Mike Straumietis: What Affects Fertilizer Prices Worldwide?

1

While the U.S. is the third-largest fertilizer producer in the world, surprisingly enough, it is not a major fertilizer exporter on the global stage. In this blog post, Mike Straumietis of Advanced Nutrients discusses this supply scenario and other factors influencing fertilizer prices.

 

U.S. Ranking in Fertilizer Production

In terms of nitrogen exports, the U.S. only ranks seventh, holding only around 4.6 percent of the nitrogen exports worldwide. Russia is first, with 16.5 percent. China is second with 11.2 percent of global nitrogen exports. Saudi Arabia is third with 6.4 percent of nitrogen exports.

 

Regarding global phosphate exports, the U.S. only ranks fourth with 11.8 percent, well behind China’s 25.2 percent, Morocco’s 17.4 percent, and Russia’s 12.7 percent.

 

The U.S. ranks even lower in global potassium exports, accounting for less than 1 percent of global potassium exports, 12th globally. Canada holds the largest share with 36.2 percent, followed by Belarus with 18.5 percent, and Russia with 16.5 percent.

 

Important Points in Creating Fertilizer

Mike Straumietis says that creating fertilizer requires a lot of energy from production facilities. Take anhydrous ammonia, for instance. Anhydrous ammonia is created via the Haber-Bosch process, which combines nitrogen with hydrogen. This process involves the synthesis of ammonia, using natural gas as the source of hydrogen, combined with energy.

 

Because natural gas is the number one building block for most all nitrogen fertilizers, it takes an estimated 33 million metric British thermal units (MMBtu) per material ton of ammonia for this conversion. This is responsible for 70 to 90 percent of the production variable expenses in the process.

 

The Plight of Nitrogen Plants in Europe

Mike Straumietis points out that because natural gas prices have risen recently, especially in the European region, many EU nitrogen plants were forced to close.

 

The average plant built for this process takes around three to five years to construct and costs approximately $3 to $5 billion. Then, when a demand surge occurs, the response time to fulfill supply through another production facility will again be delayed for another three to five years with another $3 to $5 billion in expenses.

 

Take the February 2021 freeze in Texas, for example. During this time, a hefty portion of the natural gas production was either interrupted or redirected from normal uses and pushed toward Texas because of the spike in demand. The freeze forced ammonia plants in Texas, Oklahoma, and Louisiana to shut down, cutting approximately 250,000 tons of production.

 

When Hurricane Ida hit, a halt in production occurred once more.

 

The Importance of Plant Turnarounds

Amidst disruptions in production, Mike Straumietis mentions that plant turnarounds from the COVID-19 pandemic, which already lagged, were stopped again. This kept plants from catching up with their production backlogs. This led to more production disruptions for regular maintenance or issues that have emerged because of delayed maintenance.

 

Plant turnarounds are extremely important in maintaining the integrity of the chemical processes and the safety of fertilizer production plants. Because plant turnarounds were delayed during the height of the COVID-19 pandemic, preventive measures at production facilities were implemented, and employees from companies that were under contract to perform said turnarounds were instructed to delay visits until it was safe to bring external employees back on site.

 

Other Factors Affecting Production Expenses

Other fertilizer nutrients are also experiencing fluctuations in cost because of several factors.

Take surface mining, for example. When converting phosphate rock from a raw product to its final form for sale, usage goes through a process that involves surface mining. The soil and rock that cover the phosphate are taken out using enormous draglines measuring up to five stories high. These draglines are large and expensive.

 

And as Mike Straumietisnotes, more factors such as these draglines drive up costs.

Mike Straumietis is familiar with how production is affected by several factors in his role as Founder and CEO of Advanced Nutrients. Yet, despite hurdles, the Advanced Nutrients team of highly skilled and competent Ph.D. scientists, with the guidance of Mike, has developed a broad spectrum of next-generation products that have benefitted growers in more than 110 countries.

Love & Share