OREANDA-NEWS. June 09, 2014. Upon the results of analyzing the market of mineral fertilizers, the Federal Antimonopoly Service (FAS Russia) concluded that the markets of potassium and phosphorus-containing fertilizers require additional attention from the antimonopoly body.

The level of competition on the market of potassium fertilizers is quite low; on the market of phosphorus-containing fertilizers producers of apatite concentrate are included in vertically-integrated groups.

The market of mineral fertilizers has three segments: potassium, phosphorous-containing and nitrogen fertilizers. Such breakdown is necessary because these types of mineral fertilizers are not substitutes.

Market analysis showed that the segment of nitrogen mineral fertilizes is characterized by low concentration: 11 producers, the highest share is controlled by the “EvroKhim” Group (according to 2012 data – 28, 13%).

The segment of phosphorous-containing fertilizers is moderately concentrated: 7 companies, the highest share belongs to “PhosAgro” (40.55% – 2012).

The most complex situation is in the segment of potassium fertilizers. The reare only two producers: “Uralkalii” and “Metakhim”, as of 2012 the share of “Uralkalii” was 99.74%.

The market of phosphorous-containing fertilizers requires tightened control over market indicators of the largest economic entities (including producers of the core raw materials) and property relations between economic entities in order to prevent abusing monopolistic position and maintain favourable competition environment on the market).

As commented the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko, entry of new participants is prevented by economic restrictions, such as high initial capital costs, restricted access to raw materials and excessive production capacities against limited effective demand on the part of Russian consumers.

Potassium chloride and apatite concentrate are used as the raw material for production of potassium and phosphorous-containing mineral fertilizers. Potassium chloride is produced only by “Uralkalii” OJSC while apatite concentrate – by “Apatit” OJSC, “SZFK” CJEC and “Kovdorsky Mining-and-Processing Works” OJSC. Producers of apatite concentrate are included in vertically-integrated groups producing mineral fertilizers.

To prevent violations of the antimonopoly law, FAS drafted Recommendations to provide non-discriminatory access to apatite concentrate and potassium chloride, and issued determinations to “Uralkalii” OJSC and “Apatit” OJSC to develop marketing policies and monthly monitor pricing on the market of mineral fertilizers. Upon the survey findings, however, FAS concluded that the market of potassium fertilizers is characterized by a quite high level of concentration and a low level of competition, and requires additional attention from the antimonopoly body.

The antimonopoly authority plans to continue surveying the market of mineral fertilizers at the next level – wholesale trade.