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.
