Global Fertilizer Market Weekly Update (CW22)

I. Weekly Market Summary

• Sulfur prices surged sharply, severely disrupting the global phosphate fertilizer supply chain and forcing multiple producers to reduce output.

• Concerns over global food security intensified as rising raw material and logistics costs continued to pressure agricultural markets.

• China’s ammonium sulfate market shifted from rapid price increases to a correction phase due to weaker demand, declining export profitability, and growing supply pressure.

• India’s 2026 annual potash contract established a stronger global price floor, supporting international potash market sentiment despite increasing regional demand divergence.

• The FAO warned that prolonged shipping disruptions in the Strait of Hormuz could trigger a broader agricultural supply chain crisis.

• The European Union introduced support measures including tariff exemptions, financial subsidies, and fertilizer industry upgrades to stabilize regional agricultural markets.

• Iran officially implemented new shipping control regulations and launched a dedicated maritime insurance platform, further increasing uncertainty in global fertilizer logistics.

II. Six Key Market Developments This Week

(1) Sulfur Prices Nearly Quadruple Year-on-Year, Global Phosphate Producers Cut Output, Food Supply Risks Intensify

Ongoing geopolitical tensions between the United States and Iran have continued to disrupt navigation through the Strait of Hormuz, a critical shipping route responsible for nearly 50% of global sulfur seaborne trade. The disruption has triggered a severe global sulfur shortage. As sulfur is an irreplaceable raw material in phosphate fertilizer production, the supply shock has directly impacted global phosphate production capacity. Simultaneously, sulfur demand from battery metals processing and other industrial sectors has further intensified competition for available supply, worsening the already tight global phosphate market balance.

Chris Lawson, Vice President of Market Intelligence and Pricing at CRU, stated that major global phosphate producers are currently facing severe raw material shortages, placing the industry under significant pressure. Leading fertilizer companies have already implemented production cuts:

• Mosaic, one of the world’s largest fertilizer producers, has shut down multiple phosphate production lines in Brazil and the United States due to soaring sulfur costs and shrinking margins.

• OCP Group, the world’s largest phosphate exporter, has brought forward maintenance activities and proactively reduced finished product shipments. However, thanks to its strategic inventories of sulfur and phosphate products, OCP is expected to maintain stable production until at least late July.

Sulfur spot prices have surged to historic highs. Christian Wendel, President of Hexagon Group, noted that sulfur has effectively become unavailable in the spot market. Prices have climbed from approximately USD 150-180/MT a year ago to USD 850-900/MT currently, with CFR prices in some regions approaching USD 1,000/MT.

Even for phosphate producers able to secure sulfur supply, the extraordinary raw material costs have pushed production margins into negative territory before accounting for additional processing and logistics expenses.

To reduce Strait of Hormuz shipping risks, Saudi fertilizer producers have shifted to land transportation, trucking phosphate fertilizers to Red Sea ports for export. Nevertheless, the logistical adjustments have failed to offset the disruption, with Saudi phosphate exports reportedly declining by nearly 50% year-on-year.

On the demand side, India’s latest DAP tender concluded at CFR prices of USD 930–935/MT for approximately 1.347 million tons, marking the highest DAP price level since July 2022 and nearly 40% above January levels, effectively establishing a new global phosphate price benchmark.

In contrast, global urea buyers largely remained on the sidelines, awaiting either changes in China’s export policy or normalization of Strait of Hormuz shipping conditions, resulting in persistently weak trading activity.

(2) After Surging Over 60%, China’s Ammonium Sulfate Market Rapidly Corrects

From March through early May, China’s ammonium sulfate market experienced a sharp rally driven by strong spring agricultural demand and concentrated overseas procurement, with overall prices rising more than 60%, while premium-grade products gained over 80%.

However, by mid-May, supportive factors faded rapidly and the market entered a correction phase. Mainstream coking-grade ammonium sulfate prices retreated toward RMB 1,300/MT, while high-end quotations also softened.

