Why the Hormuz Reopening Won't Instantly Solve India's Fertiliser Crisis

While a tentative US-Iran peace agreement promises to reopen the strategic Strait of Hormuz, Indian fertiliser manufacturers warn that relief is still months away. Despite the potential for smoother energy flows, structural disruptions in production and shipping mean that supply stability will remain elusive for the near term.

The Lag in Production and Natural Gas Recovery

The anticipated reopening of the Strait of Hormuz is expected to eventually ease pressure on global energy markets, but the ripple effect on fertiliser production will not be immediate. Industry executives highlight that the first sign of relief will depend entirely on the restoration of natural gas supplies.

Restarting gas plants is a complex process that requires significant downtime for safety inspections, maintenance checks, and staff mobilisation. Because many fertiliser raw materials are petroleum derivatives, the industry is essentially waiting for oil refineries to resume full-scale operations before production levels can return to normalcy. This recovery phase is expected to take at least three to four months.

Ammonia vs. Sulphur: A Divergent Price 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 stabilise within one to two months as gas plants in Qatar return to regular operations. Currently, the domestic market is being supported by imported ammonia.

However, sulphur remains a major pain point for the industry. As a key raw material for DAP and a byproduct of petroleum refining, sulphur prices have hit record highs due to West Asian supply disruptions and intense 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 towards December, posing a continued threat to DAP availability.

Logistical Bottlenecks and Shipping Delays

Even if the waterway reopens, the logistical nightmare caused by the recent conflict will not vanish overnight. The reopening of a shipping lane does not instantly clear the backlog of stranded cargo.

Branchenexperts wijzen erop dat een "wachtrij van schepen" waarschijnlijk zal leiden tot congestie in havens, vertraagde aanmeringen en langdurige inspectievertragingen. Bovendien wordt verwacht dat rederijen een voorzichtige houding zullen aanhouden, waarbij nieuwe verzekeringsgoedkeuringen en strikte veiligheidsprotocollen vereist zijn voordat het doorvaartverkeer door de Straat volledig wordt hersteld. Hoewel de overeenkomst tussen de VS en Iran het verkeer binnen 30 dagen naar het niveau van vóór de oorlog zou kunnen brengen, zullen deze logistieke hindernissen de aankomst van ureum- en DAP-zendingen naar India blijven vertragen.

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