Russian majority state-owned gas major PJSC Gazprom said sanctions are not endangering the continuity of its business, Russia’s Prime business news agency reported, citing a March 18 statement from the gas group.
“At the moment of signing of this report according to the estimates of the company executives, the described circumstances do not cast doubt on continuity of activities of the organization,” said Gazprom.
PJSC PhosAgro, Moscow, announced on March 18 that it has reduced its stake in Phosint Ltd. as a result of the issue of additional shares to Negrino Ltd., which was established by the management of the company’s trading structures.
The acquisition by Negrino of a 95 percent stake in Phosint and the corresponding reduction in PhosAgro’s stake in Phosint to 5 percent was the result of a management buyout of Phosint by its trading structures, the Russian fertilizer group said in a statement.
PhosAgro controlled all its foreign trading companies through Phosint, and which will now be handled by Negrino.
“Amid the growing number of restrictive measures in several countries, changes in Phosint Ltd. ownership structure will help ensure the uninterrupted supply of PhosAgro’s products to international trading companies,” the Russian fertilizer group said.
Despite the high degree of volatility and uncertainty in markets, the group said it remains focused on continuing its stable operations and “is committed to doing its utmost to meet its obligations in a suitable manner”.
The group’s CEO, Andrey A. Gurvey, on March 10 resigned the position, and from PhosAgro’s Board of Directors as well, after coming under European Union sanction (GM March 11, p. 1). Guryev’s father, Andrey G. Guryev, who was founder of PhosAgro and whose family holds a controlling stake in the company, also resigned from their PhosAgro Board memberships.
The U.S. House of Representatives voted March 17 overwhelmingly to end regular trade relations with Russia in a move that would allow the U.S. to sharply raise tariffs on Russian goods entering the country, according to Bloomberg.
The bill, passed 424-8, would end what’s known as “most favored nation” status for Russia, putting it in a category with other pariah states like North Korea and Cuba. The legislation would allow the U.S. to hit Russia with significantly higher tariffs than those it applies to other World Trade Organization (WTO) members. The WTO has a core principle of treating all members equally.
The next step is for the Senate to consider the legislation, and Majority Leader Chuck Schumer said on March 17 that the body will quickly pass the bill, sending it to President Joe Biden to sign. The bill passed the House via a fast-track procedure used for measures that have broad support. Schumer highlighted that both parties are united in sending a clear message to Russian President Vladimir Putin.
The bill also applies to Belarus, which has hosted the Russian troops invading Ukraine.
“This very important legislation will send a message to Putin,” Ukraine-born Rep. Victoria Spartz (R-Ind.) said before the House vote.
Ending the normal trading relationship with Russia is the latest in a series of actions from Congress to intensify pressure on Russia’s economy after Putin invaded Ukraine last month. The House last week voted to ban imports of Russian oil, though it’s unclear if that will be considered in the Senate, where some lawmakers said Biden’s executive order taking the same action makes the move unnecessary.
The trade bill also includes an expansion of the Global Magnitsky Human Rights Accountability Act. That would allow the Biden administration to impose further sanctions on Russian officials for human-rights violations.
The House also included the Magnitsky language in the legislation to ban Russian oil imports. Including it in this bill means that the measure can still advance even if the oil ban bill dies in the Senate.
About 5 percent of Russian exports went to the U.S. in 2020, according to International Monetary Fund data compiled by Bloomberg.
By mid-March 2022 a quarter of the WTO’s 164 members – collectively representing 58 percent of the global gross domestic product – were poised to stop treating Russia as a “most favored nation” under WTO rules. Besides the U.S., the list includes the European Union’s 27 members, Japan, the U.K., Canada, South Korea, and Australia.
Kansas Senator Roger Marshall and Congressman Tracey Mann, both Republicans, have introduced the Emergency Relief from Duties Act. The bills, which were introduced in both the Senate and House, make a pathway to create emergency waivers for duties placed on fertilizers by the U.S. International Trade Commission (ITC).
An interested party, a coalition, or trade association representative of U.S. agricultural producers and growers could seek the waiver from the ITC. Any waiver or renewal would be for a period of one year. The emergency could be for something that either limits U.S. production or results in a supply and demand disruption.
Emergencies listed included: acts of God; war, acts of terrorism, and epidemics; acts of governmental authorities, such as expropriation, condemnation, and changes in laws and regulations; strikes and labor disputes; and major accidents.
