Market overview
In 2022, amid complications in the global geopolitical situation, the international fertilizer market faced a number of challenges that had a predominantly negative impact on the fertilizer industry and farmers as the end consumers. The key negative drivers include:
Preliminary estimates by consulting agencies and industry analystsHereinafter based on data by CRU, Argusmedia, Profercy; expert estimates of industry analysts in Russian and international media. suggest that in 2022, global consumption of mineral fertilizes stood at 192 mt nutrient, a reduction of 6%, or 13 mt nutrient, against 2021. Consumption of nitrogen-based fertilizers was down by 3 mt of N (–3%) to 111 mt; for phosphate fertilizers, it shrank by 3 mt of P2O5 (–6%) to 47 mt, and for potash fertilizers, consumption fell by 6.0 mt of K2O (–15%) and reached 35 mt.
In terms of geography, consumption of mineral fertilizers declined across all regions except for the CIS (not including Ukraine). The reduction was most pronounced in Europe (down by 2.7 mt nutrient, or 12%,
In the CIS, there was price control on our priority market, an uptick by 0.4 mt, or 6%, against 2021 on the back of export restrictions imposed against Russian and Belarusian products and refocusing of export supplies towards the domestic market.
Phosphate rock and phosphate-based fertilizer market
The reduction was driven by weaker conditions in the markets for phosphoric acid, mineral fertilizes and industrial phosphates seen in 2022. The most significant decline in phosphate rock production came from China and Morocco, along with other African nations. Russia, Latin America and the Middle East saw no major changes in their phosphate rock production volumes.
Pricing in the phosphate rock market has the traditional time lag associated with changes in price indices in phosphate-based fertilizer markets. In 1Q–3Q 2022, prices for the key types of phosphate rock were growing steadily before price correction kicked in, following the trend for phosphate-based fertilizers.
According to preliminary estimates, global production of complex phosphate-based fertilizers (DAP + MAP) in 2022 reached 55 mt, a 6 mt (10%) reduction
Global trade in DAP/MAP in 2022 was down by 5 mt, or 17%, to 25 mt
The most significant drop in DAP/MAP imports was seen in Europe and North and South America, with the trend only partially offset by higher DAP imports to India. Global imports of NPK fertilizers shrank by 2 mt to 16 mt, driven mainly by Europe and Africa’s weaker demand for import.
In 1H 2022, phosphate-based fertilizer prices reached record highs of USD 1,200–1,300 per tonne (CFR)CFR (Cost and Freight) in sales markets, which was due to concerns over a seasonal shortage of fertilizers after export restrictions were imposed by the key supplying nations (direct or indirect sanctions against products from Russia and Belarus; China’s limitations on exports to benefit the domestic market). In 2H 2022, global prices for phosphate fertilizers saw correction amid weaker demand in the key importing markets, including Brazil, USA, and Europe.
Nitrogen-based fertilizer market
In 2022, the global fertilizer market was under pressure from surging and persistently high natural gas prices in Europe, which caused a reduction in domestic production of nitrogen-based fertilizers in Europe and contributed to their substitution with imports. The launch of new facilities in West Africa and Southeast Asia, coupled with increased utilisation of existing capacities in countries with their own cheap raw materials (natural gas), managed to offset lower production volumes in Europe and other regions with high energy costs.
According to preliminary estimates, global production of urea expanded by 4 mt (2%) to 175 mt in 2022. Lower output in Western and Eastern Europe (down by 3–4 mt) was offset by production ramp-up in Africa, North America and Asia (up by over 7 mt combined), including by new capacity launches in Nigeria, India, and Brunei.
Global urea trade volumes in 2022 stayed virtually flat at some 53 mt. A 2.5 mt uptick in imports of urea to Europe was offset by weaker import demand seen in Latin America and Asia.
In 2022, the global urea market remained highly volatile, with price fluctuations between all-year highs and lows reaching as much as 100% and above. Changes in the urea pricing environment reflect the natural gas market volatility, importer concerns over potential reductions in urea exports from Russia, and irregularities in seasonal demand from the key sales markets of South Asia and Latin America.
Potash fertilizer market
The key driver in the potash fertilizer market was the introduction of sanctions against exports of potassium chloride from Russia and Belarus.
These two nations account for around 40% of global production and exports.
Preliminary estimates show global production of potassium chloride to drop by 10 mt (14%) to 61 mt, with global trade in this fertilizer also going down by 10 mt (18%) on the back of lower shipments from Russia and Belarus.
The downward trend in export supply drove up prices for potassium chloride in 1H 2022, causing them to reach as much as 1,000 USD/t and above. High potassium chloride prices made the fertilizer less affordable for farmers, driving a reduction in demand and global price correction in 2H 2022.
