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West Asia Conflict Threatens India's Agrochemical, Fertiliser Supply Chains

The ongoing conflict in West Asia poses a significant risk to logistics for India's fertiliser imports, according to PHDCCI's Nand Kishore Aggarwal. While crude oil prices may not directly impact key fertilisers like potash or urea immediately, the agrochemical sector is highly vulnerable due to its dependence on petroleum-based raw materials. Prices for intermediates from China have already risen, and logistics costs have increased sharply. The industry body is advising members to be cautious and avoid excessive price hikes, though major shortages have not yet materialised.

Key Points: West Asia War May Disrupt Agrochemical, Fertiliser Supply: PHDCCI

  • Logistics disruption for fertiliser imports
  • Crude oil price impact on agrochemicals
  • Rising costs from Chinese intermediates
  • Advisory against excessive price hikes
3 min read

West Asia conflict may disrupt agrochemical supply chains, push up logistics costs: PHDCCI member Nand Kishore Aggarwal

PHDCCI's Nand Kishore Aggarwal warns West Asia conflict could disrupt logistics for fertiliser imports and push up agrochemical costs due to oil links.

"The war is definitely (impacting) because of logistics. - Nand Kishore Aggarwal"

New Delhi, March 6

The ongoing conflict in West Asia is likely to disrupt logistics for India's fertiliser imports and could significantly impact the agrochemical sector due to its dependence on petroleum-based inputs, said Nand Kishore Aggarwal, Chairman of the Chemical and Plastic Committee at PHD Chamber of Commerce and Industry and Chairman of Crystal Crop Protection.

Speaking about the immediate impact of the conflict, Aggarwal said the main concern at present is logistics rather than raw material costs.

"The war is definitely (impacting) because of logistics. Most of our fertiliser imports are from the Middle East, Uzbekistan and Russia. So, because of this war, there will be logistical problems and disturbances," he said, talking to ANI.

Aggarwal noted that crude oil prices may not immediately affect the cost of key fertilisers such as potash, phosphatic fertilisers and even urea, since crude oil is not a direct raw material for these products.

"I don't think the prices of crude oil will have a big impact on fertiliser, especially potash and phosphorus-based fertilisers. Because crude oil is not the raw material of potash or phosphoric fertiliser. Even with urea, there is no requirement for crude oil in this," he said.

However, he cautioned that a prolonged conflict could still have wider economic implications because crude oil is a key source of energy.

"But definitely, because oil is a source of energy and definitely, if the shortage of oil and the price increases of crude oil, it will definitely have an impact on the price of petrol and diesel," Aggarwal said, adding that "not now, but if this war continues, it will definitely have an impact on the price and supply chain."

Aggarwal said the agrochemical industry is more vulnerable because it relies heavily on petroleum-based raw materials and intermediates.

"But I am more concerned about agrochemicals. Because agrochemicals, the total raw material is from the crude oil, the different solvents and all byproducts of crude oil," he said.

According to him, prices of intermediate goods for agrochemicals that are coming from China have shot up.

"And we are expecting that they will increase the price considering this war situation," Aggarwal said, referring to Chinese suppliers.

Logistics costs have also risen sharply in recent days, he said. While the industry is not facing major shortages yet, Aggarwal said supply disruptions could emerge if the conflict continues.

As an industry body, he said, members are being advised to exercise caution and avoid excessive price hikes.

- ANI

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Reader Comments

S
Sarah B
Interesting to see the distinction between fertilisers and agrochemicals. The article clearly explains why agrochemicals are more vulnerable. It shows how interconnected global supply chains are. A conflict far away can ripple right down to our fields.
A
Aditya G
The point about China increasing prices for intermediates is crucial. We are too dependent on Chinese imports for critical inputs. This is a wake-up call for Atmanirbhar Bharat in the chemical sector. We must develop our own capabilities.
P
Priya S
Logistics cost is the silent killer for our exports and imports. Shipping lines will use any excuse to hike freight rates. Hope the industry body's advice to avoid excessive price hikes is followed. Otherwise, the common farmer will suffer.
M
Michael C
A very measured and factual take from Mr. Aggarwal. He's not creating panic but giving a clear-eyed assessment of the risks—logistics first, then energy costs, then raw materials. This is the kind of analysis we need more of.
K
Kavya N
While the analysis is good, I respectfully disagree on one point. Even if crude isn't a direct input, higher diesel prices will increase the cost of mining, transporting, and producing fertilisers. The impact might be indirect but it will be there. Let's not underestimate it.

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