其他服務業Business News

Exports of fertilizers in 2024 will increase by approximately 10% compared to the previous year. This forecast was given to Vedomosti on the sidelines of SPIEF by the President of the Russian Association of Fertilizer Manufacturers (RAPU), Andrey Guryev.

Fertilizer production in Russia, according to his estimates, will also increase by about 10%. Last year, Russian companies produced 59.3 million tons and exported 40 million tons, Guryev said. Thus, fertilizer production this year, based on RAPU forecasts, may amount to about 65.2 million tons, exports - 44 million tons.

The head of RAPU noted that in 2023, the volumes of production and export of fertilizers reached an “absolute record”, exceeding the pre-sanction levels of 2021.

“Production was higher due to the recovery in exports, as sanctions affected our sales in 2022, and also due to the introduction of new capacity - on the order of several million tons [per year],” Guryev said.

According to him, the logistics and freight market has reached a balanced state, but there are still problems with shipping containers and container ships. There are also difficulties with logistics within the country: companies have redirected cargo flows from the ports of the south to the northwest and the Eastern range of Russian Railways (Baikal-Amur Mainline and Transsib), he noted. But despite the difficulties, according to Guryev, “all this is being solved and fertilizers are being sold.”

He also noted that the government has increased the priority of transporting fertilizers by rail, which “allows them to be delivered on time.” According to the temporary rules for the priority of cargo transportation across the Russian Railways network, the priority for the export of fertilizers in April was increased from 9–10th (depending on the direction) to third, as follows from the appendix to the minutes of the Russian Railways board meeting dated April 27.  Vedomosti sent inquiries to the largest fertilizer producers: Phosagro, Eurochem, Acron and the Uralchem group, which is not part of RAPU, as well as to the Ministry of Industry and Trade.

The Russian fertilizer industry has not been subject to direct sanctions since the start of the SVO in Ukraine in 2022. But personal sanctions imposed on the owners of fertilizer producing companies, as well as logistics and financial restrictions, have affected the ability to export their products to Western countries. As a result, according to RAPU, the share of friendly countries (that did not join the sanctions) in the structure of Russian fertilizer exports in 2023 amounted to 75%, and supplies to unfriendly countries decreased by 25–30% year-on-year and amounted to about 10 million tons.

According to the Center for Price Indexes, about 30% of Russian fertilizer exports now go to Latin American countries, 11% to the United States, and 14% each to India and the European Union. Against the background of sanctions restrictions, fertilizer production in Russia decreased in 2022 by 7% to 58.6 million tons, exports fell by 15% to 32 million tons.

Experts consider the estimates of fertilizer production and exports cited by the head of RAPU to be realistic.  Boris Krasnozhenov, head of the securities analytics department at Alfa Bank, notes that the demand for fertilizers in the world is increasing due to population growth and a reduction in the area of agricultural land per capita. According to him, especially high demand for Russian fertilizers is observed in Brazil and India.

Managing Director of the NRA rating service Sergei Grishunin agrees with him. He adds that Africa is also becoming an interesting market for Russian exporters. Yaroslav Kabakov, director of strategy at Finam Investment Company, believes that Europe, despite political difficulties, also remains an important supply direction for Russia.   Krasnozhenov notes that the increase in fertilizer production in Russia is facilitated by the expansion of the production of Phosagro complex fertilizers at the site in Balakovo. In addition, Acron is modernizing its facilities at the site in Veliky Novgorod, and Uralkali has implemented a project to expand the Solikamsk-3 mine, the expert recalls. Russian companies are striving to increase exports against the background of an increase in the tax burden and a decrease in the profitability of supplies, Kabakov points out. The world market situation, in his opinion, promotes further investment by companies in expanding production and exports. Grishunin points out that there is a slight increase in prices for natural gas and agricultural products in the world, which may support export prices for fertilizers in the second half of this year.

According to Krasnozhenov, the price for diammonium phosphate (DAP, a nitrogen-phosphorus fertilizer) is now about $540/t on a FOB (“ship loaded”) basis in the Baltic Sea. The price for urea, according to him, is about $300/t on the same basis. In the near future, Alfa Bank expects a seasonal increase in prices for fertilizers. The price for DAP will increase by 5–10% and will approach $600/t, nitrogen fertilizers will become more expensive – by 15–20%, says Krasnozhenov. Prices for potash fertilizers this year, according to Alfa Bank’s forecast, may decrease by 15–20% compared to 2023 levels to $270–300/t.

Source: https://www.vedomosti.ru/business/articles/2024/06/10/1042789-rossiiskie-proizvoditeli-udobrenii-prognoziruyut-rost-eksporta