Three major factors drove the market reversal:

1. Agricultural Demand Fades, Industrial Consumption Remains Weak

China’s spring planting season has largely concluded, and compound fertilizer operating rates have dropped to around 36%. Downstream buyers have become increasingly resistant to high-priced raw materials, shifting from bulk inventory purchases to small-volume replenishment.

At the same time, industrial sectors such as rare earth processing and titanium dioxide production continue to face weak end-user demand, resulting in reduced ammonium sulfate procurement that cannot compensate for the decline in agricultural demand.

2. Export Profitability Deteriorates

Earlier geopolitical tensions in the Middle East boosted Indian nitrogen fertilizer imports and supported China’s ammonium sulfate exports. However, international urea prices have since corrected sharply, while overseas buyers have turned increasingly bearish.

Current export quotations for high-purity ammonium sulfate have fallen below domestic spot prices, eliminating export profitability and in some cases creating outright losses.

Brazilian granular ammonium sulfate buying interest has reportedly fallen to around USD 245/MT CFR, translating into domestic equivalent prices below China’s coking-grade spot market.

Meanwhile, rumors of possible import-export policy adjustments have further weakened market confidence.

3. Supply Pressure Continues to Increase

Domestic coking and caprolactam operating rates remain elevated, ensuring abundant ammonium sulfate supply. Additional coal chemical production capacity scheduled for June is expected to further increase market pressure.

As of May 14, ammonium sulfate inventories at major Chinese ports reached approximately 820,000 tons, up 70,000 tons week-on-week, continuing to weigh on domestic spot prices.

Market participants generally believe the previous one-sided rally has ended, with the market now entering a more balanced phase of bullish and bearish competition. Premium product prices may continue to decline, while the spread between high-end and low-end products is expected to narrow further.

(3) India’s Annual Contract Establishes Potash Price Floor as Opportunities and Risks Coexist

On May 18, India finalized its 2026 annual potash import contract at USD 383/MT CFR, representing an increase of USD 34/MT compared to last year. As the global benchmark contract for the potash market, the agreement has effectively reinforced the international price floor and revived bullish sentiment.

From the supply perspective, the global potash market remains structurally tight. Russia and Belarus-the world’s two major potash exporters-continue to face geopolitical sanctions that restrict production and exports. Although some sanctions on Belarusian potash have recently been eased, establishing new export channels and logistics networks will still require significant time.

Demand resilience has exceeded expectations:

• Nutrien and ICL both reported record first-quarter sales.

• Demand growth in South America and emerging Asian markets remains particularly strong.

• Nutrien has raised its annual seaborne potash sales forecast, expecting volumes to exceed last year’s levels.

Long-term demand fundamentals remain supported by:

• Global population growth

• Expansion of oilseed crop acreage

• Ongoing soil fertility restoration needs

However, regional demand divergence remains a major market risk:

• Brazilian farmers have become more cautious as potash prices exceed USD 400/MT.

• Flood damage in Europe has weakened fertilizer demand.

• El Niño-related drought concerns in Southeast Asia are negatively affecting palm oil plantation purchasing activity.

Meanwhile, shipping uncertainty in the Strait of Hormuz remains a significant risk factor. Any full closure of the route could sharply increase global fertilizer freight costs and further impact potash prices.

Overall, the potash market is expected to remain in a tight supply-demand balance during the second half of the year, with prices likely to trend steadily upward rather than repeating the extreme price spikes seen in previous years.

(4) Turkey’s Tupras Sulfur Tender Prices Surge but Remain Below Mediterranean Export Levels

This week, Turkish refiner Tupras completed its June sulfur tender, with prices rising sharply due to the tight global sulfur market.

