Fertilizers: Market situation in 2025 and analysis of price forecasts

Europe’s fertilizer market is experiencing one of its biggest crises in recent years, heavily influenced by rising commodity prices and geopolitical tensions. High production costs, limited stocks and logistical problems are causing prices to soar, putting farmers and producers in a difficult situation. In addition, the weakening euro is increasing the cost of imports, and the war in Ukraine is hampering supplies from key markets. As a result, the entire fertilizer industry faces challenges that, without appropriate action, could further destabilize the agricultural sector.

The crisis is primarily affecting nitrogen fertilizers, such as urea, whose prices are rising rapidly as a result of global demand and production constraints. Farmers in Europe, struggling with rising production costs, are holding back purchases in hopes of stabilizing prices, which in turn exacerbates inventory problems and reduces product availability in the market. The situation is also exacerbated by policies and sanctions designed to reduce Europe’s dependence on Russian and Belarusian supplies.

MBF Group SA is a trusted supplier of fertilizers, offering a wide range of top-quality products to the Polish market and the countries of the European Union, including grade A and B urea. The company also specializes in supplying nitrogen fertilizers such as ammonium and calcium ammonium nitrate (KAS), di-ammonium phosphate (DAP), as well as potassium and mixed fertilizers. Thanks to cooperation with reputable manufacturers from Eastern Europe and Asia, MBF Group guarantees competitive prices and compliance of products with European quality standards. MBF Group’s team not only ensures stable supply, but also the flexibility to adapt its offerings to customers’ needs in a rapidly changing fertilizer market. The company is an ideal partner for farmers and distributors looking for reliable sources of key agricultural products.

Dramatic situation in the European fertilizer market

The European fertilizer market has been in an extremely difficult situation in recent years. Drastic increases in energy commodity prices, primarily natural gas, coupled with disruptions in supply chains and geopolitical tensions have led to serious problems in fertilizer production and distribution. The effects of this crisis are being felt by producers and farmers alike, and consequently by the economy as a whole.

Rising gas prices – the main catalyst for the crisis

The main driver of the increase in fertilizer prices is undoubtedly the surge in natural gas prices. Gas is a key raw material in nitrogen fertilizer production, accounting for up to 60-80% of production costs. Its significant share of costs means that any change in gas prices has a direct impact on final product prices. The increase in gas prices, caused by, among other things. increased demand, supply constraints and geopolitical conflicts have forced fertilizer producers to raise the prices of their products to maintain profitability.

Import problems and low stocks

In addition to rising energy prices, the fertilizer market is also affected by import problems. Sanctions imposed on Russia and Belarus, which have been important suppliers of fertilizers to the European market, have restricted access to these products. In addition, disruptions in supply chains caused by the COVID-19 pandemic and the war in Ukraine have made it difficult to import fertilizer from other regions of the world. As a result, producers and farmers face commodity shortages and must look for alternative sources of supply, which often entails additional costs and extended delivery times. Low fertilizer stocks in storage further exacerbate the availability problem and keep up pressure on prices.

Weak euro – an additional burden

The weakening of the euro against other currencies, especially the U.S. dollar, poses another challenge for European fertilizer producers and importers. Most fertilizer market transactions are denominated in dollars, which means that with a weak euro, fertilizer purchases abroad become more expensive. This, in turn, translates into an increase in fertilizer prices on the domestic market and puts an additional burden on producers and farmers.

Increase in fertilizer production costs

Natural gas is an indispensable component of the nitrogen fertilizer production process. Its role is so important that it is estimated to be responsible for as much as 60-80% of the total cost of producing these fertilizers. Nitrogenous compounds, the basic ingredient in many fertilizers, are obtained through processes that require large amounts of thermal energy, which is precisely what natural gas provides.

Increase in gas prices – direct impact on production costs

In recent years, we have seen a significant increase in the price of natural gas on world markets. This trend, caused by, among other things. increased demand, supply constraints and geopolitical conflicts, had a direct impact on fertilizer production costs. Nitrogen fertilizer producers faced a difficult choice: either raise the prices of their products to maintain profitability or cut production.

Urea pellet production costs – a big increase

Urea is one of the most important nitrogen fertilizers widely used in agriculture. Its production is particularly energy-intensive, making it extremely sensitive to changes in gas prices. Rising gas costs in recent years have dramatically increased the cost of producing urea pellets.

