25/12/15
US-Belarus potash trade may soften MOP pricing outlook
London, 15 December (Argus) — Potash trade between the US and Belarus is set to
be reinstated after an absence of almost four years, following the lifting of US
sanctions on Belarusian potash on 13 December with immediate effect — a move
that could soften the outlook for global MOP prices as supply options increase.
The relationship between the US and Belarus had started to ease earlier this
year when Belarus agreed to release 52 political detainees from its prisons in
exchange for the lifting of some sanctions on Belarusian flagship airline
Belavia in September. This limited rapprochement generated talk among market
participants of the possibility of a further lifting of US sanctions on Belarus,
which could affect Belarusian potash. US sanctions on Belarusian potash , which
is produced by state-owned Belaruskali and marketed by BPC, have been in place
since 2021. But the announcement over the weekend has largely caught the market
by surprise. The policy change could lead to a significant shift in potash trade
dynamics, with implications that extend well beyond the borders of both
countries. For the US, it would further diversify its potash supply chain,
reducing its heavy reliance on Canadian imports and improve its negotiating
position in ongoing tariff disputes with the country. For Belarus, regaining
access to the US market opens up an opportunity to diversify export destinations
and stabilise revenues for one its most vital commodities. Such changes could
make the US a more competitive market in terms of pricing. At a global level,
buyers that had previously stopped purchasing Belarusian potash will have more
supply options and could use this as leverage to push down prices with their
current suppliers. On the contrary, a potential reduction of Belarusian MOP to
other markets in favour of the US would likely see other markets become less
competitive. But it is unlikely that the market will see such developments in
the near term. It will take some time for US-Belarus trade to resume as
administrative and financial processes still need to be put in place, and US
potash buyers will need to be incentivised to buy Belarusian MOP over Canadian
tons as some still refuse to purchase Russian product. What's in it for the US?
The removal of Belarusian potash sanctions enables the US to possibly further
diversify its sources for potash imports, signalling that this is more of a
White House priority than market participants had originally anticipated. The US
has limited domestic MOP production and is heavily reliant on imports,
particularly from Canada. The country imported 13.5mn t of MOP for the 2024/25
fertilizer year, with roughly 85pc of it sourced from Canada and 9pc coming from
Russia, according to US Census Bureau data. No other major potash import market
relies so heavily on one source. Belarusian MOP has not touched US soil since
February 2022, but in 2017-21 an average of 635,000 t/yr of Belarusian MOP was
brought into the country. This policy change also comes just days after US
president Donald Trump claimed he could impose severe tariffs on Canadian
fertilizer imports, and the return of trade with Belarus may be used as leverage
for the US in the current tariff war between the two countries. But the US will
not be able to replace all of the 11mn-12mn t/yr of Canadian potash it needs
with Belarusian product. It is also in line with Trump's strategy to secure the
country's critical minerals needs. Trump included potash in the administration's
list of American critical minerals this year and ordered the US government to
fast-track permit reviews for critical minerals projects . The importance of
potash was also highlighted when the White House spared a number of
potassium-based fertilizer products — MOP, SOP, NOP, NPK and magnesium sulphate
— from a raft of tariffs imposed earlier this year. In the US domestic market,
traders appear largely unfazed by the new development. There have been strong
MOP imports this year and there are currently healthy inventories of MOP across
the Corn Belt. Additional volumes from Belarus could oversupply the market,
pressuring prices downwards at a time when potash is already the most affordable
nutrient domestically. But it is likely to take some time for Belarus to regain
market share as it is possible that some companies may self-sanction against
Belarusian potash — similar to companies self-sanctioning against Russian potash
— while suppliers currently find prices in the US unattractive at $305-310/st
fob Nola and alternative markets such as Brazil are providing a better netback,
which could deter Belarus from promptly returning to the US market. Potash
suppliers often switch between the US and Brazil, depending on which market is
paying a premium. Moreover, the administrative processes to facilitate the
return of Belarusian trade in the US will also likely take some time to be
implemented. What's in it for Belarus? Belarusian potash is one of the most
important commodities for the Belarusian economy and provides the country with a
major source of foreign revenue. Following sanctions, Belarusian MOP practically
disappeared from the global potash market in 2022. Yet Belarus regained its
footing in the international market far quicker than expected and has managed to
continue selling significant volumes of potash to the global market with the
help of creative paperwork and lax enforcement of the sanctions. Russia played a
pivotal role in this recovery. After Belarus lost access to the Lithuanian port
of Klaipeda — previously the main export hub for Belarusian potash exports —
from 1 February 2022, the marketer was forced to declare force majeure and find
alternative routes to export its product. Today, most Belarusian potash exports
flow through Russian ports, a shift that has increased costs and extended lead
times. Argus estimates that Klaipeda typically handled 9mn-11mn t/yr of
Belarusian MOP. This year, Belarus is on track to export more than 12mn t,
surpassing pre-sanction export levels. Without access to the US and EU markets,
Belarus has leaned heavily on markets such as Brazil, China and southeast Asia,
often pricing aggressively to maintain market share. The reopening of US trade
offers a chance to reduce dependence on these regions. The lifting of the
sanctions will also make it significantly easier for companies to trade
Belarusian potash around the world, except in the EU and the UK. where sanctions
remain on Belarus. Importers that had previously stopped taking Belarusian MOP
may now be open to trading with Belarus again. By having an additional supply
option, buyers may find they have a stronger negotiating position with existing
suppliers, which could put downward pressure on prices. Conversely, markets
where Belarus has a strong presence could see a reduction of Belarusian volumes
if product shifts toward the US, potentially making those regions less
competitive. The policy change also comes at a time when Belarusian MOP capacity
is increasing capacity, with the 2mn t/yr Nezhinsky MOP project scheduled for
commissioning in the second quarter of 2026, and underscores Belarus' commitment
to continue growing its footprint in the global potash market. By Julia Campbell
and Taylor Zavala Send comments and request more information at
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