Overall transaction price range:

• USD 690-730/MT FCA overall

• Average prices increased by USD 248/MT compared to the previous tender

Transaction details by port:

• Izmit: USD 690-723/MT FCA

• Kirikkale: USD 725-730/MT FCA

• Izmir: USD 701-713/MT FCA

Due to Turkey’s sulfur export restrictions, all tendered cargoes are restricted to domestic consumption and cannot be exported internationally. As a result, Turkish sulfur prices remain below Mediterranean export market levels, limiting Turkey’s ability to ease the broader regional sulfur shortage.

(5) FAO Warns of Global Food Crisis as EU Introduces Three Major Policy Measures

The FAO warned that a prolonged closure of the Strait of Hormuz could trigger a systemic global agricultural supply chain crisis, potentially leading to sharp increases in food prices over the next 6-12 months.

Current geopolitical tensions have already driven agricultural production costs sharply higher:

• U.S. agricultural diesel prices reportedly rose by 72%

• Gulf-region urea prices increased by 55%

• U.S. hard red winter wheat production may fall to its lowest level since 1957

To counter fertilizer inflation, the European Union introduced three major measures:

1. EUR 200 Million Agricultural Crisis Reserve Fund

Targeted subsidies will help farmers offset fertilizer procurement costs.

2. Launch of the “Fertilizer Action Plan”

The program aims to:

• Strengthen domestic fertilizer production capacity

• Promote organic and bio-based fertilizer alternatives

• Improve regional fertilizer supply chain resilience

• Reduce dependence on imported fertilizers

3. One-Year Suspension of Import Tariffs on Key Nitrogen Fertilizers

Import duties on products such as urea and ammonia have been suspended for one year, a move expected to save the European agricultural sector approximately EUR 60 million annually.

The tariff exemption does not apply to Russian or Belarusian products.

(6) Iran Implements New Strait Shipping Rules and Launches Dedicated Maritime Insurance Platform

To strengthen control over the Strait of Hormuz, Iran officially established the Persian Gulf Strait Administration (PGSA), which now oversees navigation management and transit approvals across the region.

Under the new regulations:

• All vessels must obtain advance transit permits

• Unauthorized passage may be classified as illegal navigation

Iran also launched the “Hormuz Safe” digital maritime insurance platform, offering dedicated insurance services for Iranian vessels and cargoes. The platform supports cryptocurrency settlement but currently does not cover foreign ships or cargoes.

Iran has simultaneously expanded its controlled maritime zone, covering waters from Qeshm Island to Umm Al Quwain and extending toward southern Fujairah.

Although the United States and Iran have reportedly reached a temporary ceasefire agreement, Iran’s strict control measures and U.S. maritime restrictions on Iranian ports remain in place, continuing to disrupt global commodity shipping.

The new shipping management framework and insurance system fundamentally reshape operational rules in the Strait of Hormuz, meaning freight costs and logistical risks are likely to remain elevated for the foreseeable future.

III. Market Outlook and Business Recommendations for Next Week

Overall, geopolitical developments will continue to dominate the global fertilizer market next week. Upstream raw material pressures remain elevated, while finished fertilizer markets are expected to show increasing divergence.

• Sulfur shortages are unlikely to ease in the short term, keeping phosphate fertilizer production costs extremely high and supporting firm phosphate prices.

• China’s ammonium sulfate market is expected to remain weak amid seasonal demand declines.

• International potash prices are likely to maintain gradual upward momentum, supported by India’s benchmark contract.

Based on current market conditions, three practical business recommendations are suggested:

1. Closely Monitor Strait of Hormuz Shipping Developments

Pay close attention to Iranian shipping control policies and regional logistics conditions in order to anticipate freight cost fluctuations and secure shipping rates in advance.

2. Maintain Cautious Procurement Strategies for Phosphate Fertilizers

Given the extreme volatility in sulfur prices, phosphate fertilizer procurement should remain conservative, with medium- and long-term contracts signed only based on actual demand requirements.

3. Use India’s Potash Contract as a Pricing Benchmark

Potash procurement strategies can reference India’s annual contract pricing while remaining flexible toward changing demand conditions in regions such as Brazil and Europe.

Global Fertilizer Market Weekly Update (CW22)