Fertilizer International 518 Jan-Feb 2024
31 January 2024
Top ten fertilizer calls for 2024
“While CRU expects fertilizer demand to grow in 2024, this will be matched with supply in most markets – despite the uncertainty over Chinese export availability”
In a recent webinar, Chris Lawson, CRU’s Head of Fertilizers, gave the CRU view on what 2024 holds in store for the global fertilizer industry. Here are CRU’s top 10 calls for the year ahead:
1. Demand will continue to recover as affordability improves. Fertilizer demand recovered during 2023 from the price-induced destruction of the previous year. CRU’s expects this trend to continue in 2024, with agricultural consumption of nitrogen up 1.5 percent, P2 O5 up 4.8 percent and K2 O up 6.5 percent year-on-year.
2. European fertilizer capacity will remain constrained and is likely to shrink. Business is tough for European fertilizer producers (Fertilizer International 517, p32). High gas prices and a challenging regulatory environment will continue to plague producers in 2024. CRU does do not anticipate a restart of the Lifosa phosphate plant, for example. NPK plants (Fertilizer International 516, p16) are also being shuttered, while closed ammonia capacity is unlikely to return. and high costs will stifle any potential investments.
3. Europe’s CBAM reporting requirements will catch importers off-guard. Fertilizers importers are facing new EU emissions reporting requirements for certain goods imported into the bloc, as part of the carbon border adjustment mechanism (CBAM). In CRU’s view, the fertilizer industry is under-prepared for new CBAM requirements. We therefore expect some fertilizer importers to be handed small fines this year as a result.
4. European producers to invest more in North American ammonia projects. The Unites States’ ‘45Q’ tax credit has proved to be a successful incentive for US blue ammonia projects. The decision by CF Industries to cease ammonia production at its UK Billingham site (Fertilizer International 516, p8) and replace this with North American imports is a sign of things to come. CRU expects European companies to accelerate their investment in US blue ammonia production, driven by cost effectiveness and low carbon intensity.
5. Expect more delays and backtracking on ammonia investment decisions. CRU expects only half of the two million tonnes of low-emissions ammonia capacity due in 2024 to commission, as project timelines continue to slip. While some 11.7 million tonnes of capacity in CRU’s low-emissions ammonia project pipeline is scheduled for a final investment decision (FID) this year, just one million tonnes of this capacity is expected to achieve financing this year.
6. Purified phosphoric acid (PPA) capacity will receive further capital injections. Battery and electric vehicle markets are growing rapidly, and lithium iron phosphate (LFP) is increasing its share in the battery chemistry mix. There is also a conscious effort to derisk battery supply with a shift away from China (Fertilizer International 517, p46). This will be supportive of overall phosphate demand – although the incremental gains will be modest.
7. China’s potash import flows will continue to favour Belarus, Russia and Laos. China has imported a record volume of potash in 2023. Its potash import sources have also become more diverse, with both Laos (Fertilizer International 517, p52) and Belarus increasing their product share. CRU expects this trend to continue in 2024 – leaving Canada vying to capture more market share elsewhere.
8. Chinese urea and phosphate export restrictions will be tight in the first half of 2024 but loosen thereafter. The Chinese government has injected more confusion into the urea and phosphate markets by raising its export barriers yet again – and knowingly leaving export restrictions vague – its main objective being to lower domestic prices. CRU believes export restrictions will eventually loosen in 2024’s second half and, as a result, total export volumes this year will end up fractionally higher than in 2023.
9. More fertilizer exports from Russia and Morocco. Russian ammonia will continue to find its way back to the traded market with exports expected to restart via Taman, Russia’s Black Sea port, in the first quarter of 2024. Shipments which resumed from the Russian Baltic port of Ust-Luga in 2023 are also expected to continue. Morocco is finally expected to boost its phosphate exports – with recent data suggesting this is already occurring. Both Russia and Morocco will step into China’s usual markets in the first half of 2024.
10. Fertilizer price moves will be muted. Tighter markets will not translate into sharply higher prices in 2024, in CRU’s view. Fertilizer prices reached stasis last year – a situation that is set to continue, as illustrated by urea. While the urea market is set to tighten on paper, with gas price volatility and Chinese export doubts still looming as huge risks, ample supply should keep a lid on prices.
