Global Fertilizer Market Weekly Update – CW14

I. Nitrogen Fertilizers: A Lasting Blow to the Supply Landscape

Damaged Infrastructure in Iran and Qatar May Have Impacts Lasting Up to a Decade

While the shutdown of the Strait of Hormuz has drawn significant market attention due to transport disruptions, industry concerns are increasingly focused on damage to production facilities.

Mike Castle, Chief Market Intelligence Manager at StoneX, a global agricultural and commodity service provider, noted that the impact of the attack on Iran’s South Pars gas field is particularly severe, given that the facility took an extended period to recover from a similar attack last June. Meanwhile, the attack on Qatar’s Ras Laffan industrial facility could cause even more lasting damage.

QatarEnergy, the state-owned energy company, has indicated that repairs to the affected facilities could take three to five years. Castle admitted that this scenario was his greatest concern before the conflict erupted-not a shutdown lasting days, but the outright loss of a massive natural gas supply. This gas serves not only as a feedstock for local fertilizer production but also, when exported as liquefied natural gas, as a critical raw material for fertilizer plants across Europe and Asia.

Melih Keyman, Founder, President, and CEO of Keytrade, a global fertilizer trading house, confirmed that the ripple effects are already visible. India has been forced to reduce natural gas supplies to its ammonia and urea plants, currently meeting only 70% of demand, resulting in a monthly production loss of approximately 800,000 tons.

Bangladesh faces an even more dire situation, with nearly all of its fertilizer plants halted, representing an annual capacity loss of about 3.7 million tons—a country that itself requires imports of 1 million tons of fertilizers.

Structural Damage Defies Quick Recovery

The key message from both experts is that even if peace returns to the Middle East tomorrow, the fertilizer market cannot quickly return to normal. Keyman stated that even with an immediate ceasefire, resuming production, clearing sea lanes of mines, reopening the strait, and allowing over a thousand stranded vessels to load and depart would leave farmers in a difficult position for months to come. Castle held a more pessimistic view: "The structural damage to Iran's production facilities alone could have impacts lasting up to ten years."

For farmers, the two experts offered consistent, core advice: stop waiting and start planning now. Keyman advised abandoning the idea of last-minute purchasing, emphasizing that waiting for a significant price drop under current market conditions is an extremely risky strategy.

II. Phosphate Fertilizers: The Sulfur Shortage Exposes a Hidden Supply Chain Crisis

45% of Global Sulfur Supply Stranded, Phosphate Raw Materials in Jeopardy

The disruption to the Strait of Hormuz may have an even more profound impact on sulfur than on oil. Over 90% of the world’s sulfur is recovered from oil and natural gas processing, with about one-third originating in the Middle East.

Keyman noted that due to the situation in the Strait, approximately 45% of global sulfur supply is currently stranded, leaving phosphate fertilizer producers facing a critical shortage of a key raw material. Sulfur is essential for producing sulfuric acid, which is, in turn, crucial for manufacturing phosphate fertilizers.

Castle echoed this view, noting that while the market's focus has been heavily on nitrogen, the phosphate crisis is equally severe. Saudi phosphate supply is also trapped by the strait closure, and with China prioritizing domestic phosphate needs, buyer options are rapidly narrowing, leaving "Russia and Morocco as the only two major suppliers left."

Price Surge and Structural Challenges

Even before the Strait was blocked, restricted Russian exports had already pushed sulfur prices higher. According to Platts data, procurement costs for African buyers have risen nearly 20% this month. By late 2025, benchmark sulfur prices had already exceeded $500 per ton, far above the normal peak of $200. Although the US relies on imports from Canada for a third of its sulfur and sulfuric acid needs, domestic prices have still surged dramatically.

Looking ahead, even if the Gulf region stabilizes, long-term challenges remain. For decades, industry and agriculture have effectively benefited from a "hidden subsidy" in the form of cheap sulfur derived from oil and gas operations. As the world phases out fossil fuels, this supply of low-cost sulfur will face long-term erosion. At the same time, growing demand for batteries will further increase sulfur consumption.

