Nitrogen, phosphorus and potassium are the three basic fertilizers necessary for crop growth. Due to the different resource attributes and supply and demand patterns, the future market development prospects are also different. According to the International Fertilizer Association's (IFA) Medium Term Fertilizer Outlook 2022-2026, nitrogen demand will depend on a combination of supply and affordability (I. e., price acceptability) constraints, phosphate demand is expected to be primarily constrained by affordability, while potash demand is likely to be severely constrained by supply capacity.Therefore, as the supply of potash fertilizer is greatly affected by the conflict between Russia and Ukraine, the gap between supply and demand will continue for a certain period of time, and the potash fertilizer industry will maintain a high business climate in the next five years.

Nitrogen fertilizer belongs to energy processing products, and the main raw materials are coal and natural gas, which is significantly different from the situation that phosphate fertilizer and potash fertilizer rely on mineral resources reserves. Therefore,Nitrogen fertilizer industry concentration is relatively lowFive countries-the European Union, China, Russia, Qatar and Saudi Arabia-export about 60 percent of their nitrogenous fertilizer.

As far as the supply of nitrogen fertilizers is concerned, on the one hand, the export capacity of the two major producers, Russia and Belarus, has declined due to international sanctions; on the other hand, the nitrogen fertilizer industry in Western Europe and Central Europe has been severely affected by the reduction of Russian natural gas supply and the surge in natural gas prices. The above factors will lead to a decline in global nitrogen fertilizer supply in 2022.

IFA forecasts,In an optimistic scenario, effective nitrogen fertilizer production capacity will decrease slightly by 300000 tons in 2022, while in a pessimistic scenario, effective nitrogen fertilizer production capacity will decrease by 5.7 million tons; global effective nitrogen fertilizer production capacity is expected to improve between 2023 and 2026,On the basis of 0.1126 billion tons in 2021, it will increase to 0.1134 billion tons to 0.12 billion tons in 2026.

In terms of demand for nitrogen fertilizer, in 2022, IFA expects global nitrogen fertilizer consumption to decline by 0 to 5 per cent, taking into account the impact of declining nitrogen fertilizer supply and soaring nitrogen fertilizer prices, which has suppressed affordability for farmers. Compared with potash and phosphate fertilizers, the widespread production of nitrogen fertilizers also means that fewer countries and regions rely on nitrogen fertilizer imports, and many countries can produce at least part of the nitrogen fertilizer they need; in addition, nitrogen fertilizer is the most widely used nutrient for grain crops, and the world is currently rushing to replenish grain stocks to prevent a humanitarian crisis, which will also support global nitrogen fertilizer consumption.

IFA predicts that nitrogen fertilizer consumption will begin to pick up in 2023. Under the pessimistic scenario, global nitrogen fertilizer consumption will be slightly lower than the historical high level in 2020 (0.114 billion tons) by 2026, while under the neutral and optimistic scenario, global nitrogen fertilizer consumption will grow more rapidly, and consumption in 2026 will exceed 2020.

Therefore, the overall nitrogen fertilizer in the next five years will show a slightly greater supply than demand, but still basically maintain the balance of supply and demand.

Five countries around the world export more than 75% of their phosphate fertilizer-China, Russia, the EU, Morocco and the USand, therefore,Capacity expansion in the phosphate industry is at least risk of being affected by the Russian-Ukrainian conflict and sanctions.. While about 1/4 of the new capacity between 2017 and 2021 will come from Russia, the next five-year capacity expansion through 2026 is entirely outside the sanctioned countries (mainly in Africa and East Asia).

IFA expects 2022: In an optimistic scenario, global phosphate effective capacity is expected to remain stable, while in a pessimistic scenario, effective capacity is expected to be reduced by 1.2 million tonnes in 2022. In the medium term, global production capacity is expected to grow from 48.9 million tons in 2021 to 50.7 million to 52.7 million tons in 2026.

As far as the demand for phosphate fertilizer is concerned, it is more affected by price affordability.IFA predicts that global phosphorus consumption will drop by 0% to 7% in 2022 as phosphate fertilizer supply decreases and prices rise sharply. Phosphate fertilizer consumption will begin to pick up in 2023. Under pessimistic circumstances, global phosphate fertilizer consumption will be slightly lower than the historical high level in 2020 (49.7 million tons) by 2026, while under neutral and optimistic circumstances, global phosphate fertilizer consumption will grow more rapidly and consumption in 2026 will exceed 2020.

Therefore, the overall supply and demand situation of phosphate fertilizer in the next five years will be similar to that of nitrogen fertilizer, showing a state of supply slightly greater than demand.

As a resource attribute product, the monopoly of resources is the most prominent in the performance of potash.. Canada, Russia, and Belarus account for more than 70% of potash exports. Among them, Russia and Belarus account for 41% of global potash trade and are the second and third largest producers respectively. Therefore, international sanctions and The Russian-Ukrainian conflict has greatly restricted the export capacity of Russia and Belarus.

The IFA expects,In an optimistic scenario, global effective potash production capacity will be 4.1 million tons less in 2022 than in 2021.K₂ O (equivalent to about 6.4 million tons of potassium chloride) to 39.1 million tons (equivalent to about 61.1 million tons of potassium chloride),In the pessimistic case, it will reduce by nearly 9 million tons of K₂ O (equivalent to about 14.06 million tons of potassium chloride) to 34.2 million tons.(equivalent to about 53.43 million tons of potassium chloride).

