The Ukrainian fertiliser market is trying to wean off supplies from russia. However, up to 20% of the product is still "rebranded". Who imports russian fertilisers into Ukraine

The Ukrainian fertiliser market is trying to wean off supplies from russia. However, up to 20% of the product is still "rebranded". Who imports russian fertilisers into Ukraine

And how are Dmytro Firtash's companies trying to squeeze out importers?

The Ukrainian fertiliser market is trying to wean off supplies from russia. However, up to 20% of the product is still "rebranded". Who imports russian fertilisers into Ukraine
Photo: depositphotos.com

Competition for nitrogen fertiliser consumers in Ukraine has reached its peak. Consumption is increasing, imports are growing. The main manufacturers – the chemical plants of Dmytro Firtash, who previously built his business thanks to special relations with the russian gazprom, are now unable to compete with the products from the CIS countries due to expensive natural gas. The businessman-controlled holding, Group DF, accuses traders of supplying cheaper fertilisers from the aggressor country and hopes that checks by the law enforcement will detain their products at the border.

How is the Ukrainian fertiliser market changing in the context of rejecting russian products, who is recarving it and in what way, was analysed by Mind.

What did Firtash's factories come out with this year? The season for applying nitrogen fertilisers (ammonium nitrate, UAN, AN) begins in February-March and lasts until June. To be in the market, Ostchem plants (the nitrogen division of Dmytro Firtash's Group DF) produced 515,500 tonnes of fertilisers in the Q1 of 2023 and even increased production compared to the Q2 of 2022 by 36.2%. In particular, Azot of Cherkasy produced 387,400 tonnes, and Rivneazot, 128,000 tonnes. The businessman’s other two manufacturers – Stirol in Gorlivka and Azot in Severodonetsk, are occupied by separatists and do not produce..

By the end of April, Group DF was ready to offer farmers about 700,000 tonnes of nitrogen fertilisers. "Importers also made their offer – 626,000 tonnes," says Dmytro Gordeychuk, head of Infoindustriya analytical company. However, the prices in Firtash's enterprises, especially for popular urea, were "significantly higher" than imported ones. This trend continues at present. For example, in June, traders offer farmers urea on FCI terms for 17,900 – 18,200 UAH per tonne. And Ostchem has set a price for this same fertiliser, made in Ukraine, from 21,000 UAH including VAT and higher.

"With the current cost of gas in the Ukrainian commercial segment at about 11,000 UAH for 1000 cbm, Ostchem fertilisers could match import prices, but this is not currently happening," notes Dmytro Gordeychuk.

How is the competitive field formed? To maintain high prices, Group DF decided to remove competitors-importers, accusing them of manipulations with russian fertilisers and their import into Ukraine under the "label" of third countries.

"Customs statistics show that in the first five months of 2023, five countries friendly to russia imported 267,400 tonnes of mineral fertilisers into Ukraine. These are Uzbekistan, Georgia, Turkmenistan, Azerbaijan and Kazakhstan," Oleg Arestarkhov, Director for Corporate Communications at Group DF, told Mind.

Dmytro Firtash's company calculated that in January–May, these countries imported 70.6% of all imported urea (247,000 tonnes), 21.3% of imported UAN (48,600 tonnes), and almost 10% of all imported nitrate (33,200 tonnes). A fifth of them are russian fertilisers, Group DF is confident.

And this is despite the fact that Ukraine introduced a complete embargo on imports of goods from russia in April of last year.

The Ukrainian fertiliser market is trying to wean off supplies from russia. However, up to 20% of the product is still "rebranded". Who imports russian fertilisers into Ukraine
"How much of these fertilisers are still russian? "According to our preliminary estimates, up to 20% of the fertilisers imported from the mentioned five countries are actually of russian origin. The russian chemical industry has been living for over a year in a paradigm of how to sell fertilisers under existing sanctions. russia even dares to sell to Ukraine, importing fertilisers using various schemes. The main ones are through the use of falsified certificates of origin or within the so-called trade swaps," Arestarkhov assures.
Dmytro Firtash's factory managers are also outraged by the practices of friendly countries. Vitaliy Skliarov, Chairman of the Board of Cherkasy Azot PJSC, told Mind that some traders and agricultural associations, which "present themselves to the public as big patriots", do not hesitate to import "repackaged russian fertilisers" during the war. "I understand that they are driven by business interest, but trading in the fertilisers of an occupier, who throws missiles here every day, is not only illegal but also, to put it mildly, immoral," he notes.

