World Grain - November 2024 - 44

FEATURE: PLAYING RUSSIAN ROULETTE WITH FERTILIZERS
Fertilizers Manufacturers Association,
forecasts a 10% increase in Russian fertilizer
production to a record 64 million
tonnes in 2024 and an increase in fertilizer
exports to the level of 2021.
According to the Federal Customs
Service,
Russian fertilizer
exports
amounted to 37.6 million tonnes, including
14.5 million tonnes of nitrogen, 11.9
million tonnes of potash, and 11.2 million
tonnes of complex fertilizers. The
overall export value was estimated at
$12.5 billion.
Fertilizer production in Russia may
grow to 63 million tonnes, including up
to 30 million tonnes of nitrogen fertilizers,
up to 16 million tonnes of potash, and
around 17 million tonnes of complex fertilizers,
Elena Sakhnova, an independent
analyst, calculated. Exports, she added,
may amount to 40 million tonnes, including
18 million tonnes of nitrogen fertilizers,
12 million tonnes of potash and 10
million tonnes of complex fertilizers.
Russia is
expected to
export about
12 million
tonnes of
potash in
2024.
supply, " Milenkova said. " Production curtailment amid
the 2022 gas price hike only expanded those options.
For example, the share of Egypt and Morocco imports
increased. In this respect, we do not expect 'dependence
on Russian fertilizers' to grow in the EU. "
Self-destructive move
Russian analysts suggest that the problems in the
European fertilizer industry run far deeper than just
the fierce competition with Russian imports. They said
banning deliveries from Russia, in this context, would
be equal to " shooting yourself in the foot. "
It is unlikely that EU consumers will be able to find
a reasonable alternative to Russian fertilizers, Leonid
Khazanov, an independent Russian analyst, claimed.
" They (Russian fertilizers) will most likely find a replacement
(to European customers) in the face of farmers
from China, India, Brazil, and African countries, "
Khazanov said. " They will willingly buy mineral fertilizers
exported from our country. "
Russian analyst Kirill Klimentyev added, " The purpose
of sanctions is to cause economic damage to the
country against which they are imposed. In the case
(of European restrictions against Russian fertilizers
imports), Russia will be able to find another buyer for
high-quality and cheap fertilizers. Europe will have to
replace a large supplier, bearing higher costs. "
Indeed, in addition to Europe, Russia saw a surge in
fertilizer exports to India and Brazil in 2024.
As a result, Andrey Guryev, head of the Russian
44
" Russia and Belarus exports have successfully found
new destinations, most notably India and Brazil, which
require significant volumes of imported fertilizers for
their large agricultural sectors, " Milenkova said.
However, the potential European sanctions would
not be entirely painless for the Russian fertilizers industry.
If the analogy with Russian natural gas exports
is extended to the fertilizer trade, the future of
Russian fertilizer manufacturers following the possible
European ban seems rather grim.
Before 2022, the Russian natural gas monopoly
Gazprom was the highest earner in the Russian economy.
However, in 2023, Gazprom plunged to a net loss
of 629 billion roubles ($6.9 billion), its first annual loss
in more than 20 years. Russian analysts indicated that
the financial performance was ruined amid dwindling
gas trade with Europe, once its primary sales market.
A drop in sales to Europe is only the tip of the iceberg.
Reports indicate that other Russian trade partners have
started demanding more attractive prices on new contracts,
taking advantage of the vulnerable Russian position
when the choice of sales market became limited.
Like the natural gas exports, logistics hurdles promise
to constrain a rise in deliveries to alternative markets.
The eastern part of the Russian railways is heavily overloaded,
and facilitating a substantial growth in fertilizers
redirected from Europe is likely to be challenging.
We want to hear from you - Send comments and inquiries
to worldgrain@sosland.com. For reprints of WG articles,
email reprints@sosland.com.
November 2024 / World Grain / World-Grain.com
©iamporpla-stock.adobe.com
http://www.World-Grain.com
World Grain - November 2024

Table of Contents for the Digital Edition of World Grain - November 2024
