1. regulatory environment & key market drivers
Carbon Border Adjustment Mechanism (CBAM) - key topic
-
The EU Carbon Border Adjustment Mechanism (CBAM) has been fully effective since 1 January 2026, which means that imports of CO₂-intensive goods - including fertilizers - are now subject to embedded emissions costs.
-
This CO₂ levy may cause the price of imported fertilizers to rise, as importers will have to purchase certificates at the EU ETS price.
-
French and Italian authorities are calling for an exemption or suspension of the CBAM levy specifically for fertilizers to protect the competitiveness of their agriculture - partly because CBAM is expected to increase prices by up to ~25%.
👉 In parallel, the EU Commission is proposing a new rule (Article 27a) that could allow a temporary suspension of CBAM for fertilizers if serious market distortions occur.
📍 Market signal: Regulatory uncertainty about CBAM application or possible exemptions has already delayed trading activities as traders wait for clear guidance.
2. price and cost development - current signals
CO₂ costs and prices
-
Early signals show that CBAM costs are less severe than originally feared, as the CO₂ levy for fertilizers was implemented more moderately in January and industry players are reporting reduced rates.
-
Lower gas prices at the beginning of 2026 have partially relieved the production costs for nitrogen fertilizers (e.g. urea).
➡ Market participants see a slight dip in demand with extremely high prices, but no significant price declines - overall, the level remains relatively high, especially in historical comparison.
3. supply and trade dynamics
Shift in import patterns
-
Despite CBAM costs, the EU continues to cover a significant proportion of its fertilizer requirements via imports - particularly from regions with lower CO₂ certificate costs or cheaper transport routes.
-
Discussions about possible suspension of MFN tariffs and other tariff measures on ammonia, urea and other products indicate that policy measures are being attempted to mitigate import costs.
4. political controversies
Industry and interest groups express concerns
-
EU farmers' associations and fertilizer traders warn that CBAM (without accompanying support measures) could lead to a cost crisis for inputs as prices are pushed up further.
-
At the same time, industry associations argue that exemptions or an excessively loose CBAM policy would weaken the competitiveness of European producers.
👉 Overall, the discussion reflects a classic area of tension:
➡ Regulation vs. competitiveness
➡ Climate policy vs. operating costs
➡ Long-term sustainability vs. short-term production security
5. market signals & price impulses (since week 4 2026)
Bullish drivers (price pressure)
-
CBAM costs and customs policy → potentially higher import prices
-
Political pressure on fertilizer prices can lead to volatility
-
Suppliers draw on stocks and inventory purchases
Bearish driver (price dampening)
-
Slight decline in fertilizer prices in early 2026 due to moderate CO₂ levy and lower energy prices
-
Political discussions about exemptions/temporary suspensions dampen upside risks
Summary
-
Regulatory center of the movement: The introduction and implementation of CBAM continues to dominate the market debate on prices, costs and trading.
-
Political dynamics: EU Commission and member states are examining exemptions and temporary measures to avoid price shocks.
-
Price trend: Prices remain high, partly under slight pressure due to energy effects, but the uncertainty caused by CO₂ costs has a stabilizing or price-driving effect on the price level.
-
Market sentiment: Strong divergence between stakeholders → risk of short-term volatility.