Is it possible to completely throw out russian fertilisers from the Ukrainian market? Mykhailo Zabluda, Chairman of the Board of Rivneazot PJSC, believes that it is the work of the Security Service and customs service to detect such schemes, and  the government’s task is to effectively protect its markets. "Frankly speaking, we expect from officials adequate quick and effective steps that will protect the Ukrainian market from the influx of russian and belarusian imports. When imports increase, it simply kills jobs. When russian urea comes here, under the guise of Azerbaijani, Kazakh, Georgian or Turkmen – it's just a common crime," he says.

How does the scheme work and what is Group DF's interest? In fact, customs officers have repeatedly caught russian fertilisers on the border with Ukraine, "wrapped" in Azerbaijani packaging. This was told to Mind by Danylo Hetmantsev, Chairman of the Verkhovna Rada’s Committee on Finance, Tax and Customs Policy. "Unfortunately, a large amount of goods from the aggressor country continues to be imported into Ukraine. For example, the State Customs Service recently exposed a scheme for the import of supposedly Azerbaijani mineral fertilisers. But when they contacted the foreigners directly, it turned out that they did not even issue such certificates. This means these fertilisers were russian," the MP assures.

However, if russian fertilisers are on the Ukrainian market, there are not many of them and they are actually very difficult to identify, Dmytro Gordeychuk believes. "Very little such import comes in. These can be russian fertilisers, but no more than 10-15%, otherwise it will be very noticeable. But it is also very difficult to check, because the factories provide quality certificates and certificates of origin: each of the countries – Uzbekistan, Georgia, Turkmenistan, Azerbaijan, Kazakhstan – has its own fertiliser production and exports their surplus. So, either we completely break off trade relations with them, or we accept the situation as it is. Because accusing foreign factories of falsification without clear evidence, we can't do it. It's a criminal offence," the expert believes.

The essence of the scheme is that, according to the documents, russian fertilisers originate from CIS countries with whom Ukraine has not restricted trade. Therefore, customs officers have no grounds for detaining them. However, officials can request information on supplies from the manufacturer. And while they wait for a response, the fertilisers will remain uncustomed in warehouses.

"This can block import for a certain time," believes Gordeychuk. In the season when the demand for fertilisers increases and they are essentially "grabbed just-in-time”, checks can become a serious problem for domestic farmers. They will find themselves in a situation where they will be forced to buy more expensive Ukrainian fertilisers.

Who could have imported fertilisers from russia? This spring season of nitrogen fertiliser application turned out to be quite successful: analysts recorded a demand increase of 25–33% compared to last year, because certain territories of Ukraine were freed from occupiers. If in 2022 farmers purchased 1.3 million tonnes of fertilisers, this season the figure could increase to 1.45 million, predicts Dmytro Gordeychuk. The import of all fertilisers in January – April 2023 exceeded the similar indicator of 2022: 907,000 tonnes of products were brought in against 748,000 tonnes.

Another feature of this season was the appearance of new players among traders, who had not previously been noticed in this business. This includes, in particular, Bakhtiar Gharachorloo’s company Ferrotec. The company, according to the Derzhzovnishinform National Centre for Monitoring International Commodity Markets, imported almost 20,000 tonnes of urea from Turkmenistan in January – May of this year. Another newcomer among the players is Caspit Trade LLC, which positions itself as an electricity seller. The company brought in 1,600 tonne of urea from Turkmenistan and 22 tonnes from Azerbaijan.

And the leader in the import of nitrogen fertilisers from this country was Ukraine Petrochemical Company LLC: the company imported 12,200 tonnes of urea. This little-known trader appeared in the Ukrainian registers less than a year ago. Market participants assume that the company will specialise specifically in the supply of fertilisers from Azerbaijan.

