VINACHEM

The long downturn in global fertilizer prices could be coming to an end in the Americas in H1 2024 as the US and Brazil post strong planting seasons, according to the CEO for the Americas at fertilizer major EuroChem.

Don Lambert said the current “closer to floor” prices for products such as muriate of potash (MOP) or nitrogen could post “some upside” in H1 2024, while phosphates prices are set to remain strong in North America.

EuroChem’s head for South America, Gustavo Horbach, also present in the interview, said that expansion of its facilities in Serra do Salitre, in the Brazilian state of Minas Gerais, will contribute to higher sales in the region as EuroChem taps into Brazil’s perennial undersupply of fertilizers.

PRICES: THE ONLY WAY IS UP

After record high prices in 2021, global fertilizer values have fallen sharply and remained in the doldrums ever since. Lambert said this could be about to change.

“We see price stability, close to floors, on both MOP and nitrogen, but we are seeing some upside in Q1 and Q2. We expect strong demand in the US season, with farmer affordability very positive, especially in MOP and nitrogen,” he said.

“Phosphates in the US is relatively expensive compared to the rest of the world. In Brazil, we are also expecting very strong demand in H1. We are positive on pricing in general, and I don’t think we are going to see much further downside of what we have seen in the past 12 months.”

EuroChem is headquartered in Switzerland, but the bulk of its operations are conducted in Russia. People linked to the company have been sanctioned by the EU after Russia’s invasion of Ukraine, but countries such as France have lifted sanctions on the company.

In North America, EuroChem mostly distributes chemicals, and does not operate any production facilities there. Lambert said EuroChem was never sanctioned and business in the region not only continues as normal, but it has managed to increase sales and increasingly contribute to the company’s global revenue.

“EuroChem and the fertilizer sector is not sanctioned. Jurisdictions including the US, the UK, Switzerland, and the EU have made it clear that the global distribution of fertilizers should not be disrupted or sanctioned,” said Lambert.

“EuroChem’s US and South American businesses continue to grow in a substantial way, and now the Americas represents a huge percentage of the tonnage the company sells. In the Americas, we are operating in normal terms in today’s circumstances.”

However, the company concedes that business has been “severely impacted” by the knock-on effect of sanctions imposed by some countries, particularly in Europe, and by the fact that some industries such as financial, shipping and insurance services have ‘self-sanctioned’ against stated guidance.

SERRA DO SALITRE

EuroChem has put some of its hopes into Serra do Salitre, a phosphates project acquired from Norway’s fertilizers major Yara in 2021 for $410m.

In 2022, it acquired a controlling stake in Brazilian fertilizers distributor Fertilizantes Heringer.

Earlier in 2023, EuroChem appointed Horbach as head for South America; the executive was earlier employed by Heringer.

According to EuroChem, the company has invested “more than $1.5bn” in Brazil in the past few years.

“The Brazilian market imports roughly 85% of the fertilizers it consumes. Our greenfield investments are much more focussed on phosphates, rather than nitrogen fertilizers [which are much more dependent on natural gas as a feedstock],” said Horbach.

“EuroChem have invested in a new phosphate mine at Serra do Salitre, which when commissioned in March 2024 will add 1m tonnes/year of production to the Brazilian market. This will make a significant contribution to reducing Brazil’s dependency on fertilizer imports.”  – ICIS –