AZOT GROUP NEWS

Sergey Albrecht, deputy director of AZOT trading house, discusses urea and ammonium nitrate availability in the agricultural sector, export restrictions, innovative products and future forecasts

Azot Group AO
Today, Russia's fertiliser production fully meets the needs of domestic agriculture. The Russian government regulates prices for urea and ammonium nitrate and imposes export quotas to maintain a balance between shipment and consumption. Innovative products, such as urea-ammonium nitrate mixtures, are entering the market, resulting in higher crop yields and more efficient application of nutrients to the soil. Sergey Albrecht, Deputy Director of AZOT trading house, PhD in Technical Sciences, told about this and much more during the International exhibition ‘YUGAGRO 2024’ held in Krasnodar on 19-21 November.

- Sergey Nikolayevich, what is the current situation with the production of fertilisers for agriculture? Do producers cope with the needs of the agricultural sector?

- Undoubtedly, producers are coping with the needs of the Russian agro-industrial complex. We regularly receive plans for the supply of mineral fertilisers for the needs of the domestic agricultural sector. These volumes are distributed among producers depending on their capacity, so each company is well aware of how much it needs to supply to meet all the needs of the country's merchants and agrarians.
Today, the cost of credit money is quite high in Russia, and, unfortunately, many farmers simply do not have the opportunity to purchase mineral fertilisers. Therefore, this task is taken on by both producers and some market players who are willing to take risks.

Since the main demand for mineral fertilisers is in the spring (sowing traditionally starts in the southern regions and ends in the northern ones), these three months will allow the entire volume of accumulated production (as well as the results of new production) to be used for both winter and spring crops.

The output of mineral fertilisers in the country remains stable for all enterprises. As of today, we have a balanced supply of fertilisers for both domestic consumers and exports. Currently, we produce more fertilisers than we need domestically. Accordingly, the entire surplus goes abroad.
- How did the Russian government's export restrictions affect mineral fertiliser producers?

- In 2022, there was an exceptional situation when exports of mineral fertilisers reached such volumes that there was actually a domestic deficit. At that time, the Russian government even had to impose quantitative restrictions on the export of ammonium nitrate, the most common and most effective nitrogen fertiliser. After that, the situation normalised.

Now every six months the government revises the volumes of export supplies and restrictions, but there is a certain positive aspect to this. The fact is that prices for mineral fertilisers for the domestic market are set as marginal prices. This means that we, as producers, have no right to sell our products to agricultural producers above the set price. But, as a rule, export prices are higher than the ceiling prices inside Russia, so enterprising companies and farmers who bought fertilisers at a low cost are ready to resell them abroad for a completely different price. To prevent these abuses, fertiliser export quotas were introduced.
As of today, the number of products for which these quotas are introduced is being reduced. Our product line includes ammonium nitrate, urea and urea-ammonia mixtures.

As for urea, its production capacity in Russia is substantial, and it will take a month or two to cover all the needs of the domestic market. Therefore, the removal of export restrictions has already been discussed. As for ammonium nitrate, in my opinion, it is necessary to retain quotas, because in peak seasons the demand for this mineral fertiliser in agriculture is almost equal to its production. In addition to agriculture, there is another important area for the country's economy that needs ammonium nitrate - the mining and ore mining industry. In this case, the quota mechanism is necessary to exclude possible games with shortages and price hikes.
- How are mineral fertilisers and their production technologies evolving qualitatively today?

- There are traditional types of mineral fertilisers, in particular nitrogen fertilisers (ammonium nitrate and urea), as well as an evolutionary product - urea-ammonia mixtures (UAN). The latter are now becoming increasingly popular. If ammonium nitrate is ammonium-nitrate nitrogen, which in our climatic conditions are fully transformed into nitrogen assimilable by plants, urea is used, as a rule, at sufficiently high soil temperatures. If we return to our climatic conditions, the transformation of nitrogen from the urea form into nitrate and ammonium forms requires certain temperature and time factors. During this period, despite the fact that nitrogen in urea is 46%, some of it can be lost and the fertiliser will work less efficiently.

Some time ago, a product was offered to the market - urea-ammonia mixtures, which contain all three forms of nitrogen in their composition. This allows the plant to receive prolonged nutrition - from the most easily digestible form of nitrogen to the amide form. In addition, this type of fertiliser is in liquid form, which allows it to be used without external moisture.
Today we produce about 200 thousand tonnes of UAN, of which we sell the entire volume to farmers in the regions close to Kemerovo using road transport. The accumulation of urea-ammonia mixtures begins as early as September-October. In winter this product crystallises, in spring it starts to thaw, and together with the fresh product we get normal fertiliser in liquid form, which is applied during the sowing season.

In addition to the Kemerovo facility, we are launching production of urea-ammonia mixtures at the Ammoni AO facility in the city of Mendeleevsk in the Republic of Tatarstan. The capacity of the enterprise is up to 150-200 thousand tonnes of UAN per year, but everything will depend on monthly demand. The production will make it possible to satisfy the entire demand of the neighbouring regions for urea-ammonia mixtures. Because the volume of UAN produced in Russia today is not sufficient, this market is developing, and our group of companies intends to continue working in this direction.
We monitor the balance of fertiliser production and consumption across Russia very closely and understand the problems that arise in each region. For example, Siberia and the Far East, with an ammonium nitrate production of approximately 1.6 million tonnes, consume approximately 1 million tonnes more fertiliser. This takes into account the nearest exports to Mongolia, which depends on Russian production, as well as Kazakhstan and Kyrgyzstan, whose capacities are insufficient to cover the needs of their agriculture. Some fertiliser is exported from Siberia and the Far East to South-East Asia.

In the Urals and Volga Federal Districts, ammonium nitrate production exceeds consumption by approximately 2 million tonnes per year. If we talk about the western cluster (Central, Southern and North Caucasian federal districts), where enterprises are mainly focused on satisfying export markets, the deficit of ammonium nitrate there is about 1 million tonnes.

The overall picture is as follows: enterprises in the Urals and Volga Federal Districts cover the deficit in Siberia and the Far East, as well as in the western part of the Russian Federation. The main consumers of mineral fertilisers are, of course, the Southern and North Caucasus federal districts.
- How do you see the future of Russia's agricultural sector through the prism of Azot Group AO?

- We are making various forecasts. It is gratifying that the current team at the Ministry of Agriculture of the Russian Federation supports the strategy of using mineral fertilisers in the agricultural sector, as this is an opportunity to obtain higher yields. Today our country is a leading exporter of agricultural products, in particular grain, we are fully self-sufficient in many types of agricultural products, and in this prism we make forecasts that allow us to say whether the industry will be provided with mineral fertilisers in the future. As of today, we realise that our ammonium nitrate production capacity is sufficient for the next ten years. Given that we are developing and producing such products as urea-ammonia mixtures, it is likely that this will be sufficient for a longer period of time.
The publication was prepared according to the website of www.kommersant.ru