To date, major farm groups have asked The Mosaic Co., Tampa, and CF Industries Holdings Inc., Deerfield, Ill., to withdraw their ITC filings related to phosphates and UAN, respectively. The ITC has rendered a final decision with respect to Mosaic, though the case has been appealed to the U.S. Court of International Trade (GM May 14, June 4, June 11, 2021), while ITC is currently in the midst of the CF case, though preliminary duties have already been assessed (GM Jan. 28, p. 1).
In the meantime, Senator John Hoeven (R.-N.D.), ranking member of the Senate Agriculture Appropriations Committee and a senior member of the Senate Agriculture Committee, joined Senator Bill Hagerty (R-Tenn.), and several others in urging the Biden administration to take immediate action to lower the cost of fertilizer for American farmers.
“We are therefore urging your administration to review all available options to lower the cost of fertilizer, including, but not limited to: eliminating the cross-border vaccine mandate for transporters of essential commerce; engaging stakeholders to prevent a Canadian Pacific Railway strike; ensuring agricultural minerals like phosphate and potash are part of the Department of the Interior’s List of Critical Minerals; increasing U.S. gas production; and approving pending export permits at the Department of Energy for Liquefied Natural Gas,” said the letter.
Others signing the letter included: Senators John Boozman (R-Ark.), John Cornyn (R-Texas), Bill Cassidy (R-La.), John Barrasso (R-Wyo.), Ted Cruz (R-Texas), Jim Inhofe (R-Okla.), Mike Rounds (R-S.D.), Roger Marshall (R-Kan.), Cynthia Lummis (R-Wyo.), Marsha Blackburn (R-Tenn.), Thom Tillis (R-N.C.), Chuck Grassley (R-Iowa), Tom Cotton (R-Ark.), Tommy Tuberville (R-Ala.), Richard Burr (R-N.C.), John Kennedy (R-La.) and Steve Daines (R-Mont.).
Bluestar Adisseo Nanjing and Trammo have announced the signing of an exclusive 10-year agreement for the supply of anhydrous ammonia through a dedicated ammonia pipeline to both of Adisseo’s liquid methionine plants located in Nanjing.
The parties said the 20 km pipeline, which will be the longest ammonia pipeline in China, is under final stages of construction and is expected to enter commissioning phase in April of this year.
It will be operated by Oiltanking Nanjing and will connect the existing 50,000 m3 ammonia tank, the largest in China, owned and operated by Oiltanking under a long-term exclusive lease to Trammo, to the methionine facilities of Adisseo, located in the Nanjing Chemical Industrial Park.
The parties – Adisseo, a global leader in animal nutrition, and Trammo, the largest global ammonia trader – said they have found their synergy in using existing and new infrastructure in the effort to create a safe and sustainable operational environment for the entire Nanjing Chemical Park, for decades to come. They said use of the pipeline will reduce the carbon footprint and ensure safe and secure handling and delivery of ammonia within Nanjing Chemical Park.
Adisseo, which is listed on the Shanghai Stock Exchange, has 10 research centers and production sites based in China, the U.S., Europe, and Thailand, which supply feed additives to customers in over 110 countries.
Trammo, which dates its presence in China back to 1983, is an international merchandising and trading company that markets, trades, transports, and distributes raw materials used in industrial processes and fertilizer production globally. It trades anhydrous ammonia, sulfur, sulfuric acid, and other products. The company also produces and markets nitric acid in the U.S.
Oiltanking Nanjing Co. Ltd. is a joint venture between Oiltanking, NCIP Administration, and the Port Authority of Nanjing. The company owns and operates a multi-user tank terminal for bulk liquids in Nanjing and serves a wide range of customers.
Pursell Agri-Tech, Sylacauga, Ala., on March 8 announced the addition of Bill Abetz, a 30-year veteran of the “green” industry, to the team. He will be Director of Turf and Ornamentals, serving the nursery, green house, lawn care, golf, sod, and sports turf markets, delivering Pursell’s complete controlled-release fertilizer product portfolio to channel partners and end-user customers.
Pursell said Abetz brings hands-on experience in nutrient management as a former Assistant Golf Course Superintendent and Nursery Operations Manager, plus more than 20 years in chemical and fertilizer sales and product development. It said he has introduced multiple products and new product categories and is highly respected in the industry, frequently speaking at landscape, golf, and nursery association meetings.
