1253. Fertilizer Market: Recent Trends in the Fertilizer Market

Here is an article from the Agricultural Market Information System (AMIS), which contributes to maintaining and strengthening transparency in the world market and supports efforts to find solutions through dialogue.

Fertilizer is a widely traded commodity, with approximately 169 million tonnes expected to be traded in 2024. As approximately half of global food production relies on the use of mineral fertilizers, disruptions to fertilizer trade increase uncertainty in the food production system.

Notable changes in fertilizer trade patterns have recently emerged, especially with the implementation of export restrictions. In 2020, China, with 15% of total global exports, ranked among the top three global exporters of urea and was the number one global exporter of phosphate fertilizers, accounting for 30%. In 2021, China introduced export restrictions, including export bans and expanded requirements for export inspection certificates. As a result, China's exports of urea and phosphate fertilizers have fallen by 95% and 21%, respectively, since 2020, forcing trading partners to diversify sources of supply. At the same time, the global fertilizer market is facing additional pressures due to various geopolitical and logistical challenges.

In addition to the impact of the initial sanctions against Belarus dating back to 2020, the Ukraine conflict caused a significant decline in fertilizer exports from the region. Belarus and the Russian Federation, major suppliers of fertilizer and the energy essential for fertilizer production, faced challenges in selling their products on international markets. International fertilizer trade was also affected by ongoing maritime disruptions in the Red Sea and the low navigability of the Panama Canal in 2024, both of which increased uncertainty for fertilizer shipments. While some of these challenges have since eased, rising risks and insurance costs still weigh on global trade.

Despite these disruptions, the global fertilizer market has proven resilient. For example, India, which sourced 30% of its 11 million tonnes of urea imports from China in 2020, has increased domestic production and diversified its sources of supply. By 2024, India's urea imports have fallen to just 4.8 million tonnes, with the Middle East and the Russian Federation now being the major sources, accounting for 45% and 20% of total imports, respectively. In the potash market, exports from Belarus and the Russian Federation recovered in 2023 due to increased use of rail routes to China, albeit at higher logistics costs. Moreover, emerging exporters are playing a more significant role in global trade, as evidenced by Laos' growing role as an Asian potash hub. 

In contrast, the phosphate fertilizer market remains more challenging. Export volumes from the Russian Federation and Saudi Arabia have remained stable, but have not yet been able to make up for the significant decline in products from China. Morocco has steadily increased its phosphate exports since 2022, but this increase is insufficient to fully offset the decline in supply from China. Unless additional capacity is deployed in these and other major producing countries, exports are expected to remain below previous levels until at least 2027-2028.

Currently, changes in U.S. tariff policy and potential retaliatory measures by affected countries are adding further uncertainty to the market. All fertilizer trade to the U.S. is subject to a flat 10% tariff with exceptions for Canada, Mexico, and the Russian Federation for various reasons. Potash imports from Canada were initially subject to universal tariffs but were subsequently exempted, subject to compliance with the provisions of the United States-Mexico-Canada Agreement (USMCA). While these tariffs may initially primarily affect U.S. farmers, retaliatory measures from trading partners could have broader ripples. For example, if Canada were to implement countermeasures, Canadian farmers could face increased costs for phosphate, given that 75% of imports from 2020 to 2024 were U.S.-sourced. 

While the fertilizer market has shown some resilience so far, the cumulative impact of multiple stressors is difficult to quantify. Fertilizer production capacity is expected to expand in regions such as Africa, Western Asia, and the Russian Federation, making them more resilient in the face of ongoing uncertainties.

Contributor: IIYAMA Miyuki, Information Program