PhosAgro expects fertilizer prices to stabilize at current levels

MOSCOW. May 24 (Interfax) - PhosAgro expects fertilizer prices to stabilize in the near future amid the recovery of demand, the Russian fertilizer producer's chief analyst, Andrei Ryabinin said in a Telegram livestream for investors arranged by Gazprom Investment.

Fertilizer prices have been falling since the third quarter of 2022 from highs reached in the first half of last year.

"The change in the geopolitical situation last year led to buyers being concerned about a possible shortage of fertilizers and trying to buy amounts quickly, which led to a steep increase in prices [...] Prices last year reached $800-$900 per tonne FOB Baltic for urea, $1,000 or more per tonne for phosphate fertilizers and $900 per tonne for potassium chloride," Ryabinin recalled.

As a result, prices in some countries became unacceptable to farmers, who put off buying fertilizer until the last moment, which began to put pressure on prices along with falling gas prices.

"Prices at the moment amount to about $270-$300 for urea FOB Baltic, up to $500 for the main types of phosphate fertilizers and about $370 for potassium [...] The drop in prices restored the level of affordability of fertilizers to the 10-year average and in the past two or three months there has been an increase in demand for fertilizer. This will act as a stabilization factor for prices in the near future," Ryabinin said.

He expects prices for phosphate and potassium fertilizers to stabilize at current levels, and in future they will depend on how fast new capacity is brought on line. The factor that will determine prices for nitrogen fertilizers will continue to be the price of energy resources.

Commenting on changes in the geography of PhosAgro's exports in 2022, Ryabinin said there has been a "decrease in shipments to Europe and to a lesser extent to the U.S. and North American countries in favor of the markets of developing countries, foremost India," exports to which "more than quintupled and totaled more over 2 million tonnes."

PhosAgro still ships 30-35% of its fertilizer to the domestic market and exports 65-70%, he added.