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

Hata kama njia ya baharini itafunguliwa tena, "athari ya foleni" itazuia msaada wa haraka. Viongozi wa sekta walisisitiza kuwa kufungua njia ya usafirishaji hakusafishi mara moja mzigo uliokwama. Msururiko mkubwa wa meli utasababisha msongamano bandarini, kuchelewa kwa kuegesha meli, na kuongezeka kwa muda wa ukaguzi wa usalama na idhini za bima.

Viwanda vya kusafisha mafuta na vituo vya kusindika gesi pia vinahitaji ukaguzi mkali wa usalama, ukaguzi wa matengenezo, na uhamasishaji wa wafanyakazi kabla ya kuweza kufanya kazi kwa uwezo kamili. Hivyo basi, hata kama usafiri katika Mlimango wa Hormuz utarejea katika viwango vya kabla ya vita ndani ya siku 30, ukweli wa kilojistiki wa kusafisha mzigo uliokwama unamaanisha kuwa faida kwa sekta ya mbolea inaweza kuchukua miezi kadhaa kufikia mlaji wa mwisho.

Mambo Muhimu ya Kuzingatia

• Ucheleweshaji wa Uzalishaji: Kuanzisha upya mitambo ya gesi asilia na viwanda vya kusafisha mafuta ili kuimarisha malighafi za mbolea kutachukua angalau miezi mitatu hadi minne.
• Mgogoro wa Sulfur: Ingawa amonia inaweza kutulia hivi karibuni, bei ya sulfur bado iko juu zaidi ya kawaida ($815–$1,200 kwa tani ya metri) na inaweza kuongezeka zaidi.
• Mzigo wa Kilojistiki uliokwama: Kufungua tena Mlimango wa Hormuz kutasababisha msongamano wa bandari na foleni za meli, jambo litakalozuia utatuzi wa haraka wa usumbufu wa usafirishaji.