“We’re excited to welcome Bill to the Pursell team, and know that his experience, knowledge, and passion will further enhance our ability to fulfill the unique and specialized needs of the turf and ornamentals markets,” said Nick Adamchak, Pursell Agri-Tech President and CEO.
K+S Group, Kassel, posted a 262 percent increase in EBITDA to €969 million (approximately $1.065 billion at current exchange rates) for the year ended Dec. 31, 2021, up from €267 million for the previous year. The FY21 result included a one-off gain of €219 million from the completion (in December) of the REKS waste management joint venture transaction (GM Dec. 31, 2021).
Revenues were up 32 percent, to €3.2 billion versus the year-ago €2.4 billion.
Agriculture customer segment revenues increased 34 percent to €2.3 billion, mainly driven by “significantly” higher average prices (+28 percent) and an increase in year-over-year sales volumes by around 300,000 mt to 7.62 million mt, the company reported.
The Industry+ customer segment reported 29 percent higher revenues in 2021, to €941 million, up from €731 million the previous year. Strong demand in the de-icing salt business and the chemical industry, as well as higher prices for industrial potash, contributed to the positive development.
“Even with a view to the war in Ukraine and the associated dynamics in sales prices, as well as energy risks, we are sticking to our previous forecast for FY22 of an increase in EBITDA to between €1.6 billion and €1.9 billion,” said K+S Chairman Burkhard Lohr.
Due to the continued favorable market environment in the Agriculture customer segment, K+S expects the average price of the product portfolio to rise sharply again in FY22. Sales volumes are also expected to increase slightly once again.
Responding to an analyst’s question at a company earnings call on March 10, outgoing CFO Thorsten Boeckers said the U.S. is becoming “a more and more important market” for K+S, especially from the Bethune mine. He said the company achieved sales of 250,000 tons in 2021 to the U.S., and that it should be able to double the amount “in the next few years.”
The CFO highlighted that it was never clearer than today that it was “a strategic perfect move” to build the Bethune mine.
“We are so happy to be in North America with at least one mine, and a big mine, which will be growing over the years,” he said.
Boeckers reminded analysts that K+S’ initial ramp-up plan for Bethune was to ramp up tons “step-by-step” and increase secondary mining, and from time-to-time – as required – enlarge the company’s logistics. An increase of 100,000 mt/y was the plan for 2022, taking the mine to 2.1 million mt/y production capability.
“As our balance sheet has improved dramatically, the best investment is speeding up the ramp-up,” he said, but added that the opportunities were limited.
“So we might do a bit more than 100,000 mt/y [in 2022], but 200,000 mt/y is already very optimistic,” said the CFO.
Regarding reports that K+S’ Industry+ customer segment is up for sale, Lohr told analysts K+S is “not actively looking” for a sale. However, he said the company would listen if someone knocked on the door wanting to talk about a potential transaction.
The K+S Board of Executive Directors and the Supervisory Board intend to propose a dividend of 20 cents per share to the Annual General Meeting on May 12. In accordance with the K+S’ new dividend policy, the amount will consist of a basic dividend of 15 cents and a premium of 5 cents.
Uralkali swung to profit in the year ending Dec. 31, 2021, reporting a net profit of $1.77 billion versus a $43 million net loss for the previous year, according to the company’s IFRS statements published on March 4.
The company attributed the FY21 net profit performance as mainly due to higher operating profits, positive foreign exchange differences, and fair value gains on derivatives.
Full-year EBITDA more than doubled to $2.56 billion, up from the prior-year $1.22 billion, while revenue was up 54 percent, to $4.16 billion from $2.70 billion.
Uralkali CEO Vitaly Lauk cited the global potash market’s favorable conditions during the reporting period as positively impacting the company’s key operating results.
“Flexibility of our sales ensured an optimum and balanced production volume in 2021 amid a general increase in potash prices and its limited supply,” said Lauk.
Uralkali increased potash production by 9 percent last year to 12.3 million mt, up from 11.3 million mt in FY20. However, sales volumes were lower year-over-year, slipping by nearly 6 percent to 12.0 million mt in 2021, down from 12.7 million mt the previous year.