Researchers at University College London predicted in 2022 that, under some scenarios, global sulfuric acid demand could exceed supply by more than double by 2040. The current conflict has unexpectedly provided a glimpse into the post-oil era's sulfur supply challenges and offers a chance to plan ahead for this future reality.

III. Country-Specific Developments

Russia: Tightens Ammonium Nitrate Export Restrictions

On March 23, Russia announced a one-month suspension of ammonium nitrate exports. Russia controls up to 40% of the global ammonium nitrate trade. The restriction, expected to last until April 21, aims to prioritize supply for the country’s spring planting season. The Russian Ministry of Agriculture stated it has stopped issuing new export licenses and will not issue further ones, with the exception of those tied to government contracts. This move has further tightened the global fertilizer supply situation.

India: Fertilizer Output Could Drop 15%, Subsidy Pressures Mount

Due to reduced availability of LNG and ammonia, domestic fertilizer production in India could fall by 10% to 15%. A recent report from Crisil Ratings, an Indian rating agency, indicated that if the maritime disruption lasts for three months, output of urea and other fertilizers could slump by as much as 15%, coinciding with the start of India’s critical kharif (monsoon) planting season. India relies on West Asia for 40% of its fertilizer imports, and domestic producers are facing shortages of LNG and ammonia, 80% of which come from the region.

To avoid shortages during the crucial planting season, the Indian government may be forced to absorb surging international costs. Crisil estimates this could increase central government fertilizer subsidy outlays by up to 2.5 trillion rupees, adding pressure to the already budgeted 1.71 trillion rupees for the fiscal year. The government has already taken measures to stabilize the sector, including allocating 70% of available natural gas to urea producers and seeking additional procurement from alternative sources such as Indonesia, Belarus, Morocco, Russia, and China.

IV. Market Outlook and Institutional Views

Price Trends

Since the onset of the conflict, urea prices have risen over 46% in just three weeks. The price of monoammonium phosphate (MAP) has surpassed $800 per ton, its highest level since August 2022. Castle warned that India’s actions in the coming weeks will be critical. If India issues a tender due to severe domestic supply shortages, it could trigger another sharp spike in already elevated fertilizer prices.

Institutional Analysis

In a report released on March 24, Goldman Sachs noted that fertilizer shortages could lead to delayed or insufficient nitrogen application, potentially reducing global grain yields. While US farmers are relatively less affected due to advanced procurement, supply disruptions in Europe, Australia, and the Southern Hemisphere could boost demand for US grain exports, thereby pushing up American grain prices.

Rabobank’s March Agroinfo report highlighted geopolitics as the dominant market variable. The direct link between nitrogen fertilizers and natural gas makes the market highly sensitive to Middle Eastern developments. While demand in countries like Brazil may contract due to high prices, uncertainty on the supply side significantly outweighs demand-side concerns.

V. Summary and Recommendations

Global fertilizer markets remained dominated by the Middle Eastern geopolitical conflict this week. Unlike previous short-term supply shocks, this crisis displays distinct structural characteristics: prolonged recovery timelines for damaged production facilities, long-term supply transformation challenges for critical raw materials like sulfur, and continued tightening of policies by major exporting nations.

Core Recommendations:

• Stop waiting and begin planning fertilizer procurement strategies immediately. Abandon the hope for last-minute purchases at lower prices.

• Closely monitor India's import tender activities, as this could serve as the next catalyst for price volatility.

• With spring plowing and monsoon planting approaching in the Northern Hemisphere, it is advisable to secure supplies early and diversify procurement sources.

If the geopolitical conflict extends into May, the Northern Hemisphere's large-scale planting season could face direct fertilizer shortages, potentially harming global grain output and exacerbating food price inflation.