Strait of Hormuz closure & impacts to fertilizer

The Fertilizer Institute (TFI) is closely monitoring developments following the reported closure of the Strait of Hormuz, a key maritime shipping channel for global fertilizer and energy markets. Cargo insurance cancellations are also forcing vessel operators to cancel shipments, reducing the availability of ships to move product in and out of the region.

Several major fertilizer-producing countries in the region rely on the Strait of Hormuz for exports to global markets. Disruptions to this waterway could impact:

• ammonia: while the US does not typically import ammonia directly from this region, the removal of this product from the global market puts pressure on total global supply, elevating global prices
• urea: nearly 50pct of global urea exports originate from countries west of the Strait and transit through this critical waterway
• sulfur: an important fertilizer as well as a key input in the production of phosphate fertilizers, nearly 50pct of global sulfur exports originate from countries west of the Strait and transverse the Strait of Hormuz
• phosphates: Saudi Arabia is a top four global exporter of phosphates and the leading supplier of U.S. phosphates imports. With Chinese product off the market until August, the remaining producers are Russia and Morocco
• natural gas: a key feedstock for nitrogen fertilizers, 20pct of the world’s LNG makes its way through the Strait of Hormu

As TFI has shared before, the fertilizer market is global and highly integrated. Supply disruptions in one part of the world can ripple across the trade routes and affect availability and price in other regions. While the United States is both a fertilizer producer and importer, those same global supply dynamics play a role in determining input costs for American farmers.

At this early time, the full extent of impacts to the U.S. fertilizer market remains uncertain. The total impact will depend on a number of factors with time being chief among them. TFI remains in close communications with our member companies, policymakers, and other stakeholders in the agricultural community.