News
22/01/26
Fertistream sees challenging 2026 for phosphates, urea
London, 22 January (Argus) — Brazilian fertilizer buyers will continue to look
for affordable alternative products to phosphates and nitrogen in 2026, trading
firm Fertistream's head of global market intelligence, Milton Sato, told Argus
in an interview ahead of the Argus Fertilizer Latino Americano conference in
Miami next week. But the lack of Chinese phosphates will limit Brazilian buyers'
options. Sato also highlighted the risk of tighter nitrogen supply in Europe
following the implementation of the Carbon Border Adjustment Mechanism (CBAM).
Edited highlights follow: In 2025, many Brazilian buyers replaced urea with
ammonium sulphate (amsul), and MAP with NPs, SSP and TSP. How do you see this
trend in 2026? Driven by an unfavourable grain-to-fertilizer ratio, Brazilian
farmers looked for cheaper alternatives to fulfil their nitrogen and phosphates
needs. Given that amsul is not subject to Chinese export quotas and that the
Chinese cost of production is rather low due to its by-product nature, we expect
Chinese amsul exports to remain a prominent nitrogen option. For Brazilian
farmers, besides the competitive price, amsul is also a source of sulphate. For
phosphates, at least until China returns to the export market — which is
unlikely to be earlier than April — Brazilian farmers will have to rely more on
other options, such as imported MAP and TSP. SSP supplies are pressured by
escalating sulphur costs. Mainly to counter rising sulphur costs, China
announced that phosphate exports [will be suspended] until August. But officials
may review this decision once the peak domestic season ends in April. As China
resumes exports, expect Brazilian farmers to consider the low-concentration NPs
as an alternative. SSP imports will also remain on the radar, should prices
become more competitive. CBAM came into effect on 1 January in Europe. How will
Fertistream and other trading firms deal with CBAM? The level of uncertainty
around the CBAM remains high. As such, expect fertilizer traders to maintain a
conservative stance to avoid getting caught on the wrong side of a political
decision. EU importers began front-loading imports in December, especially urea
and UAN. As a result, stocks were filled to the brim. This provided some
breathing room for buyers. Assuming no changes to the CBAM rollout in January,
EU nitrogen buyers will likely avoid the high CBAM charges on UAN and CAN
imports, relying more on locally produced products and, to a lesser extent, urea
imports. The ongoing uncertainty is already denting the first-quarter EU imports
book, raising the risk of a tight nitrogen market in the upcoming season. What
will be the effects if the EU drops standard import duties on urea, as proposed,
and what if it also drops standard import duties on phosphates? If the EU drops
the most favoured nation (MFN) duties on urea, this will open up more origin
options for importers. More specifically, Egypt and Algeria will lose their
current exemption advantage, while all other origins, especially those in the
Mideast Gulf, will become more competitive. On top of the 6.5pc MFN duty,
Russian producers incur an additional duty of €40/t and €45/t for urea and
phosphates, respectively, until June. These will rise [steadily] to a hefty
€315/t and €430/t, respectively, by 2028, effectively barring Russian imports.
As such, expect Russian suppliers to turn to markets elsewhere. The removal of
the MFN duties on phosphate imports would increase sourcing options for the EU,
including Saudi Arabia, Jordan, the US, Russia and China. How has Ethiopia's
move away from tenders affected the market and is it a model for other African
countries to follow? Ethiopia is testing a way to be more responsive to market
dynamics instead of being locked in for long-term periods. Private negotiations
give countries greater flexibility. Doing a block of six months is not how the
rest of the market trades. So there's a mismatch between how the Ethiopian
bureaucrat thinks about the market and how the market actually operates.
Ethiopia shifted from importing NPs mainly from Morocco's OCP to suddenly
wanting DAP, exactly when DAP was rather tight. Not good timing, but they still
had private negotiations and became more responsive to market dynamics. So 2025
imports were quite robust at around 1.3mn t. In the global market, which markets
are you most optimistic about for growth in the next 3-6 months? The US, India
and Australasia will provide liquidity for nitrogen. The CBAM implementation in
Europe will support locally produced CAN, urea, and NPKs, and to a lesser
extent, imported urea. Chinese exports of amsul and urea are likely to remain
strong in 2026. On phosphates, because of the high prices versus grains in the
past year, many markets are under-applied. That includes the US and, to some
extent, Brazil on high-concentration fertilizers. Also, stocks are very low
across these markets. The US needs to replenish stocks ahead of the key spring
season. Brazil is also facing low stock levels and concerns about limited SSP
and NP supply. India's demand remains very strong because the government is
scared of shortages. Sulphur prices climbed in 2025 and remain firm, well above
typical levels. To what extent will sulphur be a driver for phosphates prices?
The hike in sulphur prices this past year lifted the phosphates production cost
across the board, especially for SSP. As a result, sulphur prices set a floor
for phosphates, particularly SSP prices. Expect sulphur demand to remain strong
given Indonesian nickel production and Chinese demand. As the Ukraine-Russia
conflict drags on, the risk of future production disruptions in Russian plants
remains. By Tom Hampson Send comments and request more information at
feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights
reserved.
