Despite an initial agreement between the United States and Iran to end the West Asia conflict and pave the way for the reopening of the strategic Strait of Hormuz, fertiliser availability and prices may take another three to four months to normalise, industry executives have warned .
The disruption caused by the conflict cannot be reversed immediately, even as the tentative peace deal is expected to ease pressure on global energy and shipping markets . Executives said several factors will delay a return to normalcy, including the time required to restart production plants, clear stranded cargo, and restore full shipping operations .
Production restart and supply chain hurdles
The first relief is expected to come from the restoration of natural gas supplies, a critical feedstock for urea production. However, industry executives cautioned that restarting plants and bringing production back to normal levels is a gradual process . Refineries and gas-processing units require safety checks, feedstock availability, staff mobilisation, and maintenance inspections before they can scale up operations. Plants that were idled or running below capacity are typically restarted in phases to avoid accidents and equipment damage .
Several raw materials used in fertiliser production are petroleum derivatives, and supplies will normalise only after oil refineries return to full operations . Shipping companies are also expected to remain cautious before fully resuming operations through the strategic waterway .
Stranded cargo and price pressures
Disruptions to shipments through the Strait of Hormuz have affected imports and domestic production ahead of the peak sowing season. Several vessels carrying urea and DAP to India were stranded during the crisis . “Reopening a shipping lane does not instantly clear stranded cargo. There will be a queue of vessels, port congestion, delayed berthing, inspection delays and insurance approvals,” a senior industry executive said .
While ammonia prices, a crucial input for DAP production, could stabilise within one to two months after gas plants in Qatar return to normal operations, sulphur prices are expected to remain elevated for longer . Sulphur, a key raw material for DAP and a by-product of petroleum refining, has surged to record levels due to supply disruptions in West Asia and strong industrial demand. Wholesale sulphur prices are currently between $815 and $1,200 per metric tonne . Executives warned that sulphur prices could rise further before easing towards December .
India’s stock position
India has adequate urea stocks for the ongoing kharif season, but DAP supplies continue to face pressure because of the global sulphur shortage . The government has strengthened its buffer through imports and domestic production, bringing in 5 million tonnes of crop nutrients to meet seasonal demand .
Officials maintain that there is no immediate risk to domestic availability. The country is expected to consume 38.39 million tonnes of fertilisers in the ongoing kharif season . However, the subsidy bill is likely to substantially exceed the estimate of Rs 1.70 trillion , as the government had to pay sharply higher prices for LNG and urea imports .
