Shipping Disruptions, Rising Costs Strain Fertiliser Markets; India Manages Impact

"The ongoing developments in West Asia have introduced significant volatility in global energy and fertiliser markets, given the region's critical role in supplying both natural gas and key crop nutrients," Chaudhari said, adding "Disruptions in shipping routes, particularly through the Strait of Hormuz, and tightening global LNG availability are exerting pressure on input costs and supply chains worldwide."

The conflict involving the United States and Israel on one side and Iran on the other has been ongoing for nearly a month, disrupting shipments through the Strait of Hormuz and tightening global supplies of crude oil and other commodities, including fertilisers. This has begun to impact availability at the grassroots level, pushing up prices in recent weeks.

He added that, for India, "While these challenges are real, the impact on the fertilizer sector is being carefully managed through close coordination between the industry and the Government," noting that "we are in continuous dialogue with concerned ministries, and the recent constitution of Empowered Groups reflects a proactive and structured approach to monitor disruptions, secure supplies, and address emerging risks in a time-bound manner."

India remains the second-largest consumer and third-largest producer of fertilizers globally and the country is particularly exposed to global price movements in natural gas and imported nutrients such as phosphates and potash. Higher LNG prices directly affect urea production costs, while logistical bottlenecks can delay shipments of finished fertilisers and raw materials, adding uncertainty for both producers and farmers during key agricultural cycles.

Chaudhari said the industry has taken steps to ensure continuity of supply despite the evolving situation. "On the urea front, production planning and gas allocation are being optimised to ensure uninterrupted output, even as some plants undergo scheduled maintenance," he said. "Simultaneously, for phosphatic fertilisers, diversified sourcing strategies and long-term supply arrangements are helping mitigate regional risks."

He emphasised that India's fertiliser ecosystem is now better equipped to handle such disruptions, supported by policy interventions, domestic capacity expansion and stronger collaboration between stakeholders, which together have improved resilience against global shocks.

"At this stage, availability remains comfortable, and the focus continues to be on ensuring seamless supply to farmers and safeguarding agricultural productivity and food security," Chaudhari said.

Moreover, a recent report released by Crisil Ratings stated that supply chain disruptions stemming from the ongoing conflict in the West Asia can potentially impact annual domestic production of both complex fertilisers and urea by 10-15 per cent. Profitability of manufacturers could decline amid lower capacity utilisation due to supply constraints of key raw materials.

The report further noted that the increase in prices of raw materials and imported fertilisers is likely to increase the working capital requirement of players and also raise the subsidy bill of the government by Rs 20,000-25,000 crore.

- ANI