🏭 Egypt’s fertilizer sector finds itself in a pivotal transitional phase this year as rising gas prices force a new reality on net margins. Foreign investment and a temporary European grace period have offered a lifeline for the industry, reshaping the competitive landscape, and new investments are reshaping the sector.

First, a look back: In September 2025, the government greenlit raising the supply price of natural gas for nitrogen fertilizer plants to USD 5.5 per MMBtu, up from USD 4.5. This came alongside an obligation for companies to supply 55% of their production locally under a triple quota system. Following the decision, Misr Fertilizers Production Company (Mopco) maintained its investment appeal due to long-term gas contracts that mitigated the impact, and Abu Qir Fertilizers faced margin pressure — with an estimated 15% erosion in returns for every USD 1 increase in gas costs, despite a positive outlook backed by exports and supply stability, according to a recent research memo from EFG Holding seen by EnterpriseAM.

The decision was more than a subsidy cut; it was a move to bridge a massive fiscal gap. The production cost of a ton of fertilizer exceeds EGP 11k, while it’s sold to farmers for just EGP 4.5k. This drove the annual subsidy bill to over EGP 40 bn, prompting the government to reprice gas to ensure a continuous supply and prevent plant shutdowns, while allowing companies room to compensate through exports, Agriculture Minister Alaa Farouk said at a press conference attended by EnterpriseAM.

China’s Asia Potash revealed a plan for an integrated phosphate fertilizer complex in Upper Egypt, with investments ranging between USD 7-10 bn. The project is expected to reach an annual production of 2 mn tons, all for export via Safaga, with a shift toward using green ammonia. Simultaneously, the cost of reviving the state-owned Delta Fertilizers has risen to EUR 510 mn to restart urea and ammonia plants following a five-year hiatus.

A European reprieve, albeit one with conditions: Europe is moving toward granting Egyptian exports a temporary exemption from the Carbon Border Adjustment Mechanism (CBAM) until the end of 2027. This spares manufacturers an estimated USD 317 mn in carbon surcharges annually, giving them time to adapt. The exemption comes amid pressure from France and Italy to suspend CBAM specifically for fertilizers, fearing a 25% cost spike for their farmers.

However, environmental standards have become a de facto entry requirement for global markets, with international tenders now demanding carbon compliance certificates, according to El Nasr Company for Intermediate Chemicals Export Manager Ahmed Adel, who further added that the company aims to raise exports to over USD 1 bn within two years, up from USD 620 mn in 2025.

Financing as a competitive advantage: The Federation of Egyptian Industries (FEI) launched the “Access to Finance” initiative to support the green transition. This includes creating a database of loans and grants to help companies prepare fundable projects, as environmental compliance becomes a prerequisite for credit, Executive Director of the Environmental Compliance Office at the FEI Ahmed Kamal tells us.

Trade relations with India, one of the world’s largest fertilizer importers, have also seen a strategic shift. Egyptian chemical and fertilizer exports to India surged by 176% to reach USD 224 mn in 2025, according to Chemical and Fertilizers Export Council Chairman Khaled Abu Al Makarem, who added that Singapore-based chemical company Indorama intends to up its investments in Egypt to USD 1 bn.

Global markets are transitioning toward price stabilization. Urea prices are expected to trend slightly downward, averaging roughly USD 390 per ton — down from USD 422 in 2025 — due to improved global supply despite ongoing Chinese restrictions. Phosphate remains buoyed by global shortages, while ammonia is normalizing as supply chain disruptions ease.

Early stockpiling by European buyers ahead of carbon tax regulations could dampen demand in 1H, according to EFG Holding research. As the market enters a price-stabilization phase, companies are becoming more sensitive to pressure from international buyers, who leverage sustainability requirements and knowledge of producer inventory levels to squeeze prices, Adel tells us.

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