MOSCOW — Fertilizer producers in Russia, the world’s largest exporter, will not be able to make up for a potential global shortfall linked to the US-Iran conflict as their ability to boost supply is constrained, industry sources told Reuters.

The war has shut down fertilizer plants in the Middle East and severely disrupted shipping routes via the Strait of Hormuz, conduit for about a third of global trade in fertilizers.

Russia accounts for about one-fifth of global fertilizer trade, but limited capacity, domestic export caps and recent Ukrainian attacks on major plants all constrain its ability to ramp up output, the sources said.

New export-oriented plants are not expected to come on stream before 2027, according to one source who spoke on condition of anonymity.

“Higher prices look great on paper, but Russian producers are boxed in by domestic supply obligations, especially ahead of the planting season,” said another industry source, who also spoke on condition of anonymity.

“And any windfall profits are likely to draw government attention as it looks for ways to boost budget revenue.”

A third source, also speaking on condition of anonymity, said companies are currently focused on meeting domestic demand.

“It may be possible to cover, over a short horizon, the demand left unmet without the Middle East, but in the long term it is too large a volume to replace,” the source added.

A Ukrainian drone attack on Dorogobuzh, one of Russia’s largest fertilizer plants, owned by major producer Acron, on Feb. 25 has temporarily knocked out about 5% of the country’s overall production capacity and killed seven people.

Dorogobuzh accounts for 11% of Russia’s ammonium nitrate output and 9% of its NPK fertilizer production, a mixture of nitrogen, phosphorus and potassium.

Russia, also the world’s top wheat exporter, introduced fertilizer export restrictions in 2021 to ensure sufficient supply on the domestic market.

Andrey Guryev, head of the industry lobby, estimated the gap between lower domestic and higher export prices at about 15% during a meeting with President Vladimir Putin in 2025.

He also told Mr. Putin that Russia is aiming to capture one-quarter of global fertilizer trade by 2030.

Russian fertilizer producers have been spared Ukraine-related Western sanctions in order to ensure global food security, but face payment and logistical difficulties related to sanctions.

Brazil, India and China are the biggest buyers of Russian fertilizer, and it also exports to the US.

Shares in two of Russia’s publicly traded producers, Acron and PhosAgro, have risen modestly, by 3% and 4%, respectively, on the Moscow Exchange since the US and Israeli attacks on Iran began on Feb. 28.

“A shortage of phosphate fertilizers, amid China’s export restrictions, the shutdown of sulphur production in Qatar, and tensions in the Strait of Hormuz, are powerful drivers for price increases in the market,” T-Bank analysts said in a research note. — Reuters

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