Three out of ten urea and ammonia exporters may fall out of the market due to the crisis in Hormuz — StoneX

Blocking shipping through the Strait of Hormuz could hit key segments of the global fertilizer market. Several of the largest exporters of nitrogen and phosphate products are at risk. This was stated by StoneX’s vice president of fertilizer Josh Linville.

“The problem is that three of the world’s ten largest exporters of urea and three of the ten largest exporters of anhydrous ammonia are blocked at once. The situation in the phosphate market is even worse: five countries control 85-90% of global exports, and among them is Saudi Arabia. If it cannot enter the global market, this is a serious blow,” he stressed.

According to the expert, stopping or restricting the movement of ships through the Strait of Hormuz automatically creates a bottleneck for supplies from the Middle East, a region that is one of the key in the global trade in nitrogen fertilizers.

The phosphate segment, where the market is already concentrated, looks particularly vulnerable. According to StoneX, five countries account for up to 90% of global exports. If supplies from Saudi Arabia are restricted, this could trigger a sharp price spike and shortages in individual markets.

An additional factor of tension remains the reduction in Chinese phosphate exports, which is narrowing alternative sources of supply. Taken together, these factors create the risk of a significant imbalance in the global fertilizer market.

According to the managing partner of Agropartner, which imports fertilizers, the closure of the Strait of Hormuz is creating tension in the global fertilizer market and could lead to an increase in their cost for Ukrainian farmers. Any logistical restrictions in the Strait of Hormuz primarily affect oil and ammonia, which are the basic raw materials for the production of nitrogen fertilizers.

Tags: Saudi Arabia, fertilizers, prices