Russian potash supply concerns mount, Belarusian MOP sanctioned again

Andy Hemphill


LONDON (ICIS)–The potential impact of sanctions on Russia stemming from Moscow’s invasion of Ukraine became a vital talking point in the global muriate of potash (MOP) fertilizer market this week – particularly after the EU levelled a second wave of sanctions against Belarusian MOP exports.

Russia, Belarus and Canada are the MOP export industry’s ‘big three’ producing nations, and disruption in two of them could be disastrous for global food security – and lead to even more bullish offer prices at ports across the globe.

Top-five MOP exporting nations 2019-2021 (tonnes)

Nation 2019 2020 2021
Canada 19,526,292 21,250,960 21,625,128
Russia 9,354,119 9,524,784 11,832,717
Belarus 10,323,956 11,758,388 5,141,900
US 3,216,264 3,267,038 3,119,870
Spain 628,794 400,591 760,322
*Source: National customs via TDM

The EU on 2 March ratified a new set of sanctions on Belarus’ money-spinning MOP industry, effectively banning around 70% of EU MOP imports from the nation, which is ruled by Alexander Lukashenko, a long-time ally of Russian President Vladimir Putin.

The new sanctions punish Belarus’ willingness to allow Russian troops to join the invasion of Ukraine by crossing Belarusian state lines.

22 members of the Belarusian military were also targeted for sanction under the announcement.

Under the sanctions, MOP supply contracts agreed before their imposition will be included in the punitive measures – not just new contracts, as had been included in previous measures.

Companies have three months to close open supply contracts with Belarusian MOP exporter Belarusian Potash Company (BPC).

BPC was unavailable for comment.

The effect of the previous sanctions is made clear in Belarus’ export figures for full-year 2021, which more than halved after the nation’s traditional trade route to the world’s markets – via the port of Klaipeda in Lithuania – was cut off.

Belarusian MOP exports (tonnes)

Destination 2019 2020 2021 Change 2020/2021 (%)
World 10,303,956 11,758,388 5,141,900 -56
*Source: Belarus Customs via TDM (precise national breakdown withheld)

Although Russian MOP exports are apparently continuing, concerns continue to mount that sanctions placed on the nation by Western powers could make trading with Russia increasingly difficult – notably because of restrictions on bank transactions.

The impact of such concerns is already being felt: in the Chinese domestic MOP market import prices for Russian MOP have spiked amid supply concerns spurred by the ongoing conflict.

Domestic availability is already tight, and importers opted to sit on inventories rather than sell in expectation of higher prices to come.

China imports around 60% of its annual MOP requirement, with Russia frequently the second-largest supplier thanks to well-established rail links.

Top 10 Chinese potash suppliers 2019-2021 (tonnes)

2019 2020 2021
Russia 2,176,326 2,260,653 2,254,100
Canada 3,305,610 3,607,497 2,177,749
Belarus 1,873,666 1,377,238 1,750,277
Israel 887,263 786,556 654,629
Laos 196,044 127,834 416,627
Jordan 682,521 654,588 352,642
Uzbekistan 0 3,768 65,647
Germany 1,513 11,006 1,015
US 195 193 238
Netherlands 192 264 164
World 9,124,724 8,829,619 7,673,090
*Source: China Customs via TDM

Chemical sector end-users were heard more receptive to the increased offers, although buyers who work in fertilizers – the vast majority of the nation’s MOP consumption – pushed back against the higher prices.

Buyer resistance to the increased annual import benchmark is considerable.

China domestic potash prices CNY/tonne

Product 02-Mar 23-Feb Change
Russian MOP: red potash 4,400-4,450 4,100-4,150 Up 300
Russian MOP: red potash – border trade northeast N/A N/A N/A
62% white standard MOP 4,700-4,750 4,300-4,350 Up 400
62% white standard MOP – border trade northeast N/A N/A N/A
Canadian red potash 4,750-4,800 4,350-4,400 Up 400
Canadian white potash 4,700-4,750 4,250-4,300 Up 450
Dead Sea potash 4,650-4,700 4,250-4,300 Up 400
Qinghai Salt Lake: 57% Out of stock Out of stock N/A
Qinghai Salt Lake: 60% 3,900 3,900 Stable
Qinghai Salt Lake: 62% Out of stock Out of stock Out of stock
SOP: standard 50% 4,700-5,000 4,400-4,500 Up 300-500
SOP: granular 4,850-5,050 4,550-4,650 Up 300-400

Front page picture: A train loaded with potash at a train station in Belarus in January
Source: Xinhua/Shutterstock 

Focus article by Andy Hemphill


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