The conflict between Russia and Ukraine is still going on, and its negative impact on economic life is still fermenting, and the issue of global food security has become more and more prominent.As "food of grain", fertilizers have also become "victims".
Recently, India issued a temporary ban onwheatexports, and Thailand also intends to cooperate with Vietnam to raise rice prices, which fully shows that the current food security problem is getting more and more serious.UN Secretary-General António Guterres told a ministerial meeting on the "Roadmap to Global Food Security - A Call to Action" in New York on May 18 that the solution would not be possible without Russian products, Belarusian fertilizers and Ukrainian food. food crisis.
The Futures Daily reporter noticed that since the conflict between Russia and Ukraine, Western countries led by the United States have imposed unprecedented economic sanctions on Russia.As an important fertilizer exporter in the world, Russia issued a ban on the export of chemical fertilizers in response to the sanctions imposed by Western countries on its other industries, which directly led to the tight supply of urea and potash fertilizers in the world, and the global fertilizer trade and transportation were blocked.
Russia's Permanent Representative to the United Nations, Vasily Nebenja, said on the 25th that Reveka Greenspan, Secretary-General of the United Nations Conference on Trade and Development, will go to Moscow in the near future to discuss the resumption of fertilizer exports.Nebenja pointed out that although Western countries' sanctions against Russia did not explicitly target fertilizers and grains, they created troubles in logistics, transportation, insurance,banktransfers, etc., and "hampered Russia's free exports."
On May 26, Russian President Vladimir Putin clearly mentioned in his phone call with Italian Prime Minister Draghi that Russia is willing to contribute to overcoming the food crisis, provided that the restrictions imposed by the West for political purposes are lifted.What kind of signals do these news release to the international fertilizer market?Can the "tight" pattern of international fertilizer supply be improved?Through a detailed review of the "changes" in the international fertilizer market since the escalation of the Russian-Ukrainian conflict, we further look at the future evolution of the international fertilizer market.
Before talking about the international fertilizer market in detail, let's take a look at the past day. What new news has been made in the international market?
1. The website of the President of Ukraine said that Zelensky inspected the front line of Kharkiv Oblast
According to the website of the Ukrainian President, Ukrainian President Volodymyr Zelensky inspected the forward positions of the Ukrainian army in Kharkiv Oblast on the 29th.
Zelensky also inspected the bombed Kharkiv city administrative building, bombed residential buildings and other places, and listened to the Kharkiv State Military Administrator Shinegubov and Kharkiv Mayor Tereho. husband and other officials to report.
At present, 31 percent of Kharkiv Oblast is "temporarily occupied," Sinegubov said.Zelensky advised the Kharkiv state government to analyze the feasibility of repairing the destroyed buildings.
2. US, German and French warships arrive at the Helsinki dock in Finland
According to the Finnish Broadcasting Corporation on May 29, local time, four warships from the United States, Germany and France have arrived in Helsinki, Finland. Among them, American and German warships participated in exercises in the Baltic Sea.
Finnish naval officers told the media that Finland has applied to join NATO, and the visit of the three countries' warships is to show support for Finland.In addition, the Finnish Ministry of Defense said on the 28th that Finland plans to increase the number of international military exercises.
3. Tropical Storm "Agatha" formed in the waters near Mexico and will strengthen into a hurricane
On May 28, local time, the National Hurricane Center issued a forecast thatthe first tropical storm "Agatha" in the Pacific Ocean in 2022 will form near the southern coast ofMexicoonthe28th2.75 -3.17%It will strengthen into a hurricane on the 29th and affect Central America.
The U.S. National Hurricane Center said: "Agatha is expected to strengthen further in the next 12 to 24 hours and is expected to become a severe hurricane when it reaches the southern coast of Mexico on Monday." A hurricane warning has been issued for parts of Mexico's Oaxaca coast, local residents The defense department said 200 shelters had been established along the coast to accommodate 26,000 people.About 5,000 tourists are expected to be in the affected area.
The U.S. National Hurricane Center said the hurricane is expected to bring heavy rainfall to the southern states of Oaxaca, Chiapas and Guerrero, which could trigger flash floods and mudslides.
The two countries fight, and the "food of food" suffers
A reporter from Futures Daily learned that Russia and Ukraine arethe main fertilizer exporters in theglobal market , especially Russia, which occupies an important position in world trade in terms of urea and potash fertilizers.
