Europe’s fertilizer companies are in a bind because input costs, such as natural gas, have risen, but Russian fertilizer is coming into the market at bargain prices.
This is prompting fears of permanent plant closures, write Deepika Thapliyal, Sylvia Tranganida, and Aura Sabadus in an ICIS report. ICIS is a market intelligence company.
Unconfirmed data suggest that operating rates for European facilities may soon touch around 80 per cent, a 10 per cent increase on rates reported earlier this summer, with units at Poland’s Grupa Azoty or Romania’s Azomures planning to restart in Octoberd, their report said.
With no signs of further declines in gas prices, the longer-term impact on profitability in the fertilizer sector is a concern.
There have been no permanent plant closures in Europe since German-based BASF’s announcement in February plans to shut its caprolactam and ammonia plant at Ludwigshafen by the end of 2026 due to high production costs, but the threat is real for several producers.
Reviving production is also hampered by the influx of cheap Russian products, which may cost seven times less to produce than in Europe.
Although the EU had sanctioned some individuals associated with the Russian fertiliser sector following Russia’s all-out invasion of Ukraine, products such as urea are accepted, and imports continue to be ample.
Products from major producers are no longer sanctioned in France and also moving to other countries.
Canada has imposed tariffs on Russian fertilizers. Nitrogen is the main Canadian import from Russia.
