On November 7 and 8, at the Grand Palais in Lille, fertilizer manufacturers did not hide their concerns for the coming campaign. Following the disappointing results of the campaign, farmers are short of cash to make investments. Distributors do not wish to commit to volumes with suppliers, as a result, factories operate slowly.
“Price volatility means that no one in the value chain wants to take risks,” explains Pavel Hanus, commercial director of Agrofert. The danger, if the warehouses are full and the orders do not arrive, is that factories temporarily close. » Closures which would be reminiscent of the year 2022, where the price of gas forced European industrial sites to slow down their activity.
To compensate for the fall in production, Europe imported fertilizers
“In 2022, Europe experienced a 70% drop in nitrogen fertilizer production capacity,” recalls Monica Marucci, head of the European Fertilizer Observatory. The situation improved in 2023, and this year we are about 80% of manufacturing capacity usual. »
To compensate for the drop in domestic manufacturing, Europe massively imported fertilizers. If in 2022, following European sanctions, the Russia recorded a drop in its exports to the EU of around 7% compared to the 2014-2021 average, it quickly became Europe’s main supplier of nitrogen fertilizer again, with a 28% share market in 2024. Belarus, also targeted by sanctions, and which had seen its potash exports fall, is in the process of returning to European markets.
Balanced fertilizer prices in 2024
On the price side, the drop in exports of Chinese urea and phosphates, during the first half of 2024, squeezed prices, even if, since then, exports have resumed.
Another upward factor: wars in the Black Sea and the Middle East have led to a reorientation of logistics flows. Trade passing through the Suez Canal, for example, only reached 6% of global trade, compared to 14% in normal times, with liners having instead bypassed the African continent.
Finally, after the fall in potash prices following European sanctions, the interest of global buyers in this commodity caused its prices to rise. The return of production in countries that had been sanctioned and the reduction of gas volatility have, on the contrary, relaxed the markets.
The price of nitrogen falling in the years to come?
Global fertilizer consumption, which had fallen by 4% in 2022-2023 compared to 2021, could, in 2024, return to the level of the record year 2020, according to the IFA, International Fertilizer Industry Association. If China and Latin America should drive consumption, Europe would rather show a decline the use of mineral fertilizers.
In question, the overall increase in areas dedicated to organic farming, the import of Ukrainian cereals, reducing the areas intended for large crops, and the tightening of German and English legislation on the use of fertilizers.
“In the longer term, we believe that the rate of fertilizer consumption will decelerate from 2025 due to a slowdown in population growth world, and therefore agricultural production,” points out Hanna Chtioui, mining market analyst for the IFA. Nitrogen would be particularly affected, with a surplus estimated at 5 Mt in 2028, which would lead its price to fall.
By 2028, Qatari nitrogen and Brazilian potash?
“By 2028, most of the new fertilizer production capacities should come from Russia, Eastern Europe and Central Asia,” estimates Hanna Chtioui. If Russian projects are conventional, relying on natural gas, Southeast Asia has a mix of projects based on natural gas and green ammonia projectsand the United States is investing heavily in low-carbon technologies. »
Qatar, Saudi Arabia and Australia are also entering the race for carbon-free nitrogen. Basic fertilizer development projects are concentrated in Morocco, Saudi Arabia, Brazil, India and Egypt for phosphates, and in Russia, Laos and Canada for potash fertilizers.
