Middle East Fertiliser Exports Crash Over 70% as Strait of Hormuz Crisis Strains Indian Agri-Input Feedstock
Fertiliser export volumes from the Middle East plunged by 70% to 75% year-on-year in September 2026, dropping to 994,000 tonnes from 3.41 million tonnes a year earlier, according to tracking data from commodities intelligence firm Kpler reported by The National. The steep contraction follows severe maritime transit disruptions through the Strait of Hormuz amid the escalating conflict involving Iran.
The chokepoint handles roughly one-third of global seaborne fertiliser trade and nearly half of global elemental sulphur movements. With commercial shipowners halting transits over drone and missile threats, alternative overland trucking routes through Saudi Arabia to Red Sea ports have managed only a fraction of normal volumes, failing to offset the maritime shortfall. Madeleine Overgaard, senior manager of agriculture data at Kpler, warned that shipments are expected to stay suppressed through the end of the year unless regional security drastically improves.
Direct Transmission to the Indian Market
For India, the world’s second-largest consumer of fertilisers, the supply shock hits core import channels and domestic production infrastructure simultaneously:
- Raw Material and Finished Imports: India relies on the Persian Gulf for 30% to 40% of its imported urea and diammonium phosphate (DAP), as well as the bulk of its imported ammonia and sulphur.
- Feedstock Vulnerability: Over 85% of domestic urea manufacturing is fueled by liquefied natural gas (LNG), a substantial portion of which is imported via the Strait of Hormuz. Cargo stranded in the Gulf and high spot LNG prices have forced Indian producers to operate under elevated variable costs.
- Fiscal Pressures: With global urea prices seeing steep volatility and spot import bids climbing, industry estimates from S&P Global indicate India’s annual fertiliser subsidy burden could balloon between $20 billion and $22 billion for the 2026–27 crop cycle to protect farmers from global cost surges.
Impact on Domestic Agri-Input Stocks
Shares of domestic fertiliser and chemical producers—including National Fertilizers Limited (NFL), Rashtriya Chemicals and Fertilizers (RCF), Chambal Fertilisers and Chemicals, Gujarat State Fertilizers & Chemicals (GSFC), and Coromandel International—face complex headwinds.
While domestic manufacturers usually see strong volume demand during sowing seasons, complex fertiliser producers dependent on imported rock phosphate, phosphoric acid, and elemental sulphur face compressed gross margins if international raw material costs outpace government subsidy revisions under the Nutrient Based Subsidy (NBS) framework. Conversely, companies with diversified overseas sourcing agreements and integrated domestic gas pooling may see better operational insulation.
Policy Pivot and Sourcing Diversification
To counter the Middle Eastern deficit, the Ministry of Chemicals and Fertilizers has accelerated diplomatic procurement talks. Indian officials have engaged counterparts in Saudi Arabia for long-term arrangements while actively scouting non-Gulf cargoes from Russia, Morocco, and Belarus to safeguard winter crop applications. However, analysts caution that elevated shipping freight and war-risk insurance premiums around remaining transit corridors will keep landed input costs elevated for the foreseeable quarters.
