Fertilizers are one of the most important cargo groups for Baltic Sea ports. Their share in the total cargo handled in Eastern Baltic ports is close to 7%, with Port of Klaipėda leading this market. Its three major terminals, serving the Lithuanian chemical industry’s export, attract Belarusian and Russian transit as well.

1. Maritime
Tendencies on the fertilizer transshipment
market in Eastern Baltic ports in 2013
A closer look
Fertilizers are one of the most important cargo groups
for Baltic Sea ports. Their share in the total cargo han-dled
in Eastern Baltic ports is close to 7%, with Port of
Klaipėda leading this market. Its three major terminals,
serving the Lithuanian chemical industry’s export, at-tract
IBelarusian and Russian transit as well. n 2013, 8.52 mln tn of fertilizers was transloaded in Klaipėda.
The sales market redistribution between Belaruskali and Ural-kali
resulted in a drop in the transshipment of Belarusian ferti-lizers
by 12.4% this year, i.e. 1.21 mln tn. Although less in vol-ume,
this cargo group still remains the most popular one in the Port
of Klaipėda, accounting for 25.6% of the port’s total throughput.
The Big Port of St. Petersburg took second place in terms of
turnover in this category of cargo. In 2013, 6.02 mln tn of fertilizers
was exported this way, a major part of these were handled by the
Baltic Bulk Terminal owned by Uralkali. Fertilizers were also trans-loaded
by the Sea Port of Saint-Petersburg.
Ventspils and Tallinn share the next two positions, although
proportions between them keep changing year by year. In 2013 Tal-linn
moved up, but both ports suffered a serious drop in the volume
of fertilizer transshipment (see Table 1).
Tab. 1. Transshipment of mineral fertilizers in Eastern Baltic ports [mln tn]
Port 2008 2009 2010 2011 2012 2013 2013/2012
Ventspils 2.67 1.10 2.38 3.30 2.36 1.57 -33.8%
Riga 1.94 1.93 1.37 1.70 1.42 1.41 -0.3%
Liepāja 0.00 0.00 0.00 0.00 0.01 0.01 -44.5%
Latvia total 4.62 3.04 3.75 5.01 3.79 2.98 -21.3%
Klaipėda,
7.22 7.05 8.66 11.61 9.73 8.57 -11.9%
including:
bulk 5.56 5.70 7.48 9.56 7.68 6.90 -10.3%
liquid 1.30 0.97 0.79 1.59 1.53 1.27 -16.9%
packed 0.36 0.37 0.39 0.46 0.52 0.41 -21.5%
Lithuania total 7.22 7.05 8.66 11.61 9.73 8.57 -11.9%
Big Port of
6.20 4.46 6.07 6.04 4.75 6.02 26.7%
Saint-Petersburg
Vyborg 0.53 0.38 0.55 0.53 0.56 0.49 -12.5%
Ust-Luga 0.00 0.00 0.00 0.00 0.10 0.58 499.3%
Kaliningrad 0.49 0.29 0.38 0.37 0.28 0.21 -27.3%
Russia total 7.22 5.14 7.00 6.94 5.70 7.30 28.2%
HaminaKotka 0.00 0.00 0.00 0.13 1.10 1.10 -0.3%
Finland total 0.00 0.00 0.00 0.13 1.10 1.10 -0.3%
Tallinn 0.62 1.10 1.63 1.82 2.39 1.73 -27.4%
Sillamäe* 0.26 0.31 0.51 0.55 0.70 1.18 68.7%
Estonia total 0.62 1.10 1.63 1.82 2.39 1.73 -27.4%
Eastern Baltic
19.68 16.32 21.04 25.51 22.70 21.69 -4.5%
total
* As no statistics on fertilizer transshipments are available for the Port of Sillamäe, the
cargo turnover has been estimated based on port-bound railway shipments
24 | Baltic Transport Journal | 1/2014
In total, a distinct tendency could be noted in 2013: a drop in this
cargo category was recorded by all ports, except the most attractive Rus-sian
Baltic ports: Ust-Luga and Saint Petersburg and the Estonian Port
of Sillamäe, situated approximately 30 km from the Russian-Estonian
border. In terms of growth rate, this port is a leader. Two liquid cargo
terminals: AS BCT and TankChem are owned by the Russian holding
company Acron and by EuroChem, respectively. Acron is increasing its
deliveries to the Port of Sillamäe. However, the increase is not only due to
liquid fertilizers, it is also owing to dry products of Phosphorit Industrial
Group (part of EuroChem Group SE) handled here since 2013.
