Russia's Potash Exports Surge 70% Year-Over-Year in 1H24 as Fertilizer Sector Thrives
Russia remains a dominant force in the global fertiliser market, a position that has been reinforced by recent data showing significant increases in its fertiliser exports. According to a report by Vedomosti on August 7, potash fertiliser exports from Russia surged dramatically in the first half of 2024. The volume of these exports reached 6.7 million tonnes, marking an impressive 70% increase compared to the same period the previous year. This surge represents a 1.7-fold rise from the previous year, reflecting the strongest growth in the sector over the past six months, as reported by the Metals & Mining Intelligence (MMI) agency.
Urea, a key nitrogen fertiliser, also saw substantial growth in its export volumes. Exports of urea increased by 23% year-on-year, totaling 4.6 million tonnes. However, the export of phosphorus fertilisers experienced a slight decline of 3%, reaching 2.5 million tonnes. Data on ammonium nitrate exports was not available at the time of the report.
The MMI data indicates that the total volume of fertiliser exports from Russia for all types in the first half of 2024 was approximately 13.7 million tonnes, marking a 34% increase. However, a source familiar with customs statistics suggested that the actual export volume might be higher, around 21 million tonnes, representing a 20% increase over last year’s figures.
Among Russia’s main customers for fertilisers are Brazil, China, and the United States. Significant quantities of nitrogen fertilisers were also exported to India and Mexico. The European Union has increased its imports of Russian fertilisers, a development that has raised concerns about Europe’s growing dependency on Russian supplies. According to Vedomosti, the EU’s imports of Russian fertilisers surged 1.7-fold year-on-year to 1.9 million tonnes between January and May 2024.
The growth in exports is attributed to a recovery in export prices for Russian mineral fertilisers, which had previously declined. In June, the average Free on Board (FOB) price for urea from the Baltic Sea rose by 23% year-on-year to $310 per tonne. Similarly, prices for monoammonium phosphate and diammonium phosphate increased to $572 (+38%) and $521 (+10%) per tonne, respectively. Despite this positive trend, potash fertiliser prices fell by 31% to an average of $253 per tonne compared to June 2023.
In 2023, prices for potash and nitrogen fertilisers had decreased by 30-50% compared to the previous year, while phosphorus fertiliser prices dropped by 10-15%. Phosphorus fertiliser prices stabilized at $500 per tonne in the latter half of the year, partly due to export restrictions imposed by China.
Russia’s fertiliser production has also been on the rise. According to RosStat, there was a 14% increase in the production of active substances, reaching 14.1 million tonnes in the first half of 2024. Production of ammonia, a critical raw material for fertilisers, increased by nearly 6% to 9 million tonnes.
The conflict in Ukraine initially disrupted Russian fertiliser exports due to logistical problems, even though fertilisers themselves were not directly sanctioned. Indirect sanctions affected Russian access to key transshipment hubs in Estonia and Latvia and halted ammonia supplies via the Tolyatti-Odessa pipeline through Ukraine. Furthermore, sanctions on Russian banks and businessmen with ties to the fertiliser industry complicated the export process.
In 2023, Russia began to recover from these disruptions. The Russian Fertiliser Producers Association (RAPU) reported a 25% increase in fertiliser exports to 40 million tonnes and a 9% rise in production to 59.3 million tonnes. Despite 75% of these exports being directed towards friendly countries, the Federal Customs Service has not published official export data since the start of the war in 2022.
The RAPU forecasts that fertiliser production and exports could grow by 10% in 2024, potentially reaching 65.2 million tonnes in production and 44 million tonnes in exports. Russian fertiliser producers benefit from competitive pricing, driven by lower domestic gas costs and a weaker ruble, which helps maintain high demand for their products.
Global demand for fertilisers is estimated at 195 million tonnes for 2024 and is expected to reach 200 million tonnes within the next two years, driven by population growth in developing countries and India. Notably, Indian Prime Minister Narendra Modi visited Moscow in July to meet with Russian President Vladimir Putin, securing long-term agreements for the supply of energy and fertilisers.
By the end of 2024, Russian fertiliser exports are projected to reach between 42 and 43 million tonnes, underscoring Russia’s continued significance in the global fertiliser market. This robust performance in the fertiliser sector highlights Russia’s crucial role in meeting global agricultural needs despite ongoing geopolitical tensions and logistical challenges.
