Replacing urea supplies from the Persian Gulf countries is currently impossible — StoneX

The global fertilizer market is facing a fundamental supply shortage, as it is currently impossible to replace the supply of urea from the Gulf countries. This was stated by Josh Linville, vice president of fertilizer at StoneX.

According to him, the key players in the market are Qatar, Saudi Arabia and Iran, which together provide about 13.5 million tons of urea exports. At the same time, alternative production capacities in the world simply do not exist.

“There is not even close to sufficient replacement. When we talk about urea and we look at Qatar, Saudi Arabia and Iran, these three countries together provide 13.5 million tons of urea exports. There is simply no such additional production in other parts of the world. It does not exist,” Linville emphasized.

He explained that the problem goes far beyond the supplies from the Persian Gulf itself. The restrictions on LNG exports are hurting importing countries, including India, which uses the gas to make its own nitrogen fertilizers.

“And that’s a big problem. And not just for India, but for other countries. And not just because of that. Think about ammonia. Again, three of the top ten exporters in the world are right there in the Gulf. They’re not shipping any right now. One of the two biggest variable costs in phosphate production is ammonia. The second biggest variable cost is sulfur. And guess where a lot of that sulfur comes from? It’s in the Gulf, it’s in the oil-producing countries,” Linville says.

According to the expert, the situation is fundamentally different from previous price peaks in the fertilizer market.

Linville noted that the problem is already going beyond the Gulf and is starting to affect production in other regions, becoming a global challenge for both nitrogen and phosphate fertilizers.

Tags: Saudi Arabia, fertilizers, Qatar, Iran