With the conflict in Iran ongoing, fertilizer prices remain at elevated levels. Several industry veterans in the global fertilizer trade have noted that the current situation is not merely a short-term price spike, but rather a structural supply disruption whose effects may last for years.
In the past, the industry focused more on supply disruptions caused by the closure of the Strait of Hormuz, but damage to facilities is equally concerning and has a more lasting impact. Mike Castle, Chief Market Intelligence Manager at global agriculture and commodities service provider StoneX, pointed out that Iran’s infrastructure already faces severe issues, and the attack on its South Pars gas field has only made matters worse. “The field was attacked last June, and recovery took an extremely long time.”
If the damage to Iran’s infrastructure represents the first wave of impact, then the attack on Qatar’s Ras Laffan industrial facilities may cause even more lasting damage. Castle said this was the scenario he feared most before the conflict erupted. Qatar Energy, the state-owned energy company, stated that repairs to the facility could take three to five years. “This isn’t a matter of a few days of production stoppage; it’s a direct loss of large-scale natural gas supply. “This natural gas is not only a raw material for local fertilizer production, but the exported liquefied natural gas (LNG) is also a key raw material for fertilizer production across Europe and Asia.”
Melih Kayman, founder, president, and CEO of global fertilizer trader Keytrade Group, confirmed that a chain reaction has already begun: India, one of the world’s largest fertilizer importers, has been forced to cut natural gas supplies to its ammonia and urea plants. “India can currently meet only 70% of the natural gas demand for its ammonia and urea plants, resulting in a monthly production shortfall of approximately 800,000 tons.” The situation in Bangladesh is even more severe, with virtually all fertilizer plants shut down, leading to an annual production loss of about 3.7 million tons—while the country itself still needs to import 1 million tons of fertilizer.
Castle cautioned that India’s moves warrant close attention in the coming weeks. Should India issue import tenders due to severe domestic shortages, already sky-high fertilizer prices will surge even further. “Once news of ‘India issuing tenders’ emerges, market conditions will only worsen.”
The most alarming signal conveyed by the two experts is that even if peace were to be achieved in the Middle East tomorrow, the fertilizer market would not quickly return to normal. Kaiman stated: “Even if hostilities cease immediately, production resumes, shipping lanes are cleared of mines, the Strait reopens, and the over 1,000 stranded vessels complete loading and depart, farmers will still face a difficult situation in the coming months.” Castle’s view is even more pessimistic: “The structural damage to Iran’s production facilities alone could have repercussions lasting up to 10 years.”
Regarding farmers’ strategies, both experts offered a consistent core recommendation: stop waiting and start planning immediately. Kaiman stated bluntly, “Abandon the idea of last-minute purchases. In the current market, I absolutely do not recommend waiting until the last minute in the hope that prices will drop significantly.” Castle added, “Everyone has a grain sales plan; fertilizer procurement should be no different.”
As an integrated internet platform providing benchmark prices, on March 27, SunSirs' benchmark price for urea stood at RMB1,872.50 per ton, representing an increase of 1.97% compared to the beginning of the month (RMB1,836.25 per ton).
Application of SunSirs Benchmark Pricing：
Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).
SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.
