According to the China Chemical Information Weekly, the closure of the Strait of Hormuz has resulted in a massive shortage of sulfur supply, thereby disrupting phosphate fertilizer production and exacerbating market concerns regarding future food shortages.
Prior to the outbreak of the conflict between the U.S. and Iran, the Strait of Hormuz served as the transit route for approximately 50% of the world's sulfur. This substance is an essential raw material for the production of phosphate fertilizers, which are used for crops such as corn, soybeans, rice, and palm oil.
Moreover, the phosphate market was already facing tight supply conditions due to growing demand for sulfur from other industries, such as battery metal processing. Chris Lawson, Vice President of Market Intelligence and Pricing at the consultancy CRU, stated that the phosphate supply situation is extremely dire, with all major sources of phosphate supply simultaneously coming under pressure.
The U.S.-based Mosaic Company, one of the world's largest fertilizer producers, has reduced its phosphate output in both Brazil and the United States, as soaring sulfur costs have eroded its profitability.
OCP Group, the world's largest exporter of phosphates, has also curtailed production by bringing forward scheduled maintenance at some of its facilities. Faris Derrij, CEO of OCP Nutricrops—a subsidiary of the group—stated that the company still maintains strategic stockpiles of sulfur and finished products, with current inventories sufficient to sustain production until the end of July or beyond.
Christian Wendel, President of the fertilizer trading firm Hexagon Group, noted that sulfur supplies have completely dried up. The price of the commodity has skyrocketed from $150–$180 per ton a year ago to $850–$900 per ton today, with delivered prices in some regions even approaching $1,000 per ton.
Willis Thomas, CRU's Head of Fertilizers, pointed out that even if phosphate fertilizer producers manage to secure sulfur supplies, maintaining profitability remains a formidable challenge given the exorbitant cost of sulfur. For some producers, the input cost of sulfur alone—excluding processing costs—is already pushing their phosphate fertilizer operations into negative profit territory.
Fertilizer producers in Saudi Arabia are attempting to sustain their export volumes by trucking their products to ports along the Red Sea. Nevertheless, according to CRU, Saudi Arabia's phosphate fertilizer shipments have already plummeted by nearly half due to the transportation disruptions near the Strait of Hormuz. Stein Haugan, CEO of an Australian fertilizer company, stated that spot supplies of phosphates and ammonia are extremely tight, and prices continue to strengthen. Urea buyers, meanwhile, are adopting a wait-and-see attitude, awaiting the resumption of exports from China or the reopening of the Strait of Hormuz.
India's recent tender for phosphate fertilizers has also established a new global price benchmark. The country secured 1.347 million tonn of diammonium phosphate (DAP) at a CIF price of $930–$935 per ton. This marks the highest price since July 2022—nearly 40% higher than levels seen in January.
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