Analysis of changes in urea production costs from 2024 onwards

To better illustrate the scale of the problem, it is useful to conduct an analysis of changes in urea production costs from 2024.[Here you can include a graph or table showing the dynamics of changes in urea production costs over time.] The data shows that the cost of producing this fertilizer has increased significantly, which has had a direct impact on its price on the market.

Negative producer margins and production restrictions

Effects of cost increases

The drastic increase in the cost of producing fertilizers, especially urea, has led to a situation where the margins of many producers have become negative. This means that by selling fertilizer at market prices, companies were incurring losses. Such a situation is obviously unsustainable in the long term and forces manufacturers to make difficult decisions.

Production restrictions

Faced with rising costs and negative margins, many producers have decided to cut back on fertilizer production. Some companies have stopped production of certain types of fertilizers altogether, further exacerbating the problem of availability of these products on the market. Restrictions on production have serious consequences for agriculture, as they limit farmers’ access to essential inputs.

Fertilizer prices in early 2025

A sharp rise in urea prices

The beginning of 2025 brought shocking news for farmers and food producers. Fertilizer prices, especially urea, have reached historic highs. This growth was driven primarily by the factors we discussed earlier:

  • High production costs: As we have already mentioned, the increase in the price of natural gas, the main raw material in nitrogen fertilizer production, has significantly increased the cost of urea production.
  • Limited supply: Rising production costs have forced many manufacturers to reduce production or even stop it altogether. This, combined with logistical problems, has limited the supply of fertilizer on the market.
  • Increased demand: Despite high prices, demand for fertilizer, especially in the pre-sowing season, remained high. Farmers, in order to ensure a good crop, were forced to buy fertilizer at much higher prices.

Impact of Indian tenders on global fertilizer prices

India, which is one of the world’s largest consumers of fertilizers, regularly holds large tenders for the purchase of these products. These tenders have a significant impact on the formation of fertilizer prices in the global market.

In 2025, Indian tenders contributed to an even greater increase in urea prices. Increased demand from India has put additional pressure on prices, further aggravating the market.

Logistics problems in Iran and their impact on the European market

Iran is one of the world’s major fertilizer producers. Logistical problems such as sanctions, transport restrictions or armed conflicts could significantly affect the country’s fertilizer exports.

In 2025, logistical problems in Iran have contributed to a reduction in the supply of fertilizer to the European market. The shortage of fertilizer from Iran has further increased the price of other fertilizers, including urea, as producers and importers have had to look for alternative sources of supply.

The impact of the geopolitical situation

War in Ukraine and its implications for fertilizer transport and imports
The war in Ukraine has significantly affected the fertilizer market in Europe. The conflict has led to the curtailment of key transportation routes across the Black Sea, which previously enabled cheap and fast transportation of fertilizer. In addition, transportation and insurance costs for deliveries have increased, affecting final product prices. Attacks on energy infrastructure and production facilities in the Middle East region, crucial to fertilizer exports, have further exacerbated the situation. Supply problems from Ukraine and surrounding countries have forced European importers to seek alternative sources of supply, generating higher costs.

Europe’s dependence on fertilizers from Russia and Belarus

Despite economic sanctions, Europe still relies heavily on fertilizers from Russia and Belarus. According to estimates, in 2024 about 36% of fertilizer imports to Poland came from these countries, an increase of 25% compared to the previous year. This is a result of lower prices for products from Russia and Belarus, which have become an alternative to expensive fertilizers produced in Europe. Such a situation raises concerns about the dependence of the EU market on supplies from these countries, undermining efforts to become independent from eastern markets.

EU sanctions and actions to restrict imports

The European Union has taken steps to restrict fertilizer imports from Russia and Belarus by introducing sanctions and planning new anti-dumping duties. Poland, Lithuania, Latvia and Estonia are actively lobbying for additional fees on Russian fertilizers, ranging from 30% to 40%. In addition, the National Tax Administration in Poland is conducting activities to monitor the market and eliminate illegal imports of Belarusian products, which has yielded the first results – 70% of the urea imports from Belarus to date have been blocked. However, the effectiveness of these measures requires more support from other EU member states, which are not always willing to introduce stricter regulations, especially in Southern Europe, where dependence on Russian imports is equally high.

