Special Report: Impact on Fertilizers from the Conflict in Ukraine

On 24th February 2022 Russian forces invaded Ukraine, an action which has brought widespread criticism from world leaders, and has led to punitive and escalating sanctions against the Russian State and institutions, and individuals close to the Kremlin. At the time of writing peace talks have been instigated, but it seems highly likely that the situation may escalate further before it improves. This document is intended to be a source of basic information, data and analysis to help our many clients navigate through this significant crisis.
In it we:

• Contextualise the Russian fertilizer industry in terms of its exports.
• Provide a detailed focus on key elements of the fertilizer sector.
• Highlight major areas of uncertainty.

A key challenge for all analysts at this time is the speed of change - documents can be overtaken by events almost as they are uploaded. For that reason we will be endeavouring both to update the narrative as events unfold, and we will be clear about when the document is published so readers can be clear that events that take place after publication will clearly not have been included in the analysis. This document was published on 9 March 2022.
Context

Russia is a primary producer of all three of the main commercial fertilizer nutrients, which are essential for plant growth, - nitrogen (N), phosphate (P2O5) and potassium (K2O). It has globally significant phosphate rock reserves in the Kola peninsula, potash reserves around Perm, and is a major oil and gas producer, with hydrocarbons being the key raw material for nitrogen fertilizers and the by-product sulphur from oil and gas refining a key intermediate for phosphate processing. From this core resource base Russia has developed a large down-stream fertilizer production sector, is self-sufficient for fertilizers and is an important global exporter.

Based on data from IHS Markit's Maritime and Trade team, fertilizer exports from Russia in 2020 were valued at around $7.0B, and with higher fertilizer prices, for 2021 this rose to $12.5B. Relatively therefore the fertilizer sector accounts for around 2.1% of total 2020 exports from Russia in value terms (and likely to be a little higher in 2021) - neither of huge significance, nor an irrelevance.

In broad terms, Russia accounts for almost 13% of global trade for key fertilizer intermediates (ammonia, phosphate rock, sulphur) and for almost 16% of global trade in the key finished fertilizers.

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