European fertilizer market stalled after European Commission signaled it could be changing CBAM rules

Europe’s fertilizer market has ground to a halt after the European Commission signaled it could retroactively apply an “emergency brake” to the Carbon Border Adjustment Mechanism, injecting fresh uncertainty into pricing and contracts.

Traders told Platts that deals in products such as urea have largely stopped, with buyers unwilling to commit amid confusion over whether CBAM rules could be altered after taking effect on Jan. 1.

The disruption follows the Commission’s proposal of a new Article 27a, which would allow Brussels to suspend or amend CBAM in cases of “serious and unforeseen circumstances.” EU Trade Commissioner Maroš Šefčovič said earlier this month the clause could be used to support agriculture, and officials later confirmed it could apply retroactively.

While CBAM charges will not be payable until 2027, the prospect of retrospective changes has unsettled the market. “Either CBAM applies or it doesn’t,” said Gabriel Rozenberg, chief executive of consultancy CBAMBOO. “There’s no room for ambiguity in a functioning market.”

Fertilizers are particularly exposed because of their high carbon intensity and limited decarbonization options. Industry groups warn the uncertainty risks undermining investment and raising costs for farmers.

Fertilizers Europe said any move to weaken policy clarity would further damage an already strained sector, while producers including Yara have cautioned that mixed signals from Brussels are eroding confidence across the supply chain.

For now, market participants say trading will remain subdued until the Commission clarifies whether CBAM rules will be enforced as written or subject to last-minute political intervention.