VINACHEM

The conflict between Israel and Iran has triggered significant instability in the international nitrogen fertilizer market, directly affecting global prices and supply. According to the weekly report from StoneX, a global financial services company, urea production in Iran and Egypt—two key manufacturing hubs in the Middle East—has been halted.

In Egypt’s case, the disruption is due to a shortage of natural gas resulting from reduced gas supplies from Israel. In Iran, urea and ammonia plants have shut down due to the risks associated with the war, further worsening the supply shortage. “It’s worth noting that Egypt and Iran are among the world’s top urea exporters, so the production halt in these countries is a major concern for international buyers,” says Market Intelligence Analyst Tomás Pernías.

This situation has also led to an increase in freight and maritime insurance costs, especially for routes passing through the conflict zone. According to StoneX, the rise in geopolitical risk is driving up international transport rates, which in turn is increasing logistics costs and heightening uncertainty for the global fertilizer trade.

“As a result, both FOB and CFR urea prices have risen across multiple markets, a movement intensified by the cautious stance of some sellers who have withdrawn their offers while awaiting greater clarity on demand trends and the political outlook,” Pernías explains.

Urea futures have also seen significant gains in the United States, the Middle East, and Brazil, indicating that bullish factors are currently prevailing in market expectations for the coming months.

According to Pernías, the situation is especially sensitive for Brazilian fertilizer buyers, particularly farmers. This is because nitrogen fertilizer imports typically ramp up in the second half of the year, ahead of the summer crop planting season.

“Thus, the surge in urea prices on the international market comes at a strategic time, just as Brazil is preparing to increase its demand for fertilizers. It is estimated that fertilization costs are already above 2024 levels, which raises the risk of additional pressure on farmers’ margins. Continued tensions in the Middle East could, therefore, pose significant challenges to planning for the upcoming crop season in Brazil,” the analyst concludes.  – Source: Datamar News