Gas prices forced Poland to re-export nitrogen fertilizers from Russia to Ukraine
High gas prices and uncompetitiveness of fertilizers produced in Poland are forcing Warsaw to re-export Russian nitrogen fertilizers to Ukraine, an industry representative familiar with the situation said; this information is also confirmed by data from the EU Statistics Office.
“It is not customary to talk about it: neither about the fact that Poland continues to buy fertilizers from Russia, nor even less about the fact that Ukraine de facto receives Russian fertilizers, but the actual situation is just like that,” the agency’s interlocutor said.
He explained that Poland is forced to resell Russian fertilizers to Ukraine “only by the price situation”. According to the interlocutor, at the current gas prices, the fertilizers produced by Polish fertilizer producer Azoty are not competitive due to their too high production costs.
According to the European Statbureau, in July Poland purchased 158 thousand tons of fertilizers from Russia for 55.7 million euros, which is twice as much as in June and about three times more than last year’s volume. Monthly imports were close in volume only once in the past few years – in December 2021 (137 thousand tons worth $66.2 million).
Poland in mid-summer also sharply increased fertilizer exports to Ukraine – by 28%, to 74.3 thousand tons, and in monetary terms – by 35%, to 33 million euros. Both figures are at their highest since March this year. Warsaw mainly supplied Kiev with mixed (39.9 thousand tons) and nitrogen fertilizers, exports of the latter increased by 28% to 28.2 thousand tons in July.
The main exporter of both types of “feed” for Poland was Russia: supplies of the former increased by 36.5 thousand tons to 60.9 thousand tons, and the latter – by 25.1 thousand tons to 61.3 thousand tons. However, not only Russian companies in July seriously increased sales of their fertilizers to the Polish market: China quadrupled its supplies of mixed fertilizers to 23.1 thousand tons, and Belarus increased its nitrogen fertilizer supplies 1.7 times to 44.4 thousand tons.
At the same time, the Polish producer itself is in a difficult financial situation caused by high gas prices.
“Azoty can produce fertilizers as long as it can sell them, but often gas prices and prices for finished products leave no room for profit,” the agency’s interlocutor said.
In early August, Grupa Azoty announced serious losses and was forced to sell some of its assets. Rzeczpospolita also reported at the time that due to the need for liquidity and investment, the group may consider selling the fertilizer company Compo Expert, bought several years ago, worth about 0.7-1 billion zlotys (up to $250 million).
According to Eurostat, Poland’s fertilizer production in 2023 was sharply reduced compared to 2021: nitrogen fertilizer production fell by half, mixed fertilizers by 1.6 times and potash by 40%. In all three indicators, production was at historic lows (data on different types of fertilizers are from 2011-2013).
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