Russia is considering setting up a unified trading company to export fertilizers in a bid to increase its pricing influence on global markets, according to Bloomberg, citing people familiar with the situation.
The idea was proposed in July by Uralchem PJSC’s founder Dmitry Mazepin and has since been discussed by Industry Minister Denis Manturov and Prime Minister Mikhail Mishustin. No final decision has been taken. It is not clear when the matter will be discussed again.
Spokespeople for the government didn’t respond to requests for comment. Uralchem’s press service said it’s unaware of the proposal.
While fertilizer companies haven’t been included in international sanctions over Russia’s war in Ukraine due to their importance for global food security, Baltic ports have stopped handling most products, contributing to a decline in shipments. An exodus of global shipping companies, some international banks, and insurers from Russia has also made it harder to send goods abroad.
Some large fertilizer makers don’t support the idea out of concern it will hurt business, two of the people said. Exports of most types of fertilizers have already recovered to their pre-war levels, so producers don’t see how the proposal will benefit them, the people said.
A unified trading company could give the government more control over export revenues and allow it to exert much greater influence over global pricing. Russia has been demanding smoother export conditions for its fertilizer producers in talks to restore a grain export deal allowing Ukraine to ship through the Black Sea. Moscow abandoned the deal last month (GM July 21, p. 1).
Companies currently trade their goods through Switzerland and other third countries. Russia previously had a potash trading alliance with Belarus that allowed it to control 40% of the nutrient’s global sales and prices via output caps. Potash prices slumped when the deal collapsed in 2013 (GM Aug. 5, 2013).