Russia is considering setting up a unified trading company to export fertilizers in a bid to increase its pricing influence on global markets.
(Bloomberg) — Russia is considering setting up a unified trading company to export fertilizers in a bid to increase its pricing influence on global markets.
The idea was proposed in July by UralChem PJSC’s founder Dmitry Mazepin, two people familiar with the situation said, declining to be identified because the information isn’t public. It has since been discussed by Industry Minister Denis Manturov and Prime Minister Mikhail Mishustin, the people and another person close to the government said. No decision has been taken and it’s not clear when the proposal will be discussed again, all three people said.
Spokespeople for the government didn’t respond to requests to comment. Uralchem’s press service said it’s unaware of the proposal.
Russia is the world’s largest fertilizer maker, with produce accounting for about 15% of global annual consumption. While fertilizer companies haven’t been included in international sanctions over Russia’s war in Ukraine due to their importance for global food security, Baltic ports have stopped handling most products, contributing to a decline in shipments. An exodus of global shipping companies, some international banks and insurers from Russia has also made it harder to send goods abroad.
Some large fertilizer makers don’t support the idea out of concern it will hurt business, two of the people said. Exports of most types of fertilizers have already recovered to their pre-war levels, so producers don’t see how the proposal will benefit them, the people said.
A unified trading company could give the government more control over export revenues and allow it to exert much greater influence over global pricing. Russia has been demanding smoother export conditions for its fertilizer producers in talks to restore a grain export deal that allowed Ukraine to ship through the Black Sea and that Moscow abandoned last month.
Companies currently trade their goods through Switzerland and other third countries. Russia previously had a potash trading alliance with Belarus that allowed it to control 40% of the nutrient’s global sales and prices via output caps. Potash prices slumped when the deal collapsed in 2013.
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