On February 28, the United States and Israel launched military strikes against Iran. That same evening, Iran's Islamic Revolutionary Guard Corps announced a ban on all vessels transiting the Strait of Hormuz. Currently, multiple tanker owners and traders have suspended shipments of crude oil, fuel, and liquefied natural gas through the strait. According to information obtained by CGTN reporters from Iranian sources, at least nine U.S. military bases in the Middle East and surrounding regions have been designated as Iranian targets. Following the incident, the global fertilizer market has been disrupted.
The Strait of Hormuz connects the Persian Gulf and the Gulf of Oman, serving as a transit route for 20% of the world's oil exports and a significant volume of liquefied natural gas. It also functions as the “throat” for fertilizer imports and exports in the Middle East. Data indicates that the Middle East exports 21 to 22 million tons of urea annually, accounting for approximately 40% of global seaborne trade, with Iran contributing about a quarter of this volume. Additionally, roughly half of the world's seaborne sulfur trade originates from the Middle East Gulf region, which is also a core supply source for China's sulfur imports. According to statistics from Information, by 2025, China's sulfur imports will primarily come from the Middle East, East Asia, and North America, with imports from the Middle East accounting for 56.20% of the total.
Amid escalating U.S.-Iran tensions, widespread shutdowns at Iranian urea plants have triggered reactions in the international urea market. Overseas media reports indicate Egyptian granular urea prices rose from $480–485/ton on February 27 to $495–505/ton. On the production front, Israel's Ministry of Energy has directed oil and gas producer Energean to temporarily halt operations at its offshore Karish gas field and ordered the shutdown of the Leviathan gas field as a precautionary measure.
Currently, as the Northern Hemisphere enters the critical spring fertilizer preparation period, what impact will this geopolitical conflict have on China's energy and fertilizer markets? Industry experts believe that while the conflict may temporarily drive up international oil prices and cause fluctuations in other energy prices, China's energy transportation system features diversified pathways, granting it strong resilience against price risks. Regarding the fertilizer industry, China has also diversified its trade partners for fertilizer imports and exports. Moreover, key raw materials for urea production—such as coal and natural gas—are primarily sourced domestically. Their prices are subject to national macroeconomic regulation, making significant fluctuations unlikely. Therefore, the impact on domestic fertilizer production is expected to be relatively limited.
While Middle East tensions may disrupt crude oil and commodity markets, potentially pushing up international urea prices, China's current export restrictions limit the direct impact of such increases on the domestic market. Based on existing policy expectations, lifting urea export restrictions before May is highly unlikely.
Domestically, March fundamentals point to a more pronounced bearish outlook on both supply and demand sides. Agricultural fertilizer demand is nearing its seasonal peak, industry operating rates remain high, exports face obstacles, and expectations of state-reserve urea releases are converging to exert downward pressure on domestic urea prices. However, should futures markets experience abnormal upward movements, market sentiment could prompt compound fertilizer enterprises to initiate high-nitrogen fertilizer production and stockpiling earlier than planned. This variable may alleviate downward pressure on domestic urea prices.
In the sulfur market, Middle East tensions have bolstered sellers' willingness to maintain prices. However, due to the sudden nature of the events, most market participants are adopting a wait-and-see approach, resulting in limited price increases at ports for now. Post-Spring Festival, domestic sulfur prices have shown steady gains supported by downstream restocking demand. Supply-side factors include relatively stable domestic production, limited new plant startups or shutdowns, and no significant increase in imported arrivals, with port inventories gradually declining. Future developments in the Middle East warrant monitoring for their impact on international sulfur prices; any rebound in global prices would inevitably affect domestic markets.
Industry insiders note that despite potential disruptions to China's phosphate fertilizer production from fluctuating sulfur imports amid complex global dynamics, diversified transport routes and trading partners limit impacts on domestic supply balance. China's stable energy supply system remains the core pillar supporting continuous fertilizer production, effectively mitigating supply-side shocks.
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