Fertiliser Industry Insights: Hormuz Plant Reopening May Not Alleviate Supply Challenges, According to Executives
Fertiliser availability and pricing are expected to take three to four months to normalize, despite a tentative peace agreement between the US and Iran and the anticipated reopening of the Strait of Hormuz. Industry executives indicate that while the agreement may alleviate some pressure on global energy and shipping markets, the disruptions caused by ongoing conflicts in West Asia will not be resolved immediately. A senior fertiliser company executive noted that relief will likely begin with the restoration of natural gas supplies, but restarting production facilities will take time.
Ammonia May Stabilise Soon, Sulphur Remains a Concern
Executives in the fertiliser sector predict that ammonia prices, essential for di-ammonium phosphate (DAP) production, could stabilize within one to two months as gas plants in Qatar resume normal operations. Currently, imported ammonia is available in the domestic market. However, sulphur prices are expected to remain high for an extended period. The price of sulphur, a key raw material for DAP and a by-product of petroleum refining, has surged due to supply disruptions in West Asia and strong industrial demand. Current wholesale sulphur prices range between $815 and $1,200 per metric tonne. While India has sufficient urea stocks for the kharif season, DAP supplies are under pressure due to the global sulphur shortage. Executives caution that sulphur prices may rise further before easing towards December.
Shipping Disruptions Continue to Impact Supplies
Despite the anticipated reopening of the Strait of Hormuz, industry executives highlight ongoing logistical challenges. Several vessels carrying urea and DAP to India were stranded during the crisis. Refineries and gas-processing facilities will need to undergo safety inspections, maintenance checks, and staff mobilization before returning to full capacity. A senior industry executive stated that reopening a shipping lane does not immediately resolve issues with stranded cargo, as there will be delays due to port congestion, inspection processes, and insurance approvals. Shipping companies are expected to exercise caution before fully restoring operations through this critical waterway.
Strait Reopening Expected Under US-Iran Agreement
Concerns about fertiliser supply persist even as a tentative agreement between the United States and Iran is set to facilitate the reopening of the Strait of Hormuz, a crucial global energy route. Leaked details of the interim agreement suggest that Iran will take immediate steps to reopen the strait once the deal is formally signed in Switzerland. The agreement is also expected to allow Iran to resume unrestricted oil sales while broader negotiations regarding its nuclear program continue. Under the proposed arrangement, the Strait of Hormuz could return to pre-war traffic levels within 30 days. Industry experts believe that while the reopening will eventually enhance the supply of energy-linked fertiliser inputs, the benefits may take months to permeate through global production and shipping networks.
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