Russia’s revenue from fertilizer exports has skyrocketed over the past year despite a slight decline in sales, but the skyrocketing price of fertilizer due to scarcity has brought huge profits to Russia – a rare commodity. energy market.
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According to United Nations data, Russian fertilizer exports increased by 70% in the first 10 months of 2022 to $16.7 billion compared to the same period in 2021.
Import statistics from Moscow’s trading partners show that, in terms of volume, overseas sales of the world’s largest fertilizer exporter fell only 10% year-on-year. This went against analysts’ predictions that shipments would collapse after the conflict between Russia and Ukraine took place.
Russian fertilizer exports boom in 2022. Graphic: FT
Exports of food and fertilizer from Russia are exempt from Western sanctions to promote food security, especially for poor countries. Moscow has increased exports to countries such as India, Turkey and Vietnam.
“Countries like India benefit most from fertilizer imports,” says Josef Schmidhuber of the United Nations Food and Agriculture Organization (FAO).
Russian and EU officials are concerned that some of their buyers, banks and insurers have self-sanctioned and avoided buying products from Russia, which could lead to shortages in the industry.
Last month, the EU clarified exemptions from sanctions on Russian agricultural and fertilizer exports after EU member states said they were concerned shipments were likely to stall. As a result, the EU has introduced new exemptions that allow EU member states to unblock the assets of sanctioned individuals associated with Russia’s agricultural and fertilizer industries.
Fertilizer prices started rising even before the conflict, and Russia cut supplies of natural gas, which is vital for nitrogen fertilizer production. The price of potash, another key fertilizer, skyrocketed after Western governments imposed sanctions on Belarus, one of the largest producers of the crop nutrient.
Subsequently, a sharp rise in gas prices after the conflict between Russia and Ukraine led to the closure of factories in Europe, which increased the price of nitrogen fertilizers, which are so important for the output and quality of food production. real.
The prosperous year is difficult to sustain
However, it is difficult to say for sure whether Russia will continue to benefit from higher prices this year. The recent fall in gas prices in Europe due to warmer-than-usual weather has resulted in lower fertilizer prices, with producers in the region ramping up production.
“This means that imports from EU countries will decrease significantly and that is good news for growers all over the world,” said Schmidhuber.
“Production in Europe is profitable and producers continue to ramp up fertilizer production,” said Chris Lawson, head of fertilizers at consulting firm CRU. Global nitrogen supplies are abundant and we expect phosphate and potassium prices to continue to fall.”
Russia’s grain exports in 2022 are skyrocketing. Images: FT
Grain shipments have also returned to pre-conflict levels, according to data from ship tracking company Sea. The volume of grains, including wheat and corn, shipped in the last three months of 2022 is up 21% year-on-year.
A raw material that has not yet recovered in exports is ammonia, the raw material for nitrogen fertilizer due to the closure of a pipeline through Ukraine. Russia accounts for about 12% of the global ammonia export market, and FAO data shows that Russian exports of the chemical, which is also used in industries such as plastics and textiles, have fallen by 76% in volume over the past year . The first 9 months of 2022 compared to the same period in 2021.
The Black Sea grain deal between Moscow and Kiev, brokered by the United Nations and extended in November, includes a commitment to restart Russian ammonia exports by reopening the pipeline. Russian analysts and fertilizer companies, including sanctioned Russian fertilizer billionaire Dmitry Mazepin, have called for shipments to resume despite the recent drop in international nitrogen fertilizer prices.
That reports FT, Bloomberg
