Russia is the second-largest producer of potash, ammonia and sulphur in the world. It mines 17% of the world’s potash, second only to Canada. It is the fourth-largest producer of urea and phosphates.

An estimated 13% of the world’s supply of nitric fertilizers is produced in Russia and this has grown rapidly because of an abundant supply of cheap gas. For example, CAN production in the region went from zero in 2002 to 1.3 billion tonnes in 2012.

Almost all (88%) of Russian CAN is exported, 79% of its urea production is exported and half of its ammonium nitrate is exported. The country also exports 81% of its phosphate and potash.

This dependence on exports is further reflected in its share of world trade. Last year, Russia accounted for 20% of the world’s potash exports, 14% of total phosphate exports and 17% of total ammonia exports.

Uralkali, one of the world’s largest potash producers, fulfilled 25% of total import needs of Europe.

22% of Russia’s phosphorus (DAP) exports in 2012 was destined for the western European market. Russia DAP accounted for 19% of the supply in Europe.

Only 7% of Russia’s urea exports were designated for the west EU market as Egypt remains one of Europe’s preferred suppliers. About 26% of European demand is met through Egyptian supply normally. And because of energy issues and political tensions reducing Egyptian supply, urea prices have remained very firm.

European ammonium nitrate producers are still protected by anti-dumping regulations on AN out of Russia. Russia has filed two cases with the WTO, seeking to abolish these measures. But given the current tensions, it appears unlikely that the EU will remove these anti-dumping rules.

Effect on prices

Currently European prices, while they are impacted by Russia, originate more outside of Russia. In nitrogen, for instance, limited availability out of Egypt due to gas shortages is more likely to steer market prices.

But if further bans were instigated by Europe/US, exports out of Russia into Europe could be reduced, potentially leading to price increases. The volume of Potash imported into Europe is huge (in 2012 4.3 million metric tonnes). And as potash supply is only limited to a few producers, it is the most likely candidate for any price increases should further bans happen.

There is a possibility of price increases in Europe if further bans occur, but major hikes would be capped by global availability. N, P and K are still in plentiful supply globally, so in theory Europe could likely source elsewhere should export availability out of Russia be reduced.

Ireland

According to the CSO, last year, Ireland imported almost 300,000t of fertilizer from Russia. This is equivalent to almost one quarter of the country’s fertilizer requirements. More than half of the total imported volume was 27-2.5-5. 10% of the country’s urea came from Russia, while 11% and 7% of CAN and potash came from the region respectively.