Why the Reopening of the Strait of Hormuz Won't Fix Fertiliser Woes Immediately

While a tentative US-Iran peace agreement promises to reopen the critical Strait of Hormuz, the global fertiliser industry remains on edge. Industry experts warn that easing geopolitical tensions will not instantly stabilize prices or availability, as supply chain disruptions in West Asia take time to unwind.

The Lag in Production and Natural Gas Recovery

The anticipated reopening of the Strait of Hormuz is expected to eventually relieve pressure on global energy and shipping markets. However, the transition back to normalcy is far from instantaneous. A senior fertiliser executive noted that the primary relief will stem from the restoration of natural gas supplies, but restarting gas plants and bringing production back to standard levels is a time-consuming process.

Because many raw materials used in fertiliser production are petroleum derivatives, the industry is essentially waiting for oil refineries to resume full-scale operations. Until these facilities are fully functional, the input costs for manufacturers will remain volatile, creating a ripple effect through the global supply chain.

Ammonia vs. Sulphur: A Divergent Outlook

The impact on specific fertiliser inputs is expected to be uneven. Ammonia, a critical component for Di-Ammonium Phosphate (DAP) production, is projected to see price stabilization within one to two months once gas plants in Qatar return to normal operations. Currently, the domestic market is being supported by imported ammonia.

In contrast, sulphur remains a major pain point for the industry. As a key raw material for DAP and a by-product of petroleum refining, sulphur prices have surged to record levels due to West Asian supply disruptions and high industrial demand. Wholesale sulphur prices are currently fluctuating between $815 and $1,200 per metric tonne. Experts warn that these prices could climb even higher before they begin to ease, potentially toward December. While India has sufficient urea stocks for the current Kharif season, the shortage of sulphur continues to squeeze DAP supplies.

Logistical Bottlenecks and Shipping Delays

Même si la route maritime rouvre, l'« effet de file d'attente » entravera un soulagement immédiat. Les dirigeants du secteur ont souligné que la réouverture d'une voie de navigation ne permet pas de résorber instantanément l'accumulation de cargaisons bloquées. Un afflux massif de navires entraînera une congestion portuaire, des retards d'accostage et un allongement des délais pour les inspections de sécurité et les approbations d'assurance.

Les raffineries et les installations de traitement de gaz nécessitent également des inspections de sécurité rigoureuses, des contrôles de maintenance et une mobilisation du personnel avant de pouvoir fonctionner à pleine capacité. Par conséquent, même si le trafic dans le détroit revient à ses niveaux d'avant-guerre d'ici 30 jours, la réalité logistique de la résorption de l'arriéré signifie que les bénéfices pour le secteur des engrais pourraient mettre plusieurs mois avant de se répercuter sur le consommateur final.

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