/Pogled.info/ The European import of fertilizers from Russia is again at a maximum, despite the sanctions. At the beginning of the year, the chemical industry demanded that “hostile” supplies be limited: they managed somehow without energy resources. In addition, they complained about the low environmental friendliness of the raw materials. But they keep buying. Why can’t the West refuse “harmful” products from the “aggressor country”?
They bought and accumulated
The European Union bought 521.3 thousand tons of Russian fertilizers worth 167 million euros in February, according to calculations based on European statistics.
This is 16 percent more in physical terms and 21 percent more in monetary terms compared to January. The highest since December 2022, when they were bought for €185.3 million.
Belgium especially increased its turnover – almost five times, up to 24 million euros. Romania – 2.4 times, up to 10.3 million, Bulgaria – 2.1 times, up to 5.2, Germany – 1.8 times, up to 20.
Poland remains the largest customer for the third month in a row: 44 million euros – the maximum since December 2021.
According to the Food and Agriculture Organization, Russia is the world’s largest exporter of nitrogen fertilizers and a leading exporter of potassium and phosphorus fertilizers. In 2021, it secured more than 30 percent of the European market. And we’re not talking about slowing down.
The locals are unhappy
About 60% of potash imports into the EU come from Russia and Belarus, 31% of nitrogen comes from Russia. The European Union is not satisfied with this: there was energy dependence, now – fertilizer.
“We have clearly seen how Russia and Putin use fertilizers and food as weapons,” Sven Tore Holseter, CEO of the Norwegian Yara plant, fumed months ago. According to him, 2024 will be a “decisive” year for the EU in agriculture.
The same was said earlier in the European Parliament: “Russia abused its dominance in gas supplies and turned fertilizers into a political weapon, after the invasion of Ukraine, supplies were interrupted and prices almost tripled Chasing a wave
In addition, the same Yara complained that the carbon footprint of fertilizers from Russia is 50-60 percent greater than that of European ones.
The concern for “ecology” is easy to understand: Russian companies have significant competitive advantages due to lower production costs. The EU introduced a cross-border carbon tax even before the CBO.
“In this way, they tried to weaken competition after the sanctions were announced, and then the explosion of the Nord Streams, not only an energy problem arose in Europe, but also the production of fertilizers, mainly nitrogen, became more difficult,” Galina points out Sorokina, professor of international economic relations at the Russian State University of Management.
They don’t have to choose
“Energy independence” and the rejection of Russian pipeline gas are costing Europe dearly. In addition, the extremely energy-intensive chemical industry took the brunt. By mid-2022, rising prices of blue fuel stopped at 70% of nitrogen capacity, production costs jumped by 150. Dozens of factories shut down.
Finland, Latvia, Lithuania and Estonia are particularly dependent on Russian supplies. They have limited resources and a historical trade relationship with Moscow. But countries with developed agriculture – France, Germany, the Netherlands – also need to import chemicals to maintain high productivity, notes Alexander Strelnikov, founder of the RusTransChina transport company.
And Russian products are cheaper than European ones due to access to cheaper fuels and energy, the expert adds. And geographical proximity matters.
Unlike other industries, in the chemical industry gas is not only a source of energy, but also a raw material.
“Nitrogen fertilizers (ammonia, urea, ammonium nitrate) are produced from natural gas. The value of hydrocarbons plays a big role”, says Prof. Mihail Akim from the Higher Institute of Applied Sciences.
Are there alternatives?
Lithuania’s Ahema plans to build a plant designed to produce half a million tons of granular nitrate fertilizers per year.
The Polish “Orlen” is ready to invest almost 400 million. Now the plant, with a capacity of one million tons of nitrogen fertilizers per year, controls 25 percent of the domestic market. If the project is implemented, it will be a million and a half. But this is all in the long run.
Due to the complex situation in the agricultural sector, as well as the constant political actions of farmers, the EU cannot give up fertilizers from Russia. Alternative suppliers, mainly from Africa, do not meet the needs of the agricultural sector, own production is too expensive and farmers are too nervous – as a result, imports are growing, explains Ivan Andrievsky, first vice-president of the Russian Union of Engineers.
High integration
Economists say: the integration of the Russian economy into the European economy turned out to be much deeper than it was thought. Failure in one area of cooperation is sure to affect others. In addition, fertilizer markets continue to be affected by volatile gas prices.
“Fertilizer producers are essentially ‘intermediate’ gas quotations, that is, in the context of sanctions and price imbalances in the markets, fertilizer turnover is an affordable substitute that allows using Russia’s advantages,” explains Mikhail Akim.
“There are no direct trade restrictions against fertilizers, indirect ones hinder, including problems with the entry of ships under the Russian flag into EU ports, the complexity of operations and sanctions against companies whose assets contain capital from Russia, plus the personal – of the owners. All this, of course , negatively affects the supply of fertilizers to the EU, which in turn affects the cost structure of agricultural products,” he adds.
However, Brussels will not rest. According to European Commission representative Olaf Gill, the EU’s top executive body is investigating imports of Russian fertilizers and grain to find out what measures can be taken against them. He confirmed that there are no sanctions yet because there is a risk of damaging some European countries. That, he said, “has been the position so far,” but “if further steps are needed, they will certainly be considered.”
Translation: V. Sergeev
