). In addition, Lithuania no longer uses its rail network to transport Belarusian potash to the port of Klaipeda, which normally handles 90% of Belarusian fertilizer exports.
Fertilizer exports from Russia, Ukraine and Belarus.
strong demand
Global fertilizer consumption has remained strong during the COVID-19 pandemic. Brazil and the US have allocated record acreage to soybeans due to the surge in world soybean prices in recent years. Soy is a crop that needs a lot of fertilizer.
Demand is also high in China due to the increased use of animal feed, especially maize and soy meal, which are recovering the pig population after the ASF outbreak persisted. last year. Fertilizers, which are currently at their highest price since the global food crisis of 2008, could limit the use of fertilizers in crops, although the prices of plant products have also risen.
Ability to pay for fertilizer.
Market outlook and risk factors
Urea prices are expected to remain at historically high levels as long as natural gas and coal prices continue to rise. Likewise, DAP prices are expected to remain high until ammonia and sulfur prices fall. In addition to input costs, the risk to the market outlook also depends on whether China’s urea and DAP exports resume after June. Potash prices are expected to remain at historically high levels next year unless supplies from Russia and Belarus return to international markets.
Best fertilizer consuming countries in the world.
Analysts are examining the factors influencing the market outlook, in particular the crisis between Russia and Ukraine, which is fueling high volatility in the input material market and adding to uncertainty. especially for the fertilizer market. Fertilizer prices are expected to continue to rise for the foreseeable future, especially for DAP and potassium, as the world supply of fertilizers is difficult to increase and input materials are increasing strongly.
Analysts say there are two key events to look forward to in the near future: potential consumer demand from major agricultural producing countries due to record high prices and how China is re-entering the nitrogen export market. and global phosphate fertilizers.
References: World Bank, Dtnpf