Fertiliser importers to Ukraine and their supply volumes, tonnes

Exporting country Legal entity importing to Ukraine Quantity, tonnes Total, tonnes
Imports of ammonium nitrate from CIS countries (1.01.2023 – 9.05.2023)
Kazakhstan 2 112
37040866 LLC UTK KHIMALYANS 2 112
Uzbekistan 966
36584168 LLC INFO KAR/NIKAS-UKRAINE 900
40136385 LLC TRADING HOUSE AGROKHIM 66
Georgia 131
38530114 LLC UKRTRANSLIT 131
Total 3 208 3 208
Urea imports from CIS countries (1.01.2023 – 9.05.2023) strong>
Turkmenistan 176 823
43462455 POLYGRAN TRADE LTD 32 803
40899186 FINANCIAL TECHNOLOGY COMPANY LTD 3 985
35508479 SANAGRO UKRAINE LTD 11 700
44906013 LLC Ukraine Petrochemical Company 5 000
41896055 Agrokhimtechnology LLC 4 000
38129871 FERROTEC LLC 19 802
41824279 BELOR UKRAINE LTD 18 109
32333300 PE ZAHID 11 885
30967207 PE ZAHID 5 125
41656155 CASPIT TRADE LTD 4 180
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD 2 722
3766062 Raylianka LLC 1 303
37770322 LLC Balance Agro Centre 1 288
39712220 LLC AP IMPORT 1 052
37040866 LLC UTK KHIMALYANS 887
40337026 MIRKO TRADE LTD 844
36933791 LLC Agro-Soyuz Projects 179
43016946 PANASAMI TRADING UKRAINE LTD 133
44907855 LLC Dobryva Volyni 22
43462455 POLYGRAN TRADE LTD 6 620
32227053 LTD UKRAGRORESURS 5 787
42888946 LTD OSCAR OPTIMA 5 435
43462455 POLYGRAN TRADE LTD 5 047
40899186 FINANCIAL TECHNOLOGY COMPANY LTD 2 200
43462455 POLYGRAN TRADE LTD 2 189
40282983 LLC Agrocultivation Ukraine 1 261
44309260 HARVEST 2021 LTD 1 201
34469015 LTD TRIGON PHARMING KHARKIV 629
41006056 AROUS TRADE LTD 503
30463397 LTD TRIGON FARMING MOLNIYA 270
40851370 ELEMENT-HOLDING LTD 228
38269366 LTD DISTRIBUTION COMPANY DZHERELO 96
31755204 LTD TRADING COMPANY UKRAINIAN FLOUR MILL 74
44738429 AGRI TRADE LTD 48
36023530 -- 2 622
35623200 Zlata-Trade LLC 2 361
38739959 SAVANDI LTD 1 077
42286157 LLC AgroNova Company 248
39492777 TISA BIO LTD 219
44667620 LLC ECLIES TRADE 122
24627287 SKIFIYA LTD 109
44985729 LLC Kaskad Agro Trade 25
41747399 FREE SYSTEM LTD 1 771
41656155 CASPIT TRADE LTD 1 600
32227053 LTD UKRAGRORESURS 1 282
31755204 LTD TRADING COMPANY UKRAINIAN FLOUR MILL 1 204
37261790 273
31261129 Farming Corporation Agrofirma Krasne 212
41670358 GALAGRO-DOBA LTD 183
33322755 FARMING ENTERPRISE AGRO-TROYA 138
34135609 FARMING ENTERPRISE CONDOR S. 119
34591420 LAN-INVEST LTD 68
36619546 FARMING ENTERPRISE ZakhidAgroTrans 47
33124596 FARMING ENTERPRISE LEVADA PLUS M 21
44907855 LLC Dobryva Volyni 1 001
41556736 LTD CAPITAL TRADING COMPANY 497
42067900 AGROS+ LTD 143
37693620 OKKO BUSINESS PARTNER LTD 139
45088499 SPARROW MINERALS LTD 92
40719123 FARMING ENTERPRISE BLAGOYE 22
40723796 ALPHATRADE LTD 22
LTD AGROLEON WEST 868
42652235 LTD VASYLKIVKHLIBPRODUKT 682
20348703 LLC TAN TRADING HOUSE 525
43106699 LLC Firm Eridon 506
25556075 Barkom ltd 279
44701598 PE VINKS GROUP 220
43016946 PANASAMI TRADING UKRAINE LTD 220
39483940 PANASAMI TRADING UKRAINE LTD 198
44738429 AGRI TRADE LTD 194
44734529 SALOKHA-P LTD 182
40851370 ELEMENT-HOLDING LTD 121
41006056 AROUS TRADE LTD 47
41824279 BELOR UKRAINE LTD 135
44774081 LTD INVEST PROECT BUD 88
30828056 FARMING ENTERPRISE SLAVUTYCH 66
37412312 LTD AGROCHEMICAL COMPANY GROSSDORF 66
43663494 LTD PRIVATE ENTERPRISE KHIMAGROTORG 47
38269366 LTD DISTRIBUTION COMPANY DZHERELO 24
44742435 LTD FOODAGRO TRADE 23
20090790 FARMING ENTERPRISE Vlad 23
38946320 Alion Trade LLC 22
44742435 LTD FOODAGRO TRADE 22
38432570 LTD INTERBUD-ECO TRADING 22
30211565 PRIVATE ENTERPRISE PROSIKA 22
Azerbaijan 43 376
44906013 LLC Ukraine Petrochemical Company 12 152
