Nitrogen market braces for CBAM after documents leak

Nitrogen fertilizer market participants are grappling with the implications to trade and product flows into the EU after the latest document leak from Brussels shed more light on carbon border adjustment mechanism (CBAM) charges for 2026.

‘Urea is king', declared one major European importer as urea faces the lowest proportional carbon cost in price terms, while offering the importer the highest content of nitrogen (46pc) per tonne (see table).

Conversely, projected default charges for nitrates and some ammonium sulphate (amsul) origins are considerably more prohibitive.

Europe is overwhelmingly reliant on urea imports, and the projected default values show the mechanism has been implemented to protect the bloc's non-urea nitrogen industry, one trader said.

Europe has significant capacity of nitrate-based fertilizers — ammonium nitrate (AN), calcium ammonium nitrate (CAN) and urea ammonium nitrate (UAN) — thanks to plants run by international producers Yara and Agrofert, as well as other major local suppliers, but the bloc is heavily dependent on urea imports. The EU's urea imports from non-EU sources were 6.23mn t in 2024, with Egypt, Russia and Algeria accounting for over 87pc of those receipts.

The estimated default CBAM cost for imports of duty-free urea from Egypt, the bloc's top supplier, is €43/t ($50/t) — or around 9-10pc of the granular urea fca French Atlantic price on 4 December. The calculation is based on a prompt ETS price of €82.48/t as assessed by Argus on 10 December.

Theoretical default costs range up to €58/t for urea from Turkmenistan and Uzbekistan, with Russian and Nigerian hovering around €50/t, and duty-free Algerian at around €45/t.

UAN imports from Trinidad and Tobago, the lowest tariffed origin among the major sources, are projected to have a default charge of around €68/t at current default values, which is nearly 20pc of the UAN price in Rouen, while only delivering 30pc nitrogen content.

Amsul from China, which has become a more popular source of imports this year, faces a default charge of €74/t, while only delivering 21pc of nitrogen against urea's 46pc. Amsul from Egypt is facing a levy of just €19/t.

CBAM default charges for AN and CAN are projected to be considerable at €155-161/t and €115-130/t, respectively, for imports from current top origins, equating to 33-38pc of current major EU inland prices.

The latest projected default charges have been calculated following a leaked draft of the approved documents from Brussels, which emerged on Wednesday. There remains a considerable lack of clarity among participants as to how the market will adjust to urea trade into Europe once the CBAM charges come into force from 1 January.

By Harry Minihan