Russia remains a major exporter of fertilisers which have not been sanctioned. Exports of potash were up 70% year on year in the first half of this year, reports Vedomosti on August 7.

Potash fertiliser exports from Russia surged in the first half of this year, reaching 6.7mn tonnes, a 1.7-fold increase compared to the same period last year, according to data from the Metals & Mining Intelligence (MMI) agency reviewed by Vedomosti – the strongest growth in six months.

Urea, the main nitrogen fertiliser, followed with a 23% y/y increase, totalling 4.6mn tonnes. Phosphorus fertiliser exports slightly declined by 3% to 2.5mn tonnes. Data on ammonium nitrate exports was not available.

The MMI data suggests overall the total export volume for all fertiliser types was 13.7mn tonnes in 1H24, a 34% increase. But a source familiar with customs statistics told Vedomosti the actual export volume was higher, approximately 21mn tonnes in the first half of the year, or 20% more than last year's figures.

The main customers include: Brazil, China and the US, according to MMI. Significant volumes of nitrogen fertilisers were supplied to the USA, Brazil, India and Mexico.

Exports to Europe are also rising, which has raised the fears of Europe’s growing dependence on Russian fertilisers. Vedomosti reported the EU increased these imports 1.7-fold y/y to 1.9mn tonnes between January and May 2024.

The MMI review attributes the export growth to the recovery in export prices for Russian mineral fertilisers, which began rising after a decline last year. In June, the average FOB price of urea from the Baltic Sea increased by 23% y/y to $310 per tonnes. Monoammonium phosphate and diammonium phosphate prices also rose to $572 (+38%) and $521 (+10%) per tonne respectively. However, 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 fell by 30-50% compared to 2022, while phosphorus fertilisers dropped by 10-15%, reports Vedomosti. Phosphorus fertiliser prices stabilised at $500 per tonnes in the second half of last year due to export restrictions by China.

Fertiliser production in Russia is also on the rise. RosStat reported a 14% increase in active substance production to 14.1mn tonnes in the first half of 2024. Ammonia production, used as a raw material for fertilisers, rose by nearly 6% to 9mn tonnes.

Export volumes initially fell after the start of the conflict in Ukraine due to logistical problems, despite the fact that fertilisers remain unsanctioned. Indirectly, sanctions in 2022 restricted Russian access to key transshipment hubs in Estonia and Latvia, reducing exports and ammonia supplies via the Tolyatti-Odessa pipeline through Ukraine ceased entirely.

Russian fertiliser companies have also been indirectly affected by the so-called strangulation sanctions on banking that has made payments and cargo insurance difficult. Additionally, the EU sanctioned several Russian businessmen with ties to the fertiliser industry, complicating the export process.

In 2023, a gradual recovery in fertiliser exports and production began. The Russian Fertiliser Producers Association (RAPU) reported a 25% increase in fertiliser exports to 40mn tonnes and a 9% rise in production to 59.3mn tonnes. Last year, 75% of Russian exports were directed to friendly countries but 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% this year, reaching 65.2mn and 44mn tonnes respectively.

Russian exporters offer "very competitive" prices, ensuring high demand for their fertilisers, reports Vedomosti, thanks to the lower prices and access to cheap domestic gas as well as a weaker ruble.

Experts estimate the global fertiliser demand at 195mn tonnes for 2024, potentially reaching 200mn tonnes in the next two years due to population growth in developing countries and India. Prime Minister Narendra Modi was in Moscow in July to meet with Russian President Vladimir Putin and amongst the deals done was long-term agreements on the supply of energy and fertilisers.

Russian fertiliser exports are projected to reach 42-43mn tonnes by the end of the year, reports Vedomosti.