41824279 BELOR UKRAINE LTD 2 955
31982734 LLC Autobahnservice 2 899
40256576 REZON TRADE LTD 2 355
35866777 RANGOLI LTD 1 778
40233208 LTD TRADING HOUSE ZENITH PLUS 500
44907855 LLC Dobryva Volyni 6 459
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD 1 811
37770322 LLC Balance Agro Centre 1 682
42286157 LLC AgroNova Company 1 025
38739959 SAVANDI LTD 460
39492777 TISA BIO LTD 377
43700402 DOREN COMPANY/FARMING COMPANY PEREMOGA 100
43700402 DOREN COMPANY/FARMING COMPANY STEPANKA 50
43700402 DOREN COMPANY/PE KRUPSKE 50
41747399 FREE SYSTEM LTD 2 000
43462455 POLYGRAN TRADE LTD 1 955
35623200 Zlata-Trade LLC 1 800
41656155 CASPIT TRADE LTD 1 020
43462455 POLYGRAN TRADE LTD 683
40851370 ELEMENT-HOLDING LTD 524
39548714 LTD PISHCHANKA-AGROKHIMPOSTACH 501
34161089 PRIVATE FARM HELIOS 88
41824279 BELOR UKRAINE LTD 25
20090790 FARMING ENTERPRISE Vlad 23
Uzbekistan 27 020
39741445 SATELLIT TRADE LTD/CHEMICAL TRADING COMPANY LTD 1 990
44015435 BINFIELD LOGISTICS LTD/CHEMICAL TRADING COMPANY LTD 1 653
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 1 505
44130324 CHEMICAL TRADING COMPANY LTD 155
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 4 781
2920503938 Sole Proprietor Andriy Volodymyrovych Bilenko/CHEMICAL TRADING COMPANY LTD 183
44015435 BINFIELD LOGISTICS LTD/CHEMICAL TRADING COMPANY LTD 59
39741445 SATELLIT TRADE LTD/CHEMICAL TRADING COMPANY LTD 22
41824279 BELOR UKRAINE LTD 5 008
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 2 611
43462455 POLYGRAN TRADE LTD 2 500
33189983 /CHEMICAL TRADING COMPANY LTD 1 396
36550783 VVM Trading LLC 1 176
37593110 LTD AGRO-INDUSTRIAL COMPANY BESTA 1 128
20348703 LLC TAN TRADING HOUSE 573
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 221
44130324 CHEMICAL TRADING COMPANY LTD 155
39741445 SATELLIT TRADE LTD/CHEMICAL TRADING COMPANY LTD 66
44015435 BINFIELD LOGISTICS LTD/CHEMICAL TRADING COMPANY LTD 66
31496816 LLC Volyn-Zerno-Product/CHEMICAL TRADING COMPANY LTD 22
42881830 AGROCHAMPION LTD 306
44015435 BINFIELD LOGISTICS LTD/CHEMICAL TRADING COMPANY LTD 265
41215153 LTD BUKPAP 250
44015435 BINFIELD LOGISTICS LTD/CHEMICAL TRADING COMPANY LTD 213
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 22
43283487 LTD THEA AGRO 88
21374294 AgroRos LLC 44
42363498 AGROPOINT SOLUTIONS LTD 44
39741445 SATELLIT TRADE LTD/CHEMICAL TRADING COMPANY LTD 88
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 22
43700402 DOREN COMPANY/FARMING COMPANY STEPANKA 95
30211565 PRIVATE ENTERPRISE PROSIKA 46
39741445 SATELLIT TRADE LTD/CHEMICAL TRADING COMPANY LTD 22
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD/CHEMICAL TRADING COMPANY LTD 22
40723796 ALPHATRADE LTD 44
20090790 FARMING ENTERPRISE Vlad 44
42881830 AGROCHAMPION LTD 44
32349875 AGRI FARM ZORIA 24
44052976 KHIMTRADING UA 22
38432570 LTD INTERBUD-ECO TRADING 22
41656155 CASPIT TRADE LTD 22
Total 247 220 247 220
Imports of UAN + K2O from CIS countries (1.01.2023 – 9.05.2023)
Turkmenistan 9 074
35429229 UKRAINIAN AGRO-INDUSTRIAL GROUP LTD 5 077
32333300 PE ZAHID 2 184
32333300 PE ZAHID 1 813
Uzbekistan 1 323
42637594 DUNGER LTD 1 323
Total 10 397 10 397
Imports of NP, superphosphate from CIS countries (1.01.2023 – 9.05.2023)
Kazakhstan 6 744
14013532 LTD TRADING HOUSE UKRROSKHIM 3 236
40728265 PRIBIS LTD 67
20348703 LLC TAN TRADING HOUSE 1 898
40728265 PRIBIS LTD 1 040
40136385 LLC TRADING HOUSE AGROKHIM 330
36348755 LTD AGRO-TEMP COMPANY 43
36348755 LTD AGRO-TEMP COMPANY 108
36348755 LTD AGRO-TEMP COMPANY 22
Total 6 744 6 744

