US nitrogen markets have become increasingly reliant on Russian imports, raising concerns over potential new tariffs or sanctions on Russia, but so far US president Donald Trump has said he has no intention of taking such measures.
Russia's market share of US urea imports grew to 64pc in May after Trump imposed a 10pc tariff on imports to the US except from Russia and other sanctioned countries. Argus estimates vessel imports to the US in May at about 520,000 metric tonnes (t), 64pc of which are coming from Russia, although a couple vessels may end up delivering in June.
Prior to May, Russian product made up 31pc or 1.26mn t of 4mn t of vessel imports this fertilizer year, which runs from July through June, according to US Census Bureau data and Argus estimates.
After the announcement of tariffs on 2 April the New Orleans barge market strengthened by $130/st or 34pc to a two-and-a-half-year high of $460-555/st fob by 6 May, even with access to non-tariffed Russian product.
Russia, the largest of just a few origins for UAN across the global market, also continues to be the largest source of US UAN imports, representing about 62pc or 963,000t of 1.53mn t of waterborne imports July through May. The US UAN market relies less on imports compared to urea because the US has more UAN production capacity.
Access to non-tariffed Russian product dampened the impact of tariffs on the US nitrogen market but there are increasing concerns among traders that the US' one source of non-tariffed imports could dry up. Trump showed increasing signs of impatience with Russia over continuing the conflict in Ukraine after concluding a two hour phone call with Russian president Vladamir Putin last week.
Despite saying that "Putin is playing with fire" in a social media post, Trump today said he would not impose new sanctions on Russia, adding that it may jeopardize a ceasefire agreement that he claimed could be ready within two weeks.
Trump's evolving relationship with Russia, alongside ongoing tariff negotiations with select countries, complicates the upcoming nitrogen summer fill program in the US. More expensive imports give domestic producers more leverage in price negotiations, while the possibility of tariffs being lifted may cause buyers to push purchases to a later date.
But for now, Russia's increasing share of US nitrogen imports is likely to continue, especially after the European Parliament adopted additional tariffs proposed by the European Commission on Russian and Belarusian fertilizers. The new tariffs from the EU should incentivize Russian exporters to send more product to the US.
