Strait of Hormuz remains concern for Australian fertiliser importers

THE Strait of Hormuz remains a key concern for global nitrogen markets with reports about 20 fully loaded urea vessels destined for Australia remain stranded in the Persian Gulf, the Australian Fertilizer Corporation says.

The AFC says this represents an estimated combined cargo volume of up to 600,000 tonnes.

“Affordability is now becoming one of the defining forces in global fertiliser markets,” said AFC chief executive Stein Haugan.

“Supply remains constrained across several nutrients, but buyers are increasingly resisting elevated pricing levels, particularly in phosphates and urea.”

Global urea sentiment was said to have weakened this week amid increasing uncertainty surrounding Middle East logistics.

Iranian urea exports are said to be continuing despite ongoing geopolitical tensions, with several cargoes reportedly arriving into Southeast Asia at values significantly below prevailing international prices.

Market participants are said to be closely monitoring discussions between the United States and Iran regarding sanctions and regional stability.

Any meaningful easing of sanctions could materially alter global trade flows, given Iran’s estimated export potential of about nine million tonnes annually.

“The global urea market is currently being driven as much by geopolitics as by agricultural fundamentals,” Mr Haugan said.

“Until logistics through the Strait of Hormuz normalise and China clarifies its export position, volatility is likely to remain elevated.”

Global phosphate markets are said to be fundamentally tight, though buyer resistance is reportedly becoming increasingly evident.

The AFC referred to rumours of “a potential easing” in Chinese export restrictions, though no official confirmation has been provided.

Market participants are closely monitoring upcoming meetings between Chinese authorities and major phosphate producers.

“Phosphate markets are increasingly confronting a disconnect between physical availability and commercial affordability,” Mr Haugan said.

“Even where supply exists, many buyers are simply struggling to absorb current pricing levels.”

Closer to home, meanwhile, several major production facilities remain offline or under maintenance, including Indonesia’s PAU facility, Petronas, and Yara’s Pilbara operation in Western Australia.

“The market is no longer moving in a single direction across all nutrients,” Mr Haugan said.

“Affordability, geopolitics and logistics are now interacting simultaneously, creating a far more fragmented and unpredictable global fertiliser environment.”