Source: Infoindustriya Company

Mind tried to find out directly from the traders whether they imported russian fertilisers under the guise of products from the CIS. The phone number listed in the register for Ferrotec LLC is not in service. Ukraine Petrochemical Company LLC did not respond to calls. Only the head of Caspit Trade LLC, Anton Serpinsky, denied that the company imports fertilisers from russia. "We do not engage in the import of russian fertilisers," he affirms. The company also clarified that they import fertilisers produced in Switzerland, specifically by Ameropa, as well as fertilisers from the USA.. 

Top 10 importers of nitrogen fertilisers to Ukraine

Legal entity  Share, %
UAPG LLC 9.1
Polygran-Trade LLC 8.9
Private enterprise Zakhid 7.3
Belor Ukraine LLC 4.1
Binfield LLC 3.9
Makosh Mineral LLC 3.7
Ferrotec LLC  3.1
Caspid Trade LLC 2.8
Ukraine Petrochemical Company LLC 2.7

Trading House – Svit Agro LLC 

0.8

Source: Infoindustriya Company

Top 10 importers of complex fertilisers to Ukraine

Legal entity  Share, %
Agrosem LLC  16.71
Bnfield LLC  13.23
Private Enterprise Eridon  10.97
Arta-Khimgroup LLC  6.89
UAPG LTD 4.84
CJSC Galnaftokhim 4.1
Makosh Mineral LLC  3.21
VVM Trading LLC  2.93
Organic Grain LLC  2.71
Agropartner LLC 2.66

Source: Infoindustriya Company

How does the situation in the gas market affect the fertiliser market? The vulnerability of Ukrainian nitrogen fertiliser manufacturers lies in natural gas, which serves as their raw material. Competitors from russia, Belarus, Turkmenistan, Kazakhstan, and other CIS countries either purchase relatively cheap russian gas or have access to locally extracted resources, which also guarantees a low cost of procurement. For chemical plants of Group DF, such opportunities are closed. Therefore, it is difficult for them to compete with importers who have a large margin of strength in the cost of fertilisers due to cheap gas.

This is an uneven competition. For example, the retail cost of natural gas for industrial consumers in russia in May of this year was 7 rubles per 1 cbm. That's 3.11 UAH per 1 cbm Ukrainian extraction companies sold natural gas on the Ukrainian Energy Exchange in May at a weighted average price of 10.8 UAH per cbm (excluding VAT) – almost five times more expensive.

The cost of natural gas in nitrogen fertilisers varies from 50% to 90%. Simple arithmetic suggests: to engage in this business, you need to find gas-raw materials at the lowest prices. This is what Dmytro Firtash's company is trying to do. In particular, to purchase natural gas of Ukrainian production from the state-owned Ukrnafta. This has caused scandals and accusations against its head, Sergiy Koretsky, that he allegedly cooperates with a sanctioned oligarch, offering him prices below market ones.

Ukrnafta denies such cooperation. A source within the company told Mind that Ukrnafta sells its gas under direct contracts to domestic agricultural holdings. They can then supply it to chemical plants and receive finished fertilisers in return.

However, considering that imports from the CIS to Ukraine are not banned, Dmytro Firtash's enterprises are doomed to compete with cheaper imported fertilisers from these countries at home. The government can strengthen the businessman's position by checking traders and banning such imports. This is a subject of constant political bargaining. It might only cease with the appearance in Group DF of its own gas well, or some other supplier will provide the holding with access to the cheapest raw materials.

To compete in the market with russia, belarus, Turkmenistan, Kazakhstan, and other CIS countries, which buy relatively cheap russian gas or have their own, Dmytro Firtash's enterprises need to have access to natural gas of Ukrainian production at the minimum cost. Otherwise, as soon as Group DF reduces its own fertiliser prices – importers will also lower them even more, since they have a large margin of strength in the cost of fertilisers due to cheap gas.

This project uses cookies from Mind to deliver its services and to analyze traffic.Learn moreOK, Got it