/ world today news/ Despite the whole bunch of sanctions, the West cannot do without the most important Russian products, even if it wants to. In particular, it continues to actively buy fertilizers. This angers local producers; the chemical industry demands the restriction of “hostile” imports: after all, they can somehow manage without energy resources. And it does not matter that a number of enterprises simply went bankrupt due to the energy crisis – such is the price of sudden “energy independence”. Now fertilizers have become even more expensive and it is impossible to give them up. The EU is confused and is looking for ways to solve the problem.
Increased imports
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 addition, in 2022, supplies to the EU have increased fivefold.
In January – September 2023, nitrogen supplements were sent there by 7.6% more than in the same period of 2022 – 1.8 million tons, reports the statistical agency “Eurostat.”
Germany especially increased its imports – 3.2 times, up to 426,300 tons. Poland – by 1.8, up to 257,700. France bought 18.1% more, 362,400 tons, the Netherlands – by 17.7%, 163,100. These four countries account for 2/3 of all Russian exports of nitrogen fertilizers to the EU , including Germany – almost a quarter (23.9%).
Up to 60% of EU potash imports come from Russia and Belarus, and 31% of nitrogen comes from Russia.
Extremely dissatisfied
This is extremely worrying for local businesses. The Norwegian “Yara” was outraged that the EU “replaced energy dependence with fertilizer dependence”.
“We have clearly seen how Russia and Putin use fertilizers and food as weapons,” said Yara CEO Svein Tore Holsetter. According to him, 2024 should be “decisive” for the EU in agriculture.
The same was discussed in September 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,” the MEPs complained.
Access to gas
They apparently forgot that the culprit was the “energy independence” that the European Union recklessly proclaimed by cutting Russian oil and gas imports. And he paid with a severe energy crisis and the destruction of energy-intensive industries. First of all, the chemical industry, where 80% of costs come from gas. By mid-2022, the increase in the price of the blue fuel stopped at 70% of the nitrogen capacity.
The market leader, Norwegian Yara, reduced production by 40%. The British “CF Industries” closed two factories, and the German BASF stopped part of its capacities. Companies from Poland, Lithuania, France, Great Britain and Hungary have announced the same measures.
Yara did not cite “rapid energy independence” as an example, but called for “immediate action by EU authorities to ensure access” to blue fuel. The company is the largest private industrial user of natural gas in Europe.
“The EU successfully defeated itself in the battle against Russia. The increase in energy prices above the level of the 2021 crisis stopped many mineral fertilizer plants or reduced their load. At the same time, Russian imports were blocked,” Leonid Khazanov points out. independent industry expert.
Now they are complaining again. “Food producers face the problem of excessive dependence on Russian fertilizers,” notes the European agricultural coalition Kopa Kogeka.
Vicious circle
In 2023, energy prices fell and chemical plants began to restart.
“Because of the shortage, however, mineral fertilizers are still expensive. The prospects are unclear: European companies are not particularly inclined to lower prices, and neither are traders,” says Khazanov.
The tension in the fertilizer market remains. Manufacturers are sounding the alarm: relatively cheap Russian products are pushing them out of the domestic market.
“The refusal of Russian gas for the chemical industry had fatal consequences: prices rose by 40%, the cost of producing fertilizers in Germany – by 150. Result: the gas-intensive production of fertilizers (nitrogen and ammonia) became unprofitable,” the German “Bild” quoted statement of the Ministry of Economics and Agriculture in the state of Saxony-Anhalt.
Future plans
According to observers, measures against Russian imports can be a way out of this situation. For example, a partial embargo or increased duties. However, this increases the financial burden on European producers, emphasizes Nikolay Neplyuev, an economist and expert in the petrochemical industry.
Some countries are already thinking about increasing investment in their own capacity. For example, the Lithuanian “Ahema” plans to build a plant designed to produce half a million tons of granular nitrate fertilizers per year. This is quite an interesting project, which includes the processes of preparing and concentrating the ammonium nitrate melt, mixing and granulating flour in mills for dolomite-anhydrite and ammonium sulfate, according to Neplyuev.
The Polish “Orlen” is ready to invest almost 400 million. The company now controls 25% of the country’s market and produces one million tons of nitrogen fertilizers annually. If the project is implemented, it will be a million and a half.
All these plans are medium term. “But the Europeans will hardly be able to completely give up our supplies – for this they have to significantly restore production, as well as look for large foreign suppliers, which is not economically profitable,” the expert explains.
The situation for the European Union is unfavorable: on the one hand, there is an urgent need to import Russian fertilizers, on the other hand, this contradicts the policy of “isolation” of Russia, says Dmitry Tarasov, head of the department’s “Digital Technologies in Logistics” laboratory in Logistics of the Financial University of the Government of Russia.
“The energy crisis, budget restrictions, social and economic problems in Europe have led to the contraction of industry. Against this background, we should not talk about developing our own production of fertilizers to fully satisfy domestic needs. Contrary to the statements of politicians, the “enemy” in the face of Russia continues to offer resources in the necessary quantities and at an affordable price,” adds the economist.
Meanwhile, Russia is ramping up its production of critical raw materials. According to preliminary data from the Ministry of Industry and Trade, in 2023 the production of mineral fertilizers increased by 9%, to almost 60 million tons.
Translation: V. Sergeev
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