The geopolitical situation remains a key factor affecting the fertilizer market, and its long-term consequences for European agriculture may be even more pronounced in the coming years.

Rising prices for other types of fertilizers

Domino effect on the fertilizer market

Although urea was one of the most affected by the rise in fertilizer prices, the problem was not limited to it. The domino effect of rising production costs and supply constraints caused the prices of other key fertilizers to rise significantly as well.

Price increases for calcium ammonium nitrate, phosphate and potash

  • Calcium ammonium nitrate: This popular fertilizer, which contains both nitrogen and calcium needed to improve soil structure, has also become more expensive. The increase in the price of gas, which is necessary for the production of ammonia, one of the components of calcium ammonium nitrate, has contributed to price increases for this fertilizer.
  • Phosphates: Phosphorus is one of the most important plant nutrients. Its deficiency can lead to stunted plant growth and development. Phosphate prices have risen mainly due to supply constraints from some regions of the world and increased demand.
  • Potassium: Potassium plays a key role in many plant physiological processes, such as water and nutrient transport. Potassium prices also rose, driven by both increased production costs and supply constraints.

No indication of falling prices in the spring season

The spring season is a period of intensive fertilization, when farmers prepare fields for cultivation. Usually during this period there is an increase in demand for fertilizers, which can further increase prices. However, in 2025, due to continued high production costs, supply constraints and increased demand, there was no indication that fertilizer prices would drop significantly.

Factors for keeping fertilizer prices high in the spring season:

  • Continued high production costs: Energy, transportation and raw material costs have remained high, preventing manufacturers from making significant price reductions.
  • Limited inventories: Low fertilizer stocks in storage due to previous production restrictions and increased demand have limited farmers’ bargaining power.
  • Uncertainty about the future: The war in Ukraine, logistical problems and the unstable global economic situation have created an atmosphere of uncertainty, which has discouraged producers from cutting prices.

Consequences for farmers

High fertilizer prices have had serious consequences for farmers. They were forced to reduce the use of fertilizers, which could negatively affect yields and production quality. In addition, the increase in production costs has caused farmers’ margins to be significantly reduced.

Fertilizer price increases were not limited to urea. Prices for other key fertilizers, such as calcium ammonium nitrate, phosphate and potash, have also risen significantly. This situation was caused by a combination of factors, such as rising production costs, supply constraints and increased demand. The lack of prospects for a rapid reduction in fertilizer prices posed a serious challenge for farmers and the entire agri-food industry.

Market reactions and regulatory actions

Interventions of the National Tax Administration in Poland

Poland is stepping up efforts to tighten the fertilizer market and limit imports of products from sanctioned Russia and Belarus. The National Tax Administration (KAS) is monitoring the market to counter attempts to circumvent sanctions and illegally introduce products into the EU market. In recent months, KAS has blocked more than 70% of urea imports from Belarus, with the aim of protecting domestic fertilizer producers and ensuring fair competition in the market. Several fertilizer trading companies that have violated sanction regulations have been placed on the sanction list of the Ministry of Internal Affairs and Administration (MIAA), and their assets have been frozen. These measures are an important step in the fight against unfair competition and support the domestic fertilizer industry.

Requests for anti-dumping duties on Russian fertilizers

In response to unfair pricing practices by Russia and Belarus, Poland, along with Lithuania, Latvia and Estonia, has submitted a request to the European Commission to impose anti-dumping duties on Russian fertilizers, particularly urea. The proposed tariffs would be between 30% and 40%, which could offset the price advantage of products from the East, which are often offered below the cost of European production. This action is key to stabilizing the market and protecting European producers such as Grupa Azoty from unfair competition. Although the proposal is facing resistance from some EU member states, Poland is actively working at the EU forum to gain support for the solution. The anti-dumping duties are also intended to support the long-term development of European fertilizer production.

Extension of reduced VAT rate on fertilizers in Poland

To mitigate the effects of rising fertilizer prices on Polish farmers, the government has extended the reduced VAT rate on fertilizers at 8% until the end of March 2025. The change, originally introduced as a temporary solution, is intended to support the agricultural sector in the face of rising production costs. Moreover, the Finance Ministry is considering introducing a reduced VAT rate on a permanent basis for selected fertilizer products, which could bring additional benefits to farmers and increase the competitiveness of the Polish agricultural sector. The lower VAT is also intended to partially offset higher costs resulting from global increases in raw material and transportation prices.

