Global Supply Chain Under Pressure
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The ongoing Russia–Ukraine conflict is having a profound impact on the global fertilizer market, with fertilizer prices in Vietnam expected to rise sharply in the coming months.
Export and import operations across the Baltic and Black Sea regions have been severely disrupted. Yuzhny Port, Russia’s main fertilizer export hub, has been closed, while several cargo ships have been detained or damaged, making insurance and freight contracts increasingly risky and expensive.
Russia is Europe’s largest natural gas supplier, and the conflict has driven up oil and gas prices, further increasing shipping costs—expected to climb another 30% in Q2.
Russia accounts for roughly 30% of global fertilizer demand and provides up to 70% of raw materials for Europe’s fertilizer production. Combined with ongoing export restrictions from Russia and China, the world now faces a serious supply crunch, particularly for potash (KCl) and diammonium phosphate (DAP).
As major agricultural seasons begin in Southeast Asia, India, and China, the supply shortage is expected to worsen.
Urea, DAP, and Potash Prices Soar
In the Urea market, price offers of USD 540–560/ton (FOB) have already been canceled, and Southeast Asian suppliersare sold out until mid-April. On March 3, Brunei’s granular Urea plant declared force majeure, suspending shipments priced earlier at lower February rates.
Producers in the Middle East have paused new offers to observe market volatility, while Chinese suppliers are expected to stay out until at least June. Meanwhile, shipments from Russia and Ukraine remain blocked due to sanctions and ongoing hostilities.
Experts predict Urea prices could quickly rebound to USD 800/ton in April — or even USD 1,000/ton if oil prices reach USD 150/barrel.
Under the same pressure, DAP prices are also expected to surge, as key supply sources from Russia are disrupted. OCP Morocco, the world’s largest DAP producer, has lost access to Russian ammonia, potentially cutting global DAP output by 1 million tons per month starting March 2022.
As a result, DAP prices may reach USD 950/ton (FOB) in April and could rise further to USD 1,200–1,500/ton, especially as Brazil’s demand rebounds.
For potash (KCl), Belarus and Russia—together controlling 40% of the world’s supply—are both under heavy sanctions. Suppliers from Israel and Canada have already indicated new pricing levels of USD 800–850/ton for powder and USD 1,000/ton for granular forms by mid-2022, potentially escalating to USD 1,200–1,300/ton by late 2022 or early 2023.
Fertilizer Prices in Vietnam Set to Climb
In southern Vietnam, farmers are completing harvest and preparing for the new season starting mid-April, while northern provinces are in the fertilization phase of the winter-spring rice crop. With global food demand high and commodity prices rising, fertilizer demand in Vietnam will grow.
Domestic Urea production currently exceeds demand, but since manufacturers have been exporting aggressively, inventory pressure is low, making a price rebound likely.
The DAP supply remains constrained due to raw material disputes and import bottlenecks. A shortage of imported DAP 64% is expected in Q2, with prices potentially climbing to VND 25 million/ton.
Vietnam relies 100% on imported potash, and disruptions from Russia and Belarus have already driven prices upward. Current domestic prices may soon reach VND 15–16 million/ton for powder and VND 18–20 million/ton for granular potash — and if international prices hit USD 1,000–1,200/ton, domestic prices could surge to VND 24–25 million/ton.
In turn, rising prices of KCl, DAP, and Urea will push NPK fertilizer costs even higher.
Expert Forecasts: Continued Volatility Ahead
According to Rabobank, one of the world’s leading agricultural finance institutions, fertilizer prices will remain extremely high, with potential increases of 20–40% depending on the severity of the conflict and Western sanctions against Russia and Belarus.
As natural gas remains the primary input for fertilizer production, rising energy costs will also drive higher production expenses worldwide.
In Vietnam, data from Agromonitor show potash prices rising sharply due to supply fears and logistics constraints. Russia and Belarus normally supply over 40% of Vietnam’s potash imports. Prices for Israeli potash in Ho Chi Minh City and Can Tho have already exceeded late-2021 peaks.
Domestic Urea prices are also increasing, while Chinese DAP imports continue to surge.
Additionally, the exclusion of Russian banks from the SWIFT system has created severe payment barriers — preventing letters of credit (LCs) and USD, EUR, GBP, or JPY transactions for Russian fertilizer suppliers. Vietnamese importers report that no effective payment solutions have yet been found, despite ongoing discussions with banks and suppliers in Russia and Belarus.