FEED PHOSPHATES MARKET
War exposes importance of Russian feed phosphates exports
In that time, Russia has become an essential player on the supply side of the international feed phosphates market. It came to dominate a business that was previously in the hands of Western suppliers such as Tessenderlo in Europe or Mosaic in the US. Russian producers emerged on the international scene, with EuroChem on the one hand and PhosAgro on the other hand. Both companies experienced tremendous growth in production and sales. The numbers speak for themselves: the graph on the right shows the growth in exports of monocalcium phosphate (MCP) and defluorinated phosphate (DFP) from EuroChem Lifosa (MCP), PhosAgro Balakovo (MCP), and EuroChem Phosphorit (DFP). The trade statistics do not distinguish MCP from DFP. Volumes have increased by a factor of four over the last 20 years, from 150,000 tonnes/year to 600,000 tonnes/year. Both companies consolidated their assets from Former Soviet Union (FSU) state-owned companies and made significant investments to increase production capacities. If we take a closer look at the trade patterns, we can see that a large share of the volumes was exported through Estonia and Finland. Neither of these countries can consume such large volumes given their population size and feed industry. Both companies first developed sales to the FSU and northwest Europe before expanding sales to North America and Latin America. Germany was, until recently, the primary destination for Russian producers.
www.feedinfo.com
600 k
1,2 k
$1 017 500 k
1k
$828 400 k
800
$635 $577
300 k
$497
$588
$606
$631
$631
$573
$473
$596
600
Price $/t
THE RISE OF EUROCHEM AND PHOSAGRO
Exports of MCP & DFP 2002 to 2021 : Russian producers
Volume in tonnes
F
eed phosphate supply was already tight globally at the beginning of the year, and the Russia-Ukraine war has further complicated the situation. To understand the consequences of the war for Russian phosphate producers, we must first look back over the last 20 years.
$461 $414
$374
200 k
$297
100 k
0
$188
2002
$216
400
$300
$218 200
2003
Price $/t
2004
2005
2006
2007
2008
2009
2010
2011
Volume in tonnes
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
All rights reserved: guillaume.milochau@praxed.fr ; source Eurostat, ITC
Note: The above numbers are Praxed calculations based on interviews, EuroStat and ITC data
EuroChem and PhosAgro sales developed at the expense of western producers who once dominated the market, namely Aliphos and Yara. Gradually, buyers switched to MCP from Russia and Lithuania thanks to an aggressive pricing strategy. The main destinations are in Europe, from Ukraine to Spain. Both producers have gained a significant share of the European MCP market, of up to 60%.
IS IT STILL POSSIBLE TO GET RUSSIAN-ORIGIN MATERIAL? MCP has thus far been exempted from sanctions in the EU. In most cases, sanctions are on individuals rather than businesses. Therefore, shareholders and top management have resigned to avoid compromising their businesses. Another consequence of the degraded relationship between Russia and Europe is that Borealis declined EuroChem’s offer to acquire its nitrogen business in Europe. This deal would have significantly strengthened EuroChem’s presence in western Europe, including its fertilizer production operation in Antwerp. Borealis
operates three world-scale fertilizer production units in France and Austria. Russian producers will be constrained in their activities in western Europe and North America. However, the finalisation of EuroChem’s takeover of a significant fertilizer distributor in Brazil (Herringer) last April shows that Russian producers will keep developing their business outside of these areas in direct competition with the likes of Mosaic and Yara. As of late May, ships are still sailing from and to Russian ports, according to maritime traffic reports. However, several shipping companies, including MSC, Maersk, and CMA, announced they would halt cargo booking with Russia. This has mainly impacted container shipping, with oil tankers still finding their way to Russian ports in the Black Sea and Baltic Sea. It is therefore quite a challenge — if not impossible — to obtain product, as ports used for transshipments in Ukraine (Yuzhny) and the Baltic Sea are now unreachable. As trade statistics show, Russian Continued on page 38
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