Since the beginning of this year, affected by factors such as the global new crown pneumonia epidemic, the Russian-Ukrainian war, and the energy crisis, the international prices of commodities such as grains and fertilizers have fluctuated greatly.
The energy crisis is hitting the energy-intensive industries in Europe. At present, the energy crisis has led to the interruption of production of many large chemical fertilizer companies in Europe. Ammonia capacity in Europe has shrunk further and more cuts are expected. In July alone, 10 fertiliser plants in Europe closed or reduced production, and the situation continues to get worse from now on. As many as 70% of European ammonia plants have cut or stopped production in recent months as energy prices hit record highs, sources in the Russian fertilizer industry said. There is growing concern that there will be insufficient fertilizer next year.
Global chemical giant BASF and two Polish companies have recently joined a growing number of fertilizer makers cutting output due to soaring energy costs. Grupa Azoty, Poland's largest chemical company, has cut ammonia production amid record natural gas prices, while Anwil, a subsidiary of oil company PKN Orlen SA, has halted ammonia production.
That means about 38% of capacity in Europe for key fertilizer feedstocks is now cut or cut entirely, said Chris Lawson, an analyst at research firm CRU Group. Moreover, fertilizer manufacturers Yara International, K+S AG, Borealis AG and Fertiglobe Plc have all warned recently that Europe will further restrict fertilizer production.
European farmers may choose to import more to make up the shortfall in order to meet the required fertilizer usage, which could have ripple effects in the rest of the world. If European farmers import more fertiliser products from other exporters, more vulnerable agricultural markets such as sub-Saharan Africa, South Asia and parts of Latin America could worsen and create tensions in global food markets.
The United States Department of Agriculture recently released the report "Impact and Consequences of Price Increases on the Global Fertilizer Market", and the International Fertilizer Industry Association (IFA) released the "Medium Fertilizer Outlook 2022-2026" report. Both reports forecast global fertilizer supply this year and next. Pressure remains, fertilizer prices will remain high. In the domestic market, there may be differences in the price performance of different varieties in the short term.
