Global Fertilizer Market Weekly Update (CW13): Cost Pressure · Geopolitics · Supply Chain Disruption

In the first quarter of 2026, the global fertilizer market experienced significant disruption driven by multiple converging factors, resulting in a landscape characterized by firm domestic markets, volatile global supply, and divergent policy interventions.

Geopolitical tensions in the Middle East disrupted critical supply chains, with key maritime routes constrained, pushing up both fertilizer and raw material prices. In China, prices rose steadily under the combined effects of spring agricultural demand and increasing input costs. Meanwhile, contrasting export control policies in Indonesia and China reshaped global trade dynamics. Compared with the 2022 Russia-Ukraine crisis, the current energy and fertilizer shock exhibits distinct structural differences.

This report consolidates key market developments, analyzes core drivers, and outlines forward-looking trends to support international industry participants.

I. China’s MAP Market: Prices Rise Under Triple Drivers of Cost, Supply, and Demand

1. Market Performance

In early March 2026, China’s monoammonium phosphate (MAP) market remained firm at elevated levels, with prices increasing by approximately RMB 150/ton compared to late February.

Driven by rising raw material costs, strong seasonal demand, and tight supply, most producers suspended new orders, resulting in limited spot availability and a market structure characterized by:

• Supplier dominance 

• Demand driven by rigid agricultural needs 

2. Price Trends: Broad-Based Increases and Narrowing Regional Spread

As of March 13:

• Prices across major production and consumption regions increased simultaneously

• Regional price differentials narrowed significantly

• Over 80% of producers suspended order intake by mid-March

This further tightened spot availability and reinforced upward price momentum.

3. Key Drivers: Synchronization Across Three Dimensions

(1) Cost Side: Across-the-Board Raw Material Inflation

• Sulfur prices surged due to Middle East tensions, reaching RMB 4,650/ton at Yangtze River ports (+15%) 

• Sulfuric acid prices in Hubei rose 9.1% 

• Synthetic ammonia prices also increased significantly

👉 MAP production costs rose by approximately RMB 340/ton compared to late February. This cost escalation compressed margins and strengthened producers’ willingness to hold prices.

(2) Supply Side: High Operating Rates but Limited Market Release

• Industry operating rate exceeded 64% by the second week of March 

• However:

  • Producers suspended sales due to cost uncertainty

  • Large producers controlled shipment pace

  • Smaller producers reduced order intake

👉 Result: A structural imbalance of “high production, low market availability”, leading to spot shortages and bullish sentiment.

(3) Demand Side: Strong Support from Spring Application Season

• March marks the peak of spring fertilizer application

• Compound fertilizer operating rates rose to 45.56% (+12 percentage points) 

Market dynamics:

• Large producers began to face inventory gaps

• Small and medium-sized producers actively replenished stocks

• Agricultural demand remained rigid and inelastic

👉 Downstream buyers were forced to accept higher prices, reinforcing the upward trend.

4. Outlook

In the short term, the MAP market is expected to remain at elevated levels with limited fluctuations, supported by:

• Persistently high raw material costs

• Tight supply conditions

• Ongoing seasonal demand

Key variables to monitor:

• Policy interventions

• Geopolitical developments affecting raw materials

If raw material prices ease or demand weakens, prices may correct slightly, but downside is expected to be limited.

II. Global Fertilizer Supply Chain Crisis: Hormuz Disruption Drives Price Surge

1. Strategic Importance of the Strait of Hormuz

Following the escalation of the U.S.-Israel–Iran conflict in late February 2026, the Strait of Hormuz-one of the world’s most critical maritime chokepoints—experienced severe disruption.

Approximately:

• 30% of global seaborne fertilizer trade (~16 million tons) 

• 67% of urea trade 

• 20% of DAP trade 

pass through this corridor.

On March 14, the strait recorded zero vessel transit for the first time, compared to a pre-conflict average of 77 vessels per day.