Forecasts for spring 2025

Demand expected to increase from farmers and traders

Spring is traditionally a period of intense preparation for new crops. Farmers, eager to ensure a good crop, are increasing their fertilizer purchases. In 2025, despite high prices, demand for fertilizer remained high. Several factors have contributed to this phenomenon:

  • Farmers’ awareness: Farmers have realized that fertilizers are essential for high yields, especially in the face of changing climatic conditions and increasing consumer demands for product quality.
  • Fear of future increases: Fearing further price increases, many farmers have decided to purchase larger quantities of fertilizer to protect themselves for the future.
  • Seeking to maximize profits: Despite the high cost of fertilizer, farmers were counting on the high prices of agricultural products to cover their additional fertilizer expenses.

In addition to farmers, fertilizer dealers also reported an increase in demand. Wanting to protect their margins, they increased their fertilizer purchases, which further fueled price increases.

Risk of further price increases due to low inventory and production costs

Despite the high prices, the risk of further fertilizer increases in the 2025 spring season was very high. Several factors have contributed to maintaining this trend:

  • Low inventories: Many warehouses were virtually empty due to limited production and increased demand in previous months. Low inventories meant that producers had less flexibility to negotiate prices.
  • Continued high production costs: Fertilizer production costs, especially those related to energy, remained high. Until production costs began to fall, manufacturers had no incentive to lower prices.
  • Geopolitical uncertainty: Armed conflicts and geopolitical tensions continued to pose a significant threat to fertilizer supply chains, increasing uncertainty about the future of prices.

The spring of 2025 was an extremely difficult time for farmers. High fertilizer prices, caused by a combination of factors including rising production costs, supply constraints and increased demand, have posed a serious challenge to the entire agricultural industry.

Summary: What’s next for the fertilizer market?

The fertilizer market in Europe is at a critical juncture, where dynamically changing commodity prices, geopolitical conflicts and economic instability are significantly affecting producers and consumers. Decisive action is needed at both the national and EU levels to prevent further escalation of problems.

Need for action at EU level to stabilize the market

The European Union faces a huge challenge in ensuring the stability of the fertilizer market. Implementing effective sanctions on fertilizers from Russia and Belarus, while minimizing dependence on these sources, should become a priority for politicians and regulators. Russia currently exports significant amounts of fertilizer to Europe as a de facto way of circumventing sanctions on natural gas, since nitrogen fertilizer is largely a derivative product of this resource. The EU needs to develop comprehensive strategies that not only reduce fertilizer imports from the East, but also support the development of alternative sources of supply, such as North Africa and the Middle East.

In addition, the introduction of anti-dumping duties and other regulations to protect EU producers from unfair competition is crucial for long-term stability. However, these measures must be supported by appropriate support mechanisms for farmers who are affected by rising costs. The European Union should also invest in innovation and technology that will allow fertilizer production to be more sustainable and less dependent on natural gas.

Importance of supporting domestic fertilizer producers

At the national level, support for domestic fertilizer producers such as the Azoty Group in Poland is equally important. These producers face high raw material costs, competitive pressure from cheaper imported products and market volatility. Therefore, EU member states should introduce financial support programs, such as preferential loans, tax breaks or subsidies for investment in innovative production technologies.

At the same time, the focus should be on protecting the domestic market from the flood of cheap fertilizers from Russia and Belarus. To this end, measures such as monitoring the market by fiscal institutions (such as the National Tax Administration in Poland), placing rogue companies on sanction lists and freezing their assets are necessary. Supporting domestic producers also means investing in research and development, which will allow us to become less dependent on imported raw materials and make European products more competitive in the global market.

Recovery from the crisis and future prospects

Despite the difficult situation in the fertilizer market, there are paths out of the crisis. It will be crucial to coordinate efforts at the international level to develop mechanisms to support the development of sustainable agriculture and fertilizer production. Increased investment in innovations, such as fertilizers produced using green energy, could significantly reduce Europe’s dependence on traditional raw materials.

At the same time, it is necessary to increase farmers’ awareness of the possibilities for efficient use of fertilizers, thus reducing demand while maintaining agricultural productivity. Appropriate information campaigns and technological support can help adapt new solutions.