Who is the main player here?
Estonia, Latvia and Finland are exporting insignificant volumes
of fertilizers, Russia and Belarus remain the main driving forces of
this market in the Baltic Sea region (certainly, some part of the ex-port
volumes shown in Table 2 are shipped to ports in the south).
Fertilizers are also exported by Lithuania, but this country’s exports
are “bound” to its own ports and terminals (Klaipėda).
Tab. 2. Exports of mineral fertilizers in Baltic Sea region [mln tn]
Exporter countries 2008 2009 2010 2011 2012
Russia 25.24 21.34 27.63 26.75 28.92
Lithuania 2.92 2.84 2.58 3.35 3.36
Estonia 0.31 0.08 0.05 0.06 0.09
Latvia 0.06 0.03 0.04 0.06 0.06
Finland 0.13 0.32 0.49 0.67 0.16
Belarus 6.85 3.98 7.85 9.04 7.14
Source: UN Comtrade
Russia is the key client on the Baltic fertilizer stevedoring market. Ac-cording
to official statistics of the Russian Federation’s Ministry of Trans-port,
the transit of Russian fertilizers to ports in the Baltic States (Latvia,
Lithuania, Estonia) has recently been showing a growing tendency, with
a downturn reflecting the general decrease in exports in the crisis year
2008. The maximum level 8.1 mln tn (~44% of the fertilizers volume
transloaded in the ports of the Baltic States) was achieved in 2011.
“The Potash Bubble”
To gain a better understanding of the situation, it is necessary to an-alyse
the market by fertilizer types (nitrogen-based phosphorus-based,
mixed, potassium-based). Russia and Belarus are among the world’s

2. Maritime
1/2014 | Baltic Transport Journal | 25
biggest suppliers of potassium fertilizers. These two countries’ exports
hit the historical maximum level of 16.9 mln tn in 2007, with the global
market reaching 44 mln tn (the combined share of Russia and Belarus
was close to 38% of the global market).
In the same 2007 pre-recession boom, the total exports of min-eral
fertilizers from the Eastern Baltic region (Latvia, Lithuania, Es-tonia,
and Finland), Russia and Belarus added up to 39.2 mln tn,
the potash segment accounting for 43% of the exports. Yet, namely
this part, while most substantial, is the most volatile one at the same
time. This is due to the potash market’s nature: its high concentra-tion
(six major companies control 85% of the global market), as well
as the fact that the application of potassium-based fertilizers does
not have a similar, immediate effect on crops as is the case with
nitrogen-based substances. This is the main reason why demand in
the nitrogen segment is much more stable, while the potash market
is subject to significant ups and downs.
There are two key suppliers of potash on the post-Soviet territory:
Russian Uralkali and Belarusian Belaruskali. Until 2013, the companies
used to follow an agreed sales policy, with a majority of their deliveries
going to their export markets, traded by their joint venture – Belarusian
Potash Company. However, after an international scandal, when Vladis-lav
Baumgertner, the Uralkali General Director was arrested in Minsk,
the hitherto business partners stopped their collaboration, went straight
into open competition and began remodelling their export logistics. For
the time being, it is hard to anticipate how this situation will affect the
stevedoring market, but some tendencies are already perceptible. The
break between the two leading producers was a shock to the already fall-ing
market. Since July 2013, Uralkali has been selling to the international
market solely via its own trader – Uralkali-Trading. Furthermore, the
company has revised its trading strategy and announced its transition
to a “volume over price” policy. The plans provide for an annual output
of up to 19 mln tn in 2022 (the capacity to be achieved through expand-ing
its Solikamsk-3 and Berezniki-4 plants, as well as launching the Ust-
Yayva and Polovodovo projects). According to Expert Rating Agency1,
Uralkali’s profitability is one of the highest in the fertilizer industry: 71%
in 2012, despite an average annual export price of USD 370/tn. To illus-trate
the price dynamics: according to data published by Uralkali, with
a reference made to Fertecon, Baltic FOB potassium chloride spot price
levels were: USD 990/tn in 2008, USD 515/tn in mid-2012, USD 430/tn
in mid-2013 and USD 288/tn at the beginning of 2014 (spot prices differ
from long-term contract prices, but they reflect the market dynamics).
In 2013 there was still some space for increased volumes, even if at the
cost of prices, but with the level of prices recorded early in 2014 they
clearly went down. According to preliminary estimates, Uralkali’s ex-ports
grew by 20% in 2013, year over year.
