By Gleb Bryanski and Anastasia Lyrchikova MOSCOW, March 6 (Reuters) - Fertiliser producers in Russia, the world's largest exporter, will not be able to make up for a potential global shortfall linked
Russian Fertiliser Makers Unable to Offset Global Supply Shortfall Amid Iran Crisis
Impact of Middle East Conflict on Russian Fertiliser Exports
By Gleb Bryanski and Anastasia Lyrchikova
MOSCOW, March 6 (Reuters) - Fertiliser producers in Russia, the world's largest exporter, will not be able to make up for a potential global shortfall linked to the U.S.-Iran conflict as their ability to boost supply is constrained, industry sources told Reuters on Friday.
The war has shut down fertiliser plants in the Middle East and severely disrupted shipping routes via the Strait of Hormuz, conduit for about a third of global trade in fertilizers.
Russia accounts for about one-fifth of global fertiliser trade, but limited capacity, domestic export caps and recent Ukrainian attacks on major plants all constrain its ability to ramp up output, the sources said.
Domestic Supply Constraints
Obligations to Local Market
DOMESTIC SUPPLY OBLIGATIONS
New export-oriented plants are not expected to come on stream before 2027, according to one source who spoke on condition of anonymity.
"Higher prices look great on paper, but Russian producers are boxed in by domestic supply obligations, especially ahead of the planting season," said another industry source, who also spoke on condition of anonymity.
"And any windfall profits are likely to draw government attention as it looks for ways to boost budget revenues."
A third source, also speaking on condition of anonymity, said companies are currently focused on meeting domestic demand.
"It may be possible to cover, over a short horizon, the demand left unmet without the Middle East, but in the long term it is too large a volume to replace," the source added.
Production Disruptions
Ukrainian Drone Attack on Dorogobuzh Plant
A Ukrainian drone attack on Dorogobuzh, one of Russia's largest fertiliser plants, owned by major producer Acron, on February 25 has temporarily knocked out about 5% of the country's overall production capacity and killed seven people.
Dorogobuzh accounts for 11% of Russia's ammonium nitrate output and 9% of its NPK fertiliser production, a mixture of nitrogen, phosphorus and potassium.
Export Ambitions and Global Trade
Plans for Increased Market Share
ONE QUARTER OF GLOBAL TRADE BY 2030
Russia, also the world's top wheat exporter, introduced fertiliser export restrictions in 2021 to ensure sufficient supply on the domestic market.
Andrey Guryev, head of the industry lobby, estimated the gap between lower domestic and higher export prices at about 15% during a meeting with President Vladimir Putin in 2025.
He also told Putin that Russia is aiming to capture one-quarter of global fertiliser trade by 2030.
Sanctions and Export Destinations
Russian fertiliser producers have been spared Ukraine-related Western sanctions in order to ensure global food security, but face payment and logistical difficulties related to sanctions.
Brazil, India and China are the biggest buyers of Russian fertilizers, and it also exports to the U.S.
Market Response and Price Dynamics
Stock Market Movements
Shares in two of Russia's publicly traded producers, Acron and PhosAgro, have risen modestly, by 3% and 4%, respectively, on the Moscow Exchange since the U.S. and Israeli attacks on Iran began on February 28.
Price Drivers and Analyst Commentary
"A shortage of phosphate fertilisers, amid China's export restrictions, the shutdown of sulphur production in Qatar, and tensions in the Strait of Hormuz, is a powerful driver for price increases in the market," T-Bank analysts said in a research note.
"Against this backdrop, PhosAgro, as one of the key global suppliers, could strengthen significantly."
(Writing by Gleb Bryanski; Editing by Jan Harvey)
