Fertiliser alert as MidEast ructions again block shipments

THE AUSTRALIAN Fertiliser Corporation has urged buyers to remain cautious about fertiliser availability, despite Australia having secured sufficient urea supplies to carry through the current season.

AFC says that while experts advise that Australia’s urea supply is currently under control as the main application season draws to a close, the more immediate challenge will be securing granular phosphate products—including DAP, MAP and SSP—for the 2027 season.

“Normally, Australian buyers would begin securing cargoes for spring application between October and January,” AFC chief executive Stein Haugan said.

“This year, sulphur prices have risen dramatically, driven in large part by demand from nickel producers. The closure of the Strait of Hormuz has compounded the situation by severely restricting Saudi Arabian exports.”

In the latest escalation of the Middle East crisis, Iran-backed Houthi forces in Yemen announced a maritime embargo on Saudi Arabia on 20 July in retaliation for restrictions affecting Houthi-controlled ports and airports in north-western Yemen.

“With vessels already unable to move through the Strait of Hormuz, Saudi Arabia is diverting phosphate fertiliser shipments through the Red Sea,” Mr Haugan said.

“Any direct action affecting the Bab al-Mandab Strait would therefore have serious consequences for global fertiliser supply.” 
“India and Australia are particularly exposed, with Saudi Arabia supplying significant volumes of DAP and MAP to both markets.

Shipment times from Saudi Arabia to India could increase by as much as one month, and potentially even longer for Australia, if both the Strait of Hormuz and the Bab al-Mandab Strait were disrupted,” Mr. Haugan said.

Mr Haugan said China, traditionally an important supplier of granular phosphate products to Australia, was also operating at less than 50% capacity because of exceptionally high sulphur prices.

“Sulphur is a critical raw material in the production of granular phosphate fertilisers. The principal alternative would be to source additional product from Morocco,” Mr Haugan said.

“However, Morocco is itself a major importer of sulphur, while freight costs from Morocco to Australia are also a significant consideration.”

Despite the immediate supply risks, Mr Haugan said the longer-term outlook for global fertiliser supply remained encouraging, citing new and developing projects in Qatar, Iraq, USA, Kazakhstan and Brazil. However, it should be remembered that Australia imports 100% of its urea and sulphur requirements.

“I remain confident about the long-term outlook for global fertiliser supply. My concern is the period between now and when that additional capacity comes online,” Mr Haugan said.