By Martina Kao    Photo：CANVA

1. European fertilizer demand

EU countries have about 180 million hectares of agricultural land, where they grow staple food crops such as wheat, corn, and potatoes, as well as cash crops such as grapes and olives. The growth of these crops cannot be separated from the support of chemical fertilizers such as nitrogen, phosphorus and potassium. According to recent data, Europe's annual consumption of chemical fertilizers is about 17 million tons (calculated in terms of nutrients), of which nitrogen fertilizers account for the largest proportion, about 60%, while phosphorus fertilizers and potassium fertilizers each account for about 20%.

Russia and Belarus have long been the main suppliers of potash and nitrogen fertilizers to Europe. However, after the outbreak of the Russia-Ukraine conflict in 2022, Russia's fertilizer exports were subject to sanctions and logistics restrictions, causing fertilizer prices in Europe to soar, and some countries even faced shortages. Although alternative import sources such as Brazil and Canada have provided some supplementary supply, long-distance transportation has pushed up costs and delivery cycles. In addition, the "Green Deal" launched by the European Union in recent years aims to reduce the use of chemical fertilizers by 20% by 2030 and promote organic fertilizers and biological fertilizers. Although this policy is beneficial to environmental sustainability, the transition will be difficult in the short term as farmers will still need to rely on traditional chemical fertilizers to maintain production, increasing import pressure.

Climate change is also affecting fertilizer demand in Europe. Frequent droughts and floods have led to increased loss of soil nutrient content, forcing farmers to increase fertilizer inputs to maintain crop yields. At the same time, the process of agricultural modernization in Eastern European countries such as Poland and Romania has accelerated, and the demand for chemical fertilizers has increased year by year. It can be foreseen that Europe's import demand in the future will seek a dynamic balance between policy restrictions and actual agricultural needs.

2. Asian fertilizer demand

As the most densely populated region in the world, Asia's agricultural production bears enormous pressure on food supply. According to data from the Food and Agriculture Organization of the United Nations (FAO), Asia's agricultural land accounts for about 40% of the world's total, growing major crops such as rice, wheat, and soybeans. The annual consumption of chemical fertilizers in Asia exceeds 90 million tons, far exceeding Europe, with China, India and Southeast Asian countries being the main demand markets.

China is the world's largest consumer of chemical fertilizers, with annual consumption accounting for about 50% of Asia's total. It is mainly used for rice and vegetable cultivation. It imports about 3 million tons of potash fertilizers each year, from sources including Canada and Russia. India's economy is dominated by small farmers, with an annual demand of about 35 million tons, of which nitrogen fertilizers and phosphate fertilizers account for the majority, while potash fertilizers are almost entirely imported (such as Jordan and Morocco). Thailand's annual consumption is about 4 million tons, supporting the cultivation of rice, rubber and palm oil. There is a strong demand for nitrogen fertilizer and compound fertilizer. Due to insufficient domestic production capacity, annual imports are about 2 million tons, mainly from China and the Middle East. Vietnam's annual demand is about 5 million tons for rice and coffee production, and its imports are about 2.5 million tons, with suppliers including China and Russia.

Demand growth in Asia is driven by multiple factors. Population growth and urbanization have led to a reduction in arable land, and farmers have responded by increasing yields per unit area, pushing up fertilizer use. The impacts of climate change are already evident, with abnormal monsoons in India, droughts and floods in Thailand and Vietnam forcing farmers to increase fertilizer inputs to compensate for soil degradation.

3. Asian fertilizer export capacity

Asia is not only a major consumer of chemical fertilizers, but also an important export region. As the world's largest fertilizer producer, China has an annual production capacity of more than 100 million tons, with nitrogen fertilizer and phosphate fertilizer production ranking among the highest in the world. In 2023, China exported about 20 million tons of chemical fertilizers, mainly to Southeast Asia, Africa and South America.

Middle Eastern countries such as Saudi Arabia and Qatar are important exporters of nitrogen fertilizer and urea to Asia. These countries rely on abundant natural gas resources and have a combined annual export capacity of about 30 million tons, of which about 40% flows to Asian markets (such as India and Pakistan). In addition, although Russia geographically spans Europe and Asia, its potash and nitrogen fertilizer production capacity in Siberia has a profound impact on the Asian market, with an annual export volume of about 10 million tons, mainly supplied to China, Vietnam and other places.

Thailand and Vietnam also contribute to exports, but on a smaller scale. Thailand exports about 500,000 tons of compound fertilizer and phosphate fertilizer annually, mainly to neighboring countries such as Laos and Cambodia, thanks to its chemical industry base. Vietnam exports about 300,000 tonnes of fertilizers, mostly low-value-added nitrogen fertilizers, to Southeast Asian and South Asian countries. However, both countries' exports are constrained by their dependence on raw materials (e.g. Thailand imports potash fertilizers and Vietnam relies on natural gas) and rising energy costs. Overall, Asia's export capacity is constrained by raw material supply, energy prices and logistics bottlenecks, making it difficult to fully meet regional demand.

4. Global chemical fertilizer gap and capacity replenishment suggestions

The global chemical fertilizer market has faced a significant supply-demand gap in recent years. According to the International Fertilizer Association (IFA), global fertilizer demand in 2024 will be approximately 210 million tons, while supply will be only about 190 million tons, leaving a gap of 20 million tons. This gap is mainly caused by geopolitical conflicts (such as the Russia-Ukraine war), energy crises and reduced production caused by climate change. Europe and Asia, as the main demand sources, were both affected.

To fill the capacity gap, we can start from the following aspects:

1. Diversified supply sources

Europe should reduce its dependence on Russia and turn to stable suppliers such as Canada and Morocco. Asian countries (such as Thailand and Vietnam) can deepen cooperation with the Middle East and Australia to ensure stable imports of potash and phosphate fertilizers.

2. Improving Asian export efficiency

China can moderately relax export restrictions, reduce production costs through technological upgrades, and stabilize international market supply. Middle Eastern countries and Thailand are investing in port facilities to improve logistics capabilities and shorten delivery times.

3. Promote alternative fertilizers and technologies

Europe's "Green Deal" experience is worth learning from. Asian countries can increase research and development and subsidies for organic fertilizers, microbial fertilizers and Nano fertilizers, and gradually reduce their dependence on chemical fertilizers. At the same time, promote precision fertilization technology to improve fertilizer utilization efficiency.

4. International cooperation and reserve mechanism

Establish a global fertilizer reserve alliance with the participation of China, Russia, the United States, the European Union, India, Thailand and other countries to allocate resources in times of crisis and stabilize market prices and supply.

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