Main points
- Nitrogen fertilizer prices have risen sharply due to the conflict with Iran and the closure of the Strait of Hormuz, causing a shortage in the agricultural market.
- Fertilizer manufacturers such as CF Industries Holdings Inc. and Nutrien Ltd. have seen significant growth in profits and sales amid increased demand and logistical challenges.
Nitrogen fertilizers are becoming more expensive / Photo Depositphotos
The global fertilizer market is experiencing a new wave of price spikes due to the war around Iran and logistics problems. The largest producers are already recording a sharp increase in sales and profits amid a shortage of nitrogen fertilizers.
Fertilizer manufacturers have dramatically increased sales
Global fertilizer producers are seeing strong revenue growth amid heightened tensions over Iran and disruptions to global supply chains, Bloomberg reported. CF Industries Holdings Inc. and Nutrien Ltd. reported nearly 20 percent sales growth in the latest quarter.
The price of nitrogen fertilizers, which are widely used by American farmers to grow corn and soybeans, has risen especially sharply . Against this background, CF Industries' earnings per share have more than doubled compared to last year. At Canada's Nutrien, adjusted earnings per share have more than quadrupled.
Companies explain that the market was already in a state of deficit before the conflict, due to high demand and limited supply. The war has only exacerbated the fertilizer shortage and demonstrated the vulnerability of the global nitrogen supply system.
The closure of the Strait of Hormuz caused a new price spike
The market reacted most strongly after the closure of the Strait of Hormuz, a key route for transporting fertilizers and raw materials for their production. As a result, nitrogen fertilizers became one of the most scarce goods on the agricultural market.
Analysts note that farmers cannot completely abandon the use of nitrogen, so after the stabilization of supplies, demand will remain high. An additional advantage for American producers was that natural gas prices in the United States increased more slowly than in other markets, which allowed companies to increase margins.
At the same time , phosphate fertilizers have also risen significantly in price, as not only the finished product but also the sulfur needed to produce it is transported through the Strait of Hormuz. According to Bloomberg Green Markets, since the end of February, granular urea in New Orleans has risen in price by about 36%, while in Egypt prices have soared by more than 70%.
Without Russian supplies: who currently supplies Ukraine with fertilizers?
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Polish companies Grupa Azoty and Anwil became the main suppliers of mineral fertilizers in Ukraine after the withdrawal of Russian producers.
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The stable demand for fertilizers in Ukraine is explained by the significant role of the agricultural sector in the economy, which ensures a stable position of Polish producers in the market.
Experts predict that the demand for fertilizers will remain high in the future. This, in turn, ensures Polish producers a strong position on the Ukrainian market in the medium term.