Potash is also the nutrient element most affected by the disruption, as more than 80% of future capacity expansion is expected to come from Russia. Although some large projects have not yet been included in IFA's forecast, such as BHP's Jansen mine in Saskatchewan, Canada, and the planned expansion project in Nutrient, even in the most ideal case, these projects may not be in operation until 2026 at the earliest. According to the export capacity of Russia, Ukraine and Belarus, the international sanctions imposed on Russia and Belarus, and Ukraine's logistics problems, the expansion of potash production capacity in Russia is basically at a standstill.

In the next five years, due to the high exposure risks of Russia and Belarus and the relatively slow process of sanctions relaxation even under optimistic conditions, it is deduced that the global effective production capacity of K2O in 2026 is expected to be 36 million -43.2 million tons (equivalent to 56.25 million -67.5 million tons of potassium chloride), lower than 43.2 million tons (equivalent to 67.5 million tons of potassium chloride) in 2021.

In terms of potash fertilizer demand, due to potash fertilizer's unique stress resistance (lodging resistance, pest resistance, frost resistance), excellent yield and income increase, and enhancement of the taste of fruits, vegetables and grain, considering the factors of combating global extreme weather and alleviating the food supply crisis, the global demand for potassium chloride is expected to be 64.2 million tons in 2022 and 80 million tons in 2026, with an annual compound growth rate of 5.7, of which, china's demand is about 17 million tons, a compound annual growth rate of 5.6, Southeast Asia's demand is 8.5 million tons, a compound annual growth rate of 6.9. Even in an optimistic scenario,There is still a supply and demand gap of 12.5 million tons of potash fertilizer in 2026.

As a result, global potash will be in short supply over the next five years, and the gap between supply and demand will continue to grow.

In June 2022, the U.S. Department of Agriculture released a report titled "The Impact and Consequences of Price Rising on the Global Fertilizer Market. The report reviews the global fertilizer landscape, focusing on three major fertilizer groups-nitrogen, phosphorus and potassium (NPK). The report states that,Global fertilizer prices are approaching record levels and are likely to remain high throughout 2022 and beyond.To cope with high input costs, some producers may choose to reduce total acreage, or they may plant more leguminous crops, such as soybeans or peas, to take advantage of the nitrogen-fixing capacity of these crops. Conversely, a significant increase in soybean acreage would reduce the acreage normally planted for cereals or maize, further exacerbating global food shortages. The global outlook for 2023 is likely to be more pessimistic, with global agricultural planting increasing dependence on fertilizers.

recently,Although the United States has lifted sanctions on Russian fertilizer exports, Russia has gradually resumed its export supply, and fertilizer prices have fallen. However, challenges remain-the supply of potash in Belarus has barely picked up.The supply shortage in Belarus can only be partially alleviated by increased production by other producers. Mason still expects a shortfall of about 8 million tons this year. In the case of phosphates, Mason expects that export restrictions in some countries may be extended for the rest of the year, until 2023.

At the end of July,Nutrien says it will raise potash prices in the fourth quarter of this yearIts potash price in the Midwest and New Orleans will increase by US $35/ton. The company also emphasized that customers are optimistic about the application of fertilizer in the fall, and the strength of the agricultural market has supported market sentiment. Mosaic also said that despite rising costs, limited global supplies of grain and oilseeds will continue to spur fertilizer purchases in the United States and abroad.

ICL also expressed its views on global potash prices and inventories in the just-organized second-quarter conference call: the company's judgment on potash prices comes more from the pressure on the supply chain brought about by Russia and Belarus. At the same time, for global inventories, global inventories are declining. In addition to supply chain pressures, the cost of holding inventories is also increasing. For example, the cost of holding inventories in Brazil has risen from 2% to 13%, including inflation. With the increase in labor costs, they also believe that inventories in North America and Canada have not increased, but are very tight.

my country is a major producer and exporter of nitrogen and phosphate fertilizers. At the beginning of this year, due to the impact of natural gas prices and the conflict between Russia and Ukraine, the prices of the three major fertilizers of nitrogen, phosphorus and potassium in the international market soared, and the domestic market prices also hit a new high. In order to ensure food security, China has introduced a number of measures to stabilize prices and ensure supply: directly limiting the export volume of nitrogen and phosphorus fertilizers, and the domestic prices of nitrogen and phosphorus fertilizers have dropped significantly, especially the price control effect of nitrogen fertilizers is obvious, which is less than 1/2 of the international market price;Due to China's limited self-supply capacity of potash fertilizer, more than half of the potash fertilizer needs to be imported. Although China's enterprises in Laos have increased the return of potash fertilizer to China, and increased the import of Russian-Russian potash border trade and the import of Belarusian-Russian potash special train, the quantity is limited, and the price of potash fertilizer has decreased by a limited margin, basically maintaining about 4800 yuan/ton. With the arrival of the planting season in the southern hemisphere and the need for winter storage of chemical fertilizers in China, there is still room for a slight increase in potash prices.

To sum up,From the next 5 years of the mid-cycle, due to the three major fertilizer resource attributes and supply and demand patterns of different, the future of nitrogen fertilizer and phosphorus fertilizer may appear larger price fluctuations, and potash fertilizer due to the global supply and demand gap to increase is conducive to maintaining the industry's high business climate, to maintain a higher sales price of potash fertilizer to form support.But in any case, considering the response to the food crisis and extreme weather, the market demand for the three major fertilizers will remain strong in the future.

(Source: Financial Report Network, copyright owned by the original author, if there is infringement, please contact delete)