2. Supply Disruptions and Price Escalation

The blockade triggered cascading effects:

• Shutdown of energy infrastructure in the Gulf region

• Suspension of operations at major fertilizer plants:

  • Qatar’s largest urea facility

  • Three urea plants in India

  • Four fertilizer plants in Bangladesh

Meanwhile:

• Brazil and the U.S. faced tightening supply conditions

• Freight rates surged due to higher oil prices

Price movements:

• Middle East urea export prices rose from <USD 500/ton to >USD 700/ton (+40%) 

• Egyptian phosphate fertilizers and SOP prices increased sharply

• Shipping costs rose significantly, further increasing landed costs

3. Impact on Agriculture and Food Security

The crisis coincides with the Northern Hemisphere’s critical planting season:

• Most countries lack strategic fertilizer reserves

• U.S. fertilizer supply is 25% below normal levels 

• Retail shortages and price spikes reported

Case example:

• Canadian farmers saw urea costs increase by CAD 44,000 compared to late 2025

Consequences:

• Farmers reducing fertilizer usage

• Crop switching toward lower-input crops

• Increased risk to global agricultural output

4. Policy Responses

Countries are actively seeking mitigation strategies:

• U.S.: Exploring alternative supply sources (Venezuela, Morocco)

• EU: Discussing measures to secure maritime routes

• Saudi Arabia: Redirecting phosphate exports via Red Sea ports

However:

• Implementation timelines are long

• Immediate relief remains limited

👉 The resolution of the crisis depends primarily on:

• Conflict duration

• Restoration of shipping through the Strait of Hormuz

III. Potash Market: Diverging Trends Under Cost and Policy Influence

1. MOP Market: Stable but Facing Downside Pressure

In China (mid-March):

• Prices remained stable

• Port inventories: 2.75 million tons (-150,000 tons WoW) 

Market characteristics:

• Weak high-end transactions

• Northeast China acting as a key price indicator

Outlook:

• Increased imports and policy pressure to stabilize supply

👉 Potential for moderate price decline

2. SOP Market: Sustained Price Increases

• European SOP FOB prices up >15% YTD 

• East Asia CIF prices at three-year highs 

Drivers:

• Rising sulfur costs

• Supply uncertainty from Middle East

• Mannheim producers facing feedstock risks

👉 Strong cost support + rigid demand sustain high prices

3. Structural Changes: Belarus Re-enters the Market

• U.S. lifted sanctions on Belarusian potash

• Belarus accounts for ~20% of global supply 

Implications:

• Increased supply potential

• Strong price competitiveness (e.g., USD 450/ton in Indonesia tender)

Additionally:

• U.S. domestic prices are lower than global levels

👉 Arbitrage opportunities for re-export to Brazil

4. Market Outlook

Supporting factors:

• High freight costs due to geopolitical tensions

• Seasonal demand recovery in Q2

Uncertainties:

• Conflict trajectory

• Belarus supply ramp-up

👉 Buyers are adopting flexible procurement strategies to avoid high-price inventory risk

IV. Export Control Policies: Diverging Approaches of Indonesia and China

Both countries prioritize domestic supply security, but their approaches differ significantly.

1. Indonesia: Transparent and Profit-Oriented

• Implements Domestic Market Obligation (DMO)

• Export restrictions tied to domestic supply fulfillment

• High transparency and rapid response

2. China: Inspection-Based Export Controls

• Fertilizer export inspection system since October 2021

• Focus on stabilizing domestic supply and prices

• Lower transparency and slower policy response

3. Key Differences

Aspect	Indonesia	China
Objective	Maximize export value	Ensure domestic supply
Method	Control output & exports	Encourage production, restrict exports
Transparency	High	Relatively low
Response speed	Fast	Moderate

👉 Common principle:Domestic supply security takes priority

V. Comparison with the 2022 Crisis

1. Similarities

• Both crises originated in key supply regions

• Triggered energy and fertilizer price surges

• Increased agricultural production costs and food security risks

2. Key Differences

(1) Duration

• 2022: Long-term structural crisis

• 2026: Likely shorter-term but intense shock 

(2) Energy Impact

• 2022: Direct supply destruction (gas pipelines)

• 2026: Logistics disruption (maritime chokepoints)

(3) Fertilizer Impact

• 2022: All nutrients affected (N, P, K)

• 2026: Primarily nitrogen and phosphate (especially in China)

(4) China’s Position

• Improved food self-sufficiency

• Reduced vulnerability to external shocks

VI. Conclusion and Outlook

1. Key Characteristics of Q1 2026

• Strong domestic markets in China

• Severe global supply disruptions

• Diverging nutrient trends (N/P vs K)

• Increasing policy intervention

2. Short-Term Outlook

Market expected to remain elevated and volatile, driven by:

• Middle East geopolitical developments

• Raw material price trends

• Seasonal agricultural demand

3. Long-Term Perspective

Future market structure will be shaped by:

• Geopolitical risk

• Policy intervention

• Demand from emerging industries

• Linkage between food security and energy systems

📊 Final Insight

The global fertilizer market in 2026 is no longer purely supply-demand driven—it is increasingly defined by geopolitical risk, cost structures, and policy intervention.