The prospects of exchange trade in mineral fertilizers

On 25 October 2016, the Expert Council on Chemical Industry at the Federal Antimonopoly Service had a meeting to discuss the prospects of developing exchange trading in mineral fertilizers. Deputy Heads of FAS Andrey Tsyganov and Anatoly Golomolzin; Anton Karpov, Vice-President of St Petersburg International Mercantile Exchange (SPIMEX) as well as representatives of the leading Russian producers of mineral fertilizers attended the event.

Opening the meeting, Andrey Tsyganov pointed out that exchange trading, in view of the current standards of the antimonopoly law, enables companies to build up their market conduct strategy more efficiently and prevent violations of the law, particularly, fixing monopolistically high prices.

Anna Mirochinenko, Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, emphasized that the social significance of mineral fertilizers, the relevant market structure require representative market indices and indicators reflecting the actual supply-demand balance, encouraging more efficient government regulation over the market, and helping consumers of mineral fertilizers obtain objective information in the course of a contractual campaign.

Talking about the Exchange Committee formed under the Agreement on Cooperation towards developing goods markets between the Central Bank of Russia, FAS and the Federal Tax Service, Anatoly Golomolzin pointed out that its objectives include ensuring objective price indicators and liquidity of organized trading.

Dmitry Makhonin, Head of FAS Department for Regulating Fuel-and-Energy Complex, outlined positive experiences of implementing the exchange trading mechanism, particularly, on the oil products and gas markets.

Participants were given an analysis of St Petersburg International Mercantile Exchange (SPIMEX). It demonstrated that the domestic market has a need in non-discriminatory access as well as transparent pricing. According the SPIMEX representative, Alexei Ryzhikov, developing this mechanism will be facilitated by a reduced level of price fluctuations and decreased costs.

Summing up the outcome of the Expert Council meeting, participants concluded that the issue should be discussed substantively at the Sub-Committee of FAS Exchange Committee. Its “nought” meeting is scheduled for the first decade of December and will involve representatives of consumers and manufactures of mineral fertilizers, exchanges, and interested federal executive bodies. The purpose is to determine the real steps on implementing exchange trade on the market”.