The United States has removed Russian fertilizers from sanctions

The US Treasury Department’s Office of Foreign Assets Control (OFAC) has issued a new general license that has removed Russian mineral fertilizers from possible sanctions. These chemical products necessary for agriculture have been included in the list of vital goods along with medicines, agricultural products and medical devices, Kommersant reports.

Interlocutors in the industry explained that the issued license allows any trade operations with listed goods. According to the newspaper’s sources among Russian fertilizer producers, the US decision can be considered an important signal. According to them, it is “extraterritorial in nature, that is, it is likely to be followed by all American allies.” According to the interlocutors, the United States is trying to avoid a shortage of fertilizers, which begins in the world market due to disruptions in supplies from Russia.

As of March 1, the three largest maritime container carriers – the Swiss Mediterranean Shipping Company (MSC), the Danish Maersk and the French CMA CGM – have stopped shipping from Russia. Interlocutors among chemical traders noted that supplies have generally improved – with the help of smaller ships from countries that have not imposed sanctions on Russia. However, exporters, they said, faced the fact that consumers in Europe fear the risks associated with the purchase of fertilizers. After the publication of Washington’s new license, “sales went easier,” traders said.

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The chemical market hopes that the document will help restore the usual logistics – MSC and Maersk said that the ban on transportation from Russia will not apply to basic necessities, and they now include fertilizers. Some of the newspaper’s interlocutors hope that in the future the United States and the European Union may abolish even the current duties on Russian fertilizers.

The United States imposed anti-dumping duties on urea-ammonia mixtures from Russia in January 2022: for Acron – 9.66%, for EuroChem – 9.84%, in Europe – from autumn 2019. In April 2021, Washington imposed tariffs on imports of phosphorus-containing fertilizers from Russia: for Phosagro they are set at 9.19%, for EuroChem – 47.05%, for other producers – 17.2%. Europe receives 25% of urea, 15% of ammonium nitrate, a third of phosphorus fertilizers and 35% of potassium from Russia. In the United States, the share of Russian imports is 6% for potassium, 20% for diammonium phosphate and 13% for urea.

One of the interlocutors noted that Russia itself, if supplies to the West do not improve, may redirect its volumes to Asian markets. According to him, in this case, trade flows will change – producers who have traditionally supplied to Asian markets will replace Russia in Europe and the United States. According to the interlocutor, this process could take six to nine months and be accompanied by deficits in Europe and the United States. There will be no special surplus in Asia, there are always stocks of fertilizers.

Maria Lyubimova, head of the International Arbitration and Cross-Border Disputes practice at the Regionservice Bar Association, noted that the US license showed that measures to block economic between Russia and the US could be relaxed, especially in the most sensitive areas. Any decision can be changed as easily as it is made, she added.

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