In the meantime, Belaruskali reduced both the output and the
exports as well. According to Belstat statistics, in the period Janu-ary-
November 2013, Belaruskali’s production of potassium-based
fertilizers dropped by 14.1%, year-on-year. The company produced
3.9 mln tn of fertilizers over 11 months in 2013. The export vol-ume
declined by 9.3% from January to October, falling to a level
of 2.9 mln tn. Belaruskali’s trader, Belarusian Potash Company an-nounced
exports achieving 5.7 mln tn in 2013.
Notwithstanding the situation, Belaruskali is expecting to re-cover
in 2014 and keeps expanding its capacity. In January 2014, the
second block of the Berezovsky mine was commissioned (2 mln tn
of potassium chloride). The 3rd block is expected to start operation
in 2015, adding another 2 mln tn to the company’s total capacity.
One should not forget that a third major player – EuroChem – may
appear on the market soon. Gremyachinskoe potassium salts deposit
(Volgograd Oblast) is a priority project for the company, which plans to
start production of potassium chloride in 2014 and reaching an annual
capacity of 2.3 mln tn in 2015. The second stage of completion, scheduled
for 2018, is expected to result in a total annual capacity of 4.6 mln tn.
EuroChem is planning to explore a potash deposit in Usolye
(EuroChem-Usolskiy Potash). The commissioning is expected in
2017, the first stage of capacity development – 2.0 mln tn – is sched-uled
for 2018-2019, the second stage – 1.4 mln tn – for 2021, the
total annual target capacity is to reach a level of 3.4 mln tn.
Although shifts in the project completion dates are very likely,
the potential effect on the market should not be underestimated.
While Gremyachinskoe’s output is gravitating towards the southern
basin, export from the Perm region can be well expected to follow
the Baltic direction. Hence, the potash segment appears to be the
most capacious, while being the most risky segment of the market at
the same time, both today and in the nearest decade as well.
The underwater part of the iceberg
Around 80% of the mineral fertilizer exports volume is shipped
via sea ports in Russia, with the Baltic Sea being the largest logistic
channel for Russian fertilizers. However, an analysis reveals a gap
between the volume of railway deliveries from production plants to
1 Source: Expert-Ural No. 43 (576) October 28, 2013, Potash Kaliynyi Gambit.
Voronina Ekaterina
Photos: JSC Belarusian Potash Company

3. Maritime
sea ports and the volume of bulk cargo transshipment in the Rus-sian
ports, as well as the transit volume in the Baltic States.
Despite purely methodological complexities of the statistical ac-count,
the situation can be explained with one distinct tendency in re-cent
years – growing volumes of packaged cargo – containerized and
big-bagged. This category is classified as containerized or general cargo
and is not covered by bulk statistics. Nevertheless, the volumes are sig-nificant:
up to 2.8 mln tn in the Port of Saint Petersburg alone in 2012.
What can be expected in 2014
Russian fertilizers are streaming to Russian ports: in 2013 the turno-ver
in Russian Baltic ports (mainly the Big Port of Saint Petersburg and
Ust-Luga) increased by 1.6 mln tn, i.e. 28.2%, while the volume of deliv-eries
to the ports of Baltic States dropped by 0.35 mln tn, i.e. 5.15%. The
growth in cargo volumes handled by the Big Port of Saint Petersburg can
be explained by the fact that Uralkali reduced its shipments to Ventspils
and Nikolaev, while increasing the volume of freight dispatched via its
own terminal at the Big Port of Saint Petersburg, the Baltic Bulk Termi-nal
by one time and a half, i.e. by 1.2 mln tn. Furthermore, more ship-ments
are received from another key customer of the port – PhosAgro. A
part of the freight flow was re-oriented from the Port of Tallinn.
Nevertheless, there has not been any boom on the Russian market
so far. Cargo owners are bound by long-term contracts with stevedoring
companies and many producers have invested in the construction of their
own terminals. As a result, freight flows aren’t transferred between ter-minals
as actively as they could be. For example, the European Sulphur
Terminal, currently handling fertilizers at the Port of Ust-Luga, is work-ing
below its throughput capacity, despite the significant rise in transship-ment
volumes noted in 2013 (nearly five times, up to 580 thou. tn).