Export sales volumes were down almost 10 percent, at 9.1 million mt versus the year-ago 10.1 million mt, while sales volumes to the domestic market increased by 11 percent, to 2.9 million mt from the year-ago 2.6 million mt. The company cited increased sales to Russian NPK producers and the country’s agricultural sector as driving the increase in its sales volumes to the domestic market last year.
The average potash export price for FY21 increased to $299/mt FCA, compared with $166/mt FCA in FY20, reflecting the increases in global potash prices over the past 12 months and more.
Lauk said Uralkali continues its normal operations and is closely monitoring the current geopolitical situation.
Uralkali expects global potassium chloride deliveries this year to be around 68-71 million mt by the end of 2022, “amid high prices and limited supply of potash” in the world market. This compares to the company’s estimated 71 million mt of deliveries last year.
Uralkali said its EGM in December voted to pay dividends on outstanding preferred shares based on its first nine months of 2021 results, and not pay dividends on the outstanding ordinary shares.
Russia’s Industry and Trade Minister on March 10 announced that Russia will temporarily suspend exports of fertilizers.
Last week, the ministry recommended that fertilizer producers temporarily halt exports, citing logistics problems (GM March 4, p. 1). But information on the specific products involved and the list of countries to be affected is hard to access, as well as the timeframe.
According to a Tass report citing the Industry and Trade Ministry on March 10, Vladimir Putin has indicated that obligations to “friendly” countries would be maintained.
“With countries that have friendly relations with Russia, we have agreements on unconditional provision of their need for mineral fertilizers,” Putin said in a government meeting, Tass reported
“First of all, we need to guarantee fertilizer supplies for the domestic market for our farmers, but we have resources, we are ready to supply our foreign partners,” he said, Tass reported.
According to a ForexLive report, the list of “unfriendly countries” includes the U.S. and Canada, Member States of the European Union, the U.K., Ukraine, Norway, Japan, Australia, New Zealand, South Korea, and Taiwan.
Notably, Brazil is not on the “unfriendly countries” list, as cited by the report. However, the countries list could not be verified by Green Markets at press time.
Russia early last month imposed a ban on ammonium nitrate (AN) exports for two months, starting on Feb. 2 until April 2 (GM Feb. 4, p. 29). The move was to ensure that the country has enough product for its domestic season, according to the government’s press service.
Putin on March 10 warned that the price of fertilizers across the globe may spike further if the West continued to create “difficulties” for his country, according to a Tass report.
“Russia and Belarus are one of the largest suppliers of mineral fertilisers to world markets. If they continue to create any problems with financing this work, insurance, logistics, delivery of our goods, then the prices, already are already exorbitant, will grow even more,” he said.
Russia produces 50 million mt/y of fertilizers, accounting for nearly 13 percent of the world’s total output.
The Russian government on March 10 also approved a list of imported goods and equipment that are temporarily prohibited from being exported from Russia. The decision will be effective until the end of 2022. The ban is reported to cover more than 200 products.
The list includes technological, telecommunication, and medical equipment, vehicles, agricultural machinery, and electric equipment, as well as railway cars and locomotives, containers, turbines, metal and stone cutting machines, video displays, projectors, consoles, and switchboards, the government said on its website.
According to the government website, the export of these goods has been suspended to all countries, excluding member states of the Eurasian Economic Union (EAEU), Abkhazia, and South Ossetia.
In addition, Russia has also suspended the export of several types of timber and timber products to countries that “are undertaking hostile actions” against Russia. This ban will also run until the end of this year.
The Russian government said the trade measure is “necessary to maintain stability on the Russian market.” It stopped short of curbing sales of energy and raw materials, the country’s biggest contribution to global trade.
Record high natural gas prices in Europe have led to several announcements by fertilizer producers this week of fresh production curtailments.
Yara International ASA said on March 9 it is temporarily curtailing production at its Ferrara, Italy, and Le Havre, France, plants as a consequence of record-high natural gas prices in Europe. The two plants have a combined annual capacity of 1 million mt/y ammonia and 0.9 million mt/y urea.
Including optimization and maintenance at other production facilities, Yara said its European ammonia and urea production is expected to be operating at approximately 45 percent of capacity by the end of this week.
The company said it will continue to monitor the situation and “to the extent possible, use its global production system to keep supplying customers and secure continuity in food supply chains, but curtailing production where necessary due to challenging market conditions.”
Hungarian producer Nitrogenmuvex also this week said it is temporarily halting output of ammonia, citing high natural gas prices.
