Govt assures agri firms of stability in fertilizers

China will guarantee the stable operations of key enterprises involved in the business of agricultural materials and fertilizers, the Ministry of Industry and Information Technology said on Monday.

The announcement was made amid the Russia-Ukraine tensions, which are expected to intensify fertilizer volatility in markets worldwide, as Russia is one of the world's largest exporters of chemical fertilizers.

China will strengthen the guarantee and coordination of factors like energy, logistics and employment, and prioritize the guaranteed supply of basic industrial products and essential commodities related to living, the ministry said.

"China will boost the industrial sector and ensure stable operations in the first quarter of this year. The ministry will implement a series of policies and measures to promote steady growth of the industrial sector, and help clear bottlenecks in the supply chains of some key products," said Xiao Yaqing, minister of the MIIT.

Russian exports account for 20 percent of potassic fertilizers globally. Exports from Russia and Belarus account for a combined 40 percent of potassic fertilizers globally. Potassic fertilizers are exported mostly to Brazil, the United States and China, according to the Observatory of Economic Complexity, a data visualization platform created by the MIT Media Lab in the United States.

Russia's three main ports involved in potassic fertilizer exports are not located in the current conflict zone, so there is not any impact on ocean shipping.

Still, given the economic sanctions imposed by some European countries and the US on Russia, the possibility of the US and European countries imposing an embargo on Russian chemical fertilizers in the future cannot be ruled out. Any such eventuality could increase the costs of sea transportation of chemical fertilizers, market watchers said.

In November, the value of Russia's potassic fertilizer exports reached $486 million. Between November 2020 and November 2021, exports of Russia's potassic fertilizers increased 250 percent or by $347 million, according to the OEC.

Meanwhile, the China Phosphate Fertilizer Industry Association issued a statement last week to remind the Chinese companies concerned to pay attention to international developments and policies so as to avoid potential risks. Chinese companies should factor in potential disruptions to raw material supplies in the fertilizer market and follow related price trends, to avoid or minimize trade risks, the association said.

In China, inadequate supplies of potassic fertilizer have already inflated product prices. For instance, on Feb 23, factory-level domestic potassium chloride－the most important variety of potassium fertilizer－quoted for about 3,490 yuan ($553) per ton, up about 70 percent year-on-year, according to SunSirs Commodity Data Group.

Belarus, which shares a border with both Russia and Ukraine, supplies nearly 20 percent of potassic fertilizers to the world, the OEC stated.

JSC Belaruskali, a potassic fertilizer maker in Belarus, said recent sanctions and trade restrictions by the US, Europe and Ukraine have led to the suspension of the flow of goods, and the company is unable to fulfill some contracts. The uncertainty over potassic fertilizer supplies globally has increased, according to the statement by China Phosphate Fertilizer Industry Association.