Tab. 3. Transshipment of Russian fertilizer exports in Eastern Baltic ports [mln tn]
Port 2008 2009 2010 2011 2012 2013
Baltic Sea basin,
11.66 10.69 13.57 15.03 12.52 13.84
including:
Ports of Russia 7.23 5.14 7.00 6.88 5.70 7.30
Ports of Baltic States 4.43 5.54 6.57 8.15 6.89 6.54
Russian ports’ share 62% 48% 52% 46% 45% 53%
In all fairness, it has to be mentioned that although the share of
Russian ports in the Baltic flow of fertilizers increased in 2013, it still
remains below the level recorded in 2008. In 2009, the nadir year
in exports, the Baltic States managed to overtake Russian freight
flows. Thereafter, however, the tendency to transfer shipments to
their “own” ports recovered more or less by luck.
In 2013, Russian ports won the battle for Russian fertilizers. The
situation may change, however. There are two principal factors to
this: development of new cargo handling capacities at ports and the
potential redistribution of the potash fertilizers exports.
At the end of 2013, the completion of Uralchem’s terminal in
Riga was announced. The project was a joint venture with SIA Rīgas
tirdzniecības osta. Further expansion being possible, with its current
cargo handling capacity of 2 mln tn, the terminal will be receiving
Uralchem’s export freight flows, although services can also be provid-ed
to other exporters. With the existing export routes, Baltic ports are
the most convenient for the company – 89% of all seaborne shipments
26 | Baltic Transport Journal | 1/2014
were dispatched via Baltic ports. Uralchem reoriented some of its
freight flow to Riga in 2013, even before the terminal opened.
EuroChem is planning to build a fertilizer terminal in the Port
of Ust-Luga, with a target capacity of 6 mln tn. The project has been
postponed, awaiting completion of the company’s other develop-ments
(development of deposits). Delays in the latter will result in
an insufficient cargo volume in the nearest time span.
In connection with its general development programme (dredg-ing
and widening of the navigation channel), the Port of Klaipėda
announced the expansion of three existing terminals’ capacity.
The fertilizer industry is witnessing another tendency today – new
production plants are being constructed within port zones. This can also
lead to new opportunities, such as handling other exporters’ production.
ICT Group is constructing an urea production plant in the indus-trial
zone of Ust-Luga port, designed to produce up to 1.2 mln tn of
granulated urea and up 350,000 tn of ammonia per year. The fertilizer
transloading capacity should reach 4 mln tn. The possibility of building
ammonia handling facilities is being considered. The plant will be con-structed
by Baltic Carbamide Plant, established by ICT Group.
Transshipment of liquid mineral fertilizers is another segment
where Russia cannot compete with the ports of Latvia, Lithuania, Esto-nia
and Finland in the Baltic Sea region. Kaliningrad is the only Russian
port here capable of handling liquid mineral fertilizers, but the liquid
freight flow remains on a stable, but low level: 48 thou. tn in 2012, 82
thou. tn in 2013. Russian companies exported 690 thou tn of liquid fer-tilizers
via the ports of the Baltic States in 2012 and 850 thou. tn in 2013.
Таb. 4. Basic characteristics of terminals handling liquid fertilizers in the
Eastern Baltic ports
Country Port Terminal Capacity,
thou.
tn/ year
Cargo turnover,
thou. tn
2011 2012 2013
Latvia Ventspils Ventamonjaks SA 1,350
ammonia
487.9 614.1 n/a
Lithuania Klaipėda Bega UAB KJKK 1,200
Lithuania Klaipėda Klaipėdos jūrų
krovinių
kompanija АВ
(KLASCO)
2,600 Total
1591.4
Total
1213.2
Total
1269.0
Estonia Sillamäe Baltic Chemical
Terminal AS (BCT)
1,000
ammonia
1,000 КАС
281.0
537.0
140.0
707.0
n/a
Russia Kaliningrad Kaliningrad Sea
Fishing Port
no data
available
42.2 48.0 82.3
As far as the potash segment is concerned, the question of a possible
reunion between Uralkali and Belaruskali is becoming the new topic of
the day. The issue remains unsolved as of the beginning of 2014 and the
parties are expressing no such intentions in their official statements.
Nevertheless, if collaboration resumes, it might result in strengthen-ing
of the potash market overall (increasing the level of prices) due
to policy consent; therefore, this course of action cannot be excluded.
The spectrum of potential impacts is hard to envisage, though. Possi-bly,
Uralkali’s key port turnover will stabilize, while the turnover in the
ports of Baltic States may increase owing to Belaruskali. ‚
Olga Gopkalo
Morstroytechnology
Morstroytechnology is design, engineering and consulting company pro-viding
full range of services including: transport market research, cargo flows
analysis, regional transport programs, logistic optimization, industrial design
of ports and terminals, engineering. More info at: http://www.morproekt.ru