Vienna-based Borealis AG, another European producer, is running its ammonia production at a reduced rate due to the high natural gas prices in Europe, and is considering halting output “for economic reasons,” according to a Bloomberg report on March 9th, citing a company spokesperson.
High natural gas prices caused Yara to idle a significant amount of European production last fall (GM Sept. 17, 2021), though it eventually resumed.
It is worth reminding that gas currently being used by ammonia producers in Europe is based on prices from a few weeks ago, when gas prices were lower.
Despite natural gas prices soaring to a record level earlier this week, CF Industries Holding, Inc., Deerfield, Ill., parent company of the U.K’s CF Fertilisers, has said there has been no change to its operational status in the U.K.
The company’s Billingham complex in Teeside, northeast England, remains online and is producing ammonia, nitric acid, and ammonium nitrate, as well as by-product CO2from the ammonia production process, according to a report by the U.K’s City A.M. newspaper on March 10.
CF said it is continuing to monitor energy market conditions and “to have conversations with customers about the current commercial environment.”
The U.K.’s carbon dioxide industry came to an agreement with CF on Feb. 1 to ensure a sustainable supply of CO2 (GM Feb. 4, p. 28). An existing agreement between CF and its industrial gas customers expired on Jan. 31 (GM Jan. 28, p. 29).
The new offtake and pricing deal with CF and its U.K. industrial gas customers, according to some U.K. media sources at the time – before the current Russia-Ukraine crisis – was announced by the country’s Department for Business, Energy, and Industrial Strategy, and was set to last until the spring. However, it is unclear if this is just conjecture on the basis that natural gas prices may ease with the onset of warmer weather.
CF’s two U.K. plants – the other is at Ince, Cheshire – produce an estimated 60 percent of the U.K.’s commercial supply of the by-product gas. CF has kept its Ince manufacturing plant in Cheshire in northwest England closed since halting operations there on Sept. 15 due to high natural gas prices (GM Sept. 17, 2021). The company also closed the Billingham complex on Sept. 15, but resumed production at the plant with the support of the U.K. government and the CO2 industry later that month (GM Oct. 15, 2021; Sept. 24, 2021).
Meanwhile, ammonium nitrate (AN) prices have skyrocketed over the past week in line with the volatility in European natural gas markets. CF Fertilisers this week posted a new price for AN at £900/mt (approximately $1,183/mt at current exchange rates) FCA for April deliveries in the U.K., a record high for U.K. AN.
Yara was reported to have increased its AN price in France to €1,205/mt CPT (approximately $1,324/mt at current exchange prices). Somesources were of the view that Yara is testing the AN market; if buyers accepted the higher price, then the company may restart the ammonia plant. If the higher prices were rejected, then Yara would keep the plants closed.
Dutch TTF front-month gas, the European benchmark, on March 10 had more than halved from the record high of €345 (approximately $379 at current exchange prices) per megawatt hour hit on March 7, after the Biden administration announced it would impose a ban on U.S. imports of Russian energy. The U.S. ban will include Russian oil, liquefied natural gas, and coal.
The U.K. also said this week it will end imports of Russian oil and oil products by the end of 2022, but other European nations have yet to take decisions on Russian energy import embargoes.
Milder weather forecast for some parts of Europe and robust wind and solar power output were also helping to keep gas prices in check. Traders were also waiting on news on talks between Russia’s and Ukraine’s foreign ministers, which were due to start in Turkey on March 10. Late-day reports on March 10 suggested the talks had made little progress.
The TTF front-month contract (currently April) was at €133 per megawatt hour as of 4:59 p.m. (GMT) on March 10, down 14.678 percent on the day.
Europe relies on Russia for around 40 percent of its natural gas, and around one-third of that gas transits Ukraine.
Russian gas shipments via a key transit route crossing Ukraine were reported to be flowing normally on March 10, a Bloomberg report cited Russian state-owned gas supplier Gazprom PJSC as stating. However, there were reports earlier in the week of Russian threats to cut supplies of natural gas via the Nord Stream 1 pipeline to Europe.
But “overall nervous sentiment about the future of European gas supply is still imminent,” Energi Danmark A/S wrote in a client note, as cited by a Bloomberg report.
“We expect fluctuations [in gas prices] to remain extremely high in the coming days,” the energy trading group wrote.