At present, the global urea production capacity is about 227 million tons, of which the urea production capacity of Russia is 11.39 million tons, accounting for 5.03%, and the urea production capacity of Ukraine is 4.166 million tons, accounting for 1.83%.As a major exporter of urea, Russia will export 7.292 million tons and 6.97 million tons of urea in 2020 and 2021 respectively. In 2021, the total export volume of chemical fertilizers will be 42.43 million tons, accounting for 17% of the total export volume of chemical fertilizers.Ukraine also occupies an important position as one of the important exporters of urea.As far as potash fertilizers are concerned, the global potash fertilizer production capacity and production are concentrated in Canada, Russia and Belarus.
According to historical data, in 2020, the output of potash fertilizers in Russia and Belarus will be 7.6 million tons and 7.3 million tons respectively, accounting for 18% and 17% of global production.With the high concentration of the global potash fertilizer industry, Russia, as one of the main producing areas, occupies an important position in the global fertilizer trade.
According to the statistics of Sinochem, in 2021, the main exporters of global fertilizers are Russia, China, Canada, the United States, and Morocco; the main importers of global fertilizer products are Brazil, the United States, India, China, France, and Indonesia.Global fertilizer imports will remain at around 57 million tons in each quarter of 2020 and 2021, an increase of 3.6% year-on-year compared to the 2019 quarterly average import volume of 55 million tons.The new crown epidemic has made countries pay more attention to food security issues, and the import volume has increased instead of falling.In the first quarter of 2022, the global fertilizer import volume decreased by 28% year-on-year, mainly because Russia, which is the largest exporter of fertilizers, and Belarus, the top ten fertilizer exporters, were restricted in fertilizer exports.
It can be seen that since the conflict between Russia and Ukraine, Russia has issued a ban on the export of chemical fertilizers in response to the sanctions imposed by Western countries on its other industries, which has directly led to the tight supply of urea and potash fertilizers in the world.
"The international fertilizer supply is tight, and the most direct manifestation is the sharp rise in international market prices. As far as the Middle East is concerned, the FOB price of its paper goods, the lowest price before the Russian-Ukrainian conflict was aroundUS$600 /ton, and it once rose to At the same time, some countries have also issued some bans on the export of chemical fertilizers in response to the tight supply situation, such as Vietnam.” Cai Yingchao, a urea analyst at Qisheng Futures, said that Russia’s total export volume of chemical fertilizers in 2021 will be 42.43 million ton, fertilizer export trade accounted for 17% of the total global trade."After the implementation of its export ban, the global prices of nitrogen, phosphorus and potassium have risen rapidly, which has directly led to an increase in the cost of global grain production. In the first half of the year, the peak fertilizer season in the northern hemisphere has caused a certain supply shortage."
Affected by the export quota policy and shipping restrictions, the export volume of Russian fertilizers has declined. At the same time, the restrictions on Russiannatural gasexports will also affect the operating rate of European synthetic ammonia, urea, ammonium phosphate and other production capacity.
From the perspective of new production capacity, the new production capacity of potash fertilizer in 2022 will mainly come from Russia, Belarus and Laos.The new production capacity of 2.3 million tons in Russia and 1.5 million tons in Belarus may have greater uncertainty due to the conflict between Russia and Ukraine.The new capacity of phosphate fertilizer is mainly due to the expansion plan of OCP capacity in Morocco. OCP plans to increase the production capacity of granular phosphate fertilizer by an average of 1 million tons per year from 2020 to 2027.According to IFA's forecast, the newly added capacity of urea in 2022 will be 4 million tons, mainly from Nigeria, Brunei, India and other places.
"As far as the supply side is concerned, the global fertilizer production has not changed much for the time being, but what is worth paying attention to in the later period is the start of production capacity in Europe." Industry insiders said that the urea production capacity in Europe exceeded 10 million tons, and the conflict between Russia and Ukraine The cut-off of natural gas supply from Russia to Europe may cause the supply of natural gas in Europe to be tight in winter, resulting in the suspension or reduction of production of urea plants in Europe, which in turn makes the international urea supply tense again.
From the demand side, affected by the new crown epidemic and the conflict between Russia and Ukraine, the problem of global food security has become more and more prominent, and countries are paying more and more attention to the guarantee of their own food security.With the rise in global food prices, the agricultural prosperity has improved, and farmers' enthusiasm for planting has also increased, and the global demand for fertilizers has steadily increased.According to IFA forecast, the growth rate of global fertilizer demand is expected to reach 2.9% in 2022.
