World prices for nitrogen fertilizers have fallen by almost 50%, so fertilizers continue to become cheaper in Ukraine

Global prices for nitrogen fertilizers continue to decline rapidly, despite traders' expectations of the restoration of full shipping through the Strait of Hormuz, the Financial Times reports, citing data from the analytical agency Argus.

In recent months, nitrogen fertilizer prices have fallen by almost 50%, effectively returning to levels seen before the escalation of the conflict in the Middle East.

In particular, according to Argus, since April of this year, the price of urea has fallen from $918/t to $475/t. The decline began even before the signing of the memorandum of understanding between the US and Iran.

Experts say the main reasons for the price drop are a seasonal decline in demand and expectations of the resumption of large-scale exports of urea from China, which remains one of the world's largest producers of nitrogen fertilizers.

The global trend is already having a significant impact on the Ukrainian market. Against the backdrop of a sharp drop in external prices and low activity of farmers, purchase prices for urea in Ukraine continue to decline. According to market participants, urea currently costs 29–30 thousand UAH/t compared to 40–42 thousand UAH/t a few months ago.

A decrease in prices is also observed in the ammonium nitrate segment, which traditionally remains one of the most popular nitrogen fertilizers on the domestic market.

At the same time, farmers are not yet in a hurry to actively build up reserves for the autumn sowing campaign. Most farms expect further reductions in fertilizer prices against the backdrop of low world prices for urea and the preservation of sufficient supply on the market.

The main demand in the fall will traditionally be for complex fertilizers, primarily NPK and NP. Experts note that this segment has a different pricing structure, as it largely depends on the cost of phosphorus, potassium, import supplies and logistics costs.

That is why complex fertilizers can maintain high prices or even increase in price, despite a significant decrease in the cost of nitrogen fertilizers.

Currently, NPK 10-26-26 fertilizers and similar brands are offered at 44.5–45 thousand UAH/t, while NPK 15-15-15 costs 34.5–35 thousand UAH/t.

Market participants expect increased purchases during the harvest, when farmers will receive additional working capital from the sale of winter barley and rapeseed of the new crop. Given current trends, prices for nitrogen fertilizers in Ukraine may remain close to the levels observed before the escalation of the conflict between Iran and Israel.