Fertilizer Supply Chains Face Continued Stress Amid Hormuz Disruptions

The global fertilizer market is navigating a complex period marked by persistent supply chain vulnerabilities, with the Strait of Hormuz emerging as a critical chokepoint. The situation, described by Alkagesta as a "slow-moving structural test," remains unresolved as of June 2026.

The Strait of Hormuz experienced a sharp reversal in shipping flows following Iran's Revolutionary Guard Corps (IRGC) declaration on June 21 that the waterway was shut. This move, in response to Israeli strikes on Lebanon, saw transits drop significantly from 35 vessels on Saturday to just 12 on Sunday, according to ship tracking data cited by Alkagesta [Alkagesta]. This occurred despite a brief period of recovery after a US-Iran peace agreement, which had seen tanker transits peak at only 25 vessels on June 19, well below the pre-war baseline of over 100 daily transits.

Structural Weaknesses Exposed

Approximately one-third of all globally traded fertilizers traverse the Strait of Hormuz, highlighting the lack of redundancy in a supply chain highly optimised for efficiency. This concentration has exposed the market's fragility. Previous disruptions saw urea prices surge past $800 per tonne FOB Egypt, and force majeure clauses were invoked on contracts. Furthermore, Qatari gas supply tightening led to reduced output from producers in South Asia.

The Food and Agriculture Organization (FAO) Director-General Qu Dongyu underscored the global implications at the 181st Session of the FAO Council, stating that the Strait's closure poses a "global food security risk," as 20-30% of global fertilizer exports pass through this channel. G7 agriculture ministers have since convened to discuss supply diversification and market transparency. Vusal Muradov, Alkagesta’s Fertilizer Desk Lead, emphasised the critical role of businesses that can maintain supply flow through bottlenecks, calling them "essential global infrastructure."

Navigating Market Pressure

In the current climate, timely and accurate delivery of fertilizer products has become as crucial as price discovery. Fertilizer demand is highly seasonal, meaning delays can impact an entire growing season. Market participants must manage complexities including product specifications, storage, port infrastructure, inland logistics, and multi-jurisdictional regulations. The economics of nitrogen fertilizer production are also closely tied to energy and ammonia market stability, which currently signals volatility.

The recent, albeit brief, reopening and subsequent closure of the Strait reinforce that a swift return to pre-disruption operating conditions is unlikely. For fertilizer buyers and traders, this means planning must account for sustained uncertainty. Planting schedules are inflexible, and rebuilding supply chains takes considerable time, even once shipping routes become accessible again. Companies with robust sourcing relationships, flexible logistics, and strong execution capabilities are better positioned to navigate this prolonged period of market pressure.

Source: Alkagesta