Ukraine and Russia have always been important grain exporters in Europe and the world.According to statistics, the export volume of wheat and cornin Russia and Ukraineaccounts for 25% and 13% of the global export trade volume respectively, and they are important "granaries" in the world.
According to WuZhiqiao, senior researcher of Greenland Dahua Futures, since the conflict between Russia and Ukraine, the supply of main grains has been interrupted, and the prices of crops have continued to rise. need.
On March 10 this year, Russia 's Ministry ofIndustrysaid it would ban the export of fertilizers to "unfriendly" countries.Belarus said the European Union and Canada required restrictions on some exports of its potassium content (equivalent to K2O) below 40% or above 62%.
"The EU's sanctions on Russia's fertilizer exports are also exacerbating the continued tension in global fertilizers, superimposed transportation is blocked, and the gap between global fertilizer supply and demand is enlarged." Wu Zhiqiao said.
"Port closure" embargo, Russian fertilizer exports are restricted
At present, the Black Sea region is one of the focuses of the conflict between Russia and Ukraine. Port trade and ship navigation in the region are affected, transportation is blocked, and Russian fertilizer exports are also greatly affected.
It is understood that Russia's fertilizers are mainly transported through the Baltic Sea. After the start of the Russian-Ukrainian conflict, many countries ordered to prohibit Russian-related ships and goods from entering the port.Due to the interruption of the logistics chain, many leading shipping companies have suspended their business with Russia.Maersk and Mediterranean Shipping, the world's top two container shipping companies, announced on March 1, 2022, that they would suspend all bookings of cargo in and out of Russia, except for food, medical and humanitarian supplies.Russia can transport potash fertilizers to China through theChina-Europe train, but it has disadvantages compared to sea freight in terms of transportation cost and transportation capacity.
In this regard, Wu Zhiqiao said that from the perspective of logistics and transportation, the conflict between Russia and Ukraine has affected the main chemical fertilizer export ports in Russia and Ukraine. increased shore costs.From the perspective of current land transportation, although Russia and China have carried out more potash fertilizer border trade, land transportation cannot effectively replace the role of sea transportation, and the transportation capacity is greatly reduced compared with that of sea transportation.
Belarus is the third largest producer of potash fertilizers in the world, exporting 12.5 million tons of potash fertilizers annually.From February 1, 2021, EU sanctions have led to an embargo on its rail transport, and re-exports through Russian ports will take several months to return to normal levels, while other shipping routes will increase shipping costs to Asian demand countries.
The EU has imposed a ban on the purchase, import or transfer of Russian fertilizer products (including potassium chloride). Since July 10 this year, the import of fertilizers from Russia must pass the annual quota review. The EU’s annual quota for purchasing Russian potassium chloride is 837,570 tons, which means that the EU will reduce the import of Russian fertilizer products by 1/3.
Regarding export quotas, in fact, in early November 2021, the Russian government has imposed half-year restrictions on fertilizer exports in the form of quotas, that is, from December 1, 2021 to the end of May 2022.
On April 17, 2022, Russia eased export restrictions on mineral fertilizers, and by the end of May, the export quota of Russian mineral fertilizer producers will temporarily increase by nearly 700,000 tons.
Russia's current export quota for nitrogen fertilizers is about 5.7 million tons (an increase of 231,000 tons), and the export quota for phosphorus (compound) fertilizers is about 5.6 million tons (an increase of 466,000 tons).
On April 27, 2022, Russia extended the quota mechanism for fertilizer exports until August 31, and raised the possibility of extending restrictions on a quarterly basis.
From the perspective of trade flow, Brazil, India and the United States are the world's major fertilizer importers, while Belarus, Canada, China and Russia are the major fertilizer exporters. Logistics and transportation are crucial for delivering fertilizers to all parts of the world.
Russia accounts for 17% of global potash exports, while Belarus (23% of exports) is already facing sanctions, and 40% of global potash trade could be at risk of disruption due to the inability to export fertilizer products due to transit blockades.
"Russia is the largest urea exporter, with nearly 40% exported to Europe and North America. If the conflict between Russia and Ukraine continues, Russia's urea exports to Europe and North America will face disruption, and this part may flow to emerging markets such as India, while the Middle East's urea exports will be disrupted. The supply of goods is expected to turn to the US and European markets. The export volume of phosphate fertilizers from China and Morocco is 3-4 times that of Russia. If Russia's supply is interrupted, the global phosphate fertilizer trade may face a readjustment." Wu Zhiqiao said.
