Impact of West Asia Conflict on Fertilizer Supply

Disruption in Fertilizer Production and Shipping

The ongoing conflict in West Asia has led to the shutdown of fertilizer plants and disruption in shipping routes, affecting the supply of crucial plant nutrients such as nitrogen and phosphate fertilizers.

• The Strait of Hormuz, a key channel for one-third of the global trade in these nutrients, has seen a significant decline in transit activities.
• Qatar Energy ceased production at the world's largest urea plant due to a halt in natural gas feedstock caused by attacks on LNG facilities.
• Sulphur production has decreased in other parts of the region.

Global Supply Concerns

• Countries like India, China, Australia, and Indonesia are expected to face fertilizer shortages.
• India, which sources over 40% of its urea and phosphatic fertilizers from West Asia, might face delayed shipments.
• Three Indian plants have reduced urea output due to decreased LNG supplies from Qatar.

Market Tightness Before the Conflict

The global fertilizer market was already constrained due to various factors:

• China has restricted exports to maintain domestic supply.
• European producers have reduced output following the loss of cheap Russian gas.
• Urea prices have risen by approximately $80 per ton since the conflict began.

Regional Dependencies

• China is expected to expand fertilizer export controls, with more than 50% of its sulphur imports coming from West Asia.
• Indonesia relies on West Asia for nearly 70% of its sulphur supplies, a key ingredient for phosphate fertilizers.
• Australia depends almost entirely on imports for its fertilizer needs, particularly for wheat and other crops.