China and India, as the main fertilizer demand places, negotiate potash fertilizer contracts with Russia every year.
"From the perspective of the source countries of India's imports in 2022, from January to March, Russia still occupies the fifth position, and the top four are Oman, the United Arab Emirates, the cartel, and Saudi Arabia. From April, Russia is no longer there. Within the main import source countries, to a certain extent, it shows that after Russia's export embargo, India is seeking sources of goods from other countries other than Russia to gradually replace its dependence on Russia." Wu Zhiqiao said.
The solution: Russian and Ukrainian fertilizers return to the market?
Canadian fertilizer giant Nutrien, the world's largest potash producer, has warned that supply disruptions have led to a chaotic trend in the fertilizer market that could continue beyond 2022.Nutrien expects global potash shipments to fall to between 60 and 65 million tonnes in 2022.
Another fertilizer giant, Mosaic, expects the potash market to remain tight for the foreseeable future.Mosaic CEO York?"Maybe it's going to be a two-year problem, and even then it's going to take two to four years for the gap to catch up," Joc O'Rourke said on May 3.
For the world's major fertilizer-demanding countries, it is particularly important to ensure a stable supply of fertilizers, which is related to food security issues.
As of January 2022, all fertilizer stocks in India have fallen by 45%-78% year-on-year.There is a huge demand for replenishment in India. In order to ensure the supply of domestic fertilizers, India is actively replenishing its warehouses through tenders.
According to statistics, since the beginning of this year, India has issued a total of 5 times of urea import bidding, with a total of 9.062 million tons of bids.Separately, India is negotiating a multi-year fertilizer supply agreement with Russia to buy 1 million tons of potash and phosphate fertilizers and 8 million tons of nitrogen fertilizers, and is also negotiating purchases with Belarus.
"In the first half of 2022, India's first tender for fertilizers was slightly earlier than the same period in 2021. As of early May, the cumulative total number of tenders had exceeded that of the same period last year. In order to ensure its fertilizer supply, India, on the one hand, increased domestic fertilizer production, taking urea as an example. , From January to April 2022, India's domestic urea production will increase by 10% compared with the same period last year; on the other hand, India is actively engaging with countries such as Jordan, Morocco and Canada to expand alternative sources of imports of potash and phosphate fertilizers, and hopes to reach an agreement with Russia Long-term cooperation to obtain a more favorable price."Yao Yao, a researcher atXinhu Futures Energy Chemical, said.
"Faced with a tight supply situation, China's approach is to ensure supply and stabilize prices, relax restrictions on the production of fertilizer companies, increase operating rates, and limit fertilizer exports. But this only applies to countries with production capacity. For production capacity like India Countries with large gaps can only increase the scale of purchases in the international market and increase domestic subsidies." Yan Sensheng, an analyst at Goon Futures, said that on April 27, the Indian government increased the fertilizer subsidy for the autumn harvest season of the new fiscal year from 210 billion rupees. To 609.4 billion rupees (about 52.52 billionyuan), this half-year subsidy is 6.6% higher than the 2021/2022 full-year subsidy of 571.5 billion rupees."This will intensify the contradiction between supply and demand in the international market, raise the cost of procurement, and increase the pressure on some countries with weak financial strength."
Respondents generally believe that the core of the current changes in the international fertilizer market is, on the one hand, when the conflict between Russia and Ukraine will end, and when the economic sanctions against Russia will end, so that energy prices will fall; return to the international market.
As far as the current United Nations intervention is concerned, food security has become a global issue.Global fertilizers are inseparable from Russia, especially in potash fertilizers.
"From the perspective of Russia, it is a big country that is willing to undertake its own international obligations, but only if the measures imposed by the West on it for political purposes are lifted, especially in the energy embargo. The tough attitude on the issue of the ban can also be seen that only through negotiations between the West and Russia can the issue of Russian fertilizer returning to the international market be finally resolved.” Cai Yingying said.
He said that with the easing of the conflict between Russia and Ukraine in the later period, the tight supply of international fertilizers may be greatly improved.First, energy prices may drop rapidly, thereby reducing the cost of international fertilizer production. Especially if the relationship between Europe and Russia eases, natural gas can be effectively supplied, and the possibility of urea enterprises shutting down production due to natural gas supply cuts in the later period will be greatly reduced.Second, the return of Russian and Ukrainian fertilizers to the international market will bring the international fertilizer market to the original balance again. In addition, the new fertilizer plants in other regions will be put into operation in the future, and the supply shortage will be effectively alleviated.
