Seatrade-Maritime: Middle East fertiliser crisis likely to hit smaller bulk carriers

Published by Seatrade-Maritime

The head of the Yara International, Svein Tore Holsether, has warned that soaring prices and a shortage of fertilisers could lead to a ‘global auction’ potentially hitting the poorest countries, unable to pay for high-cost supplies, hardest. 

Growing seasons across the African continent extend from May until October in the north and central regions, and November to March in the south. Fertilisers are essential to ensure satisfactory crop yields. Although Africa could be a major food producer, Holsether said, countries there are still ‘massive food importers’.

For the food that is produced, nations are heavily reliant on finished fertilisers including diammonium phosphate and urea from suppliers in the Gulf such as Saudi Arabia, the UAE and Qatar. Key loading ports include Jubail, Ras Laffan and Sohar. The Gulf nations are sources for 30-35% of international trade in urea, and 20-30% of ammonia.

In normal times, around 30% of the world’s fertiliser passes through the Strait of Hormuz. But sources estimate that around 300 bulk carriers are now marooned in Gulf waters, many of them laden with fertiliser bound for countries in Africa. The issue is of particular concern for the owners of ships in the 20,000 – 65,000 dwt range – handy’s, handymax, supramax and ultramax – which are the principal carriers of finished product fertiliser and its feedstocks, particularly urea. 

The Economist newspaper has recently stated that the Gulf is arguably even more central to the global fertiliser industry than it is to energy. It cites data from Kpler, a global commodity and transport specialist, which estimates that 1.9m tonnes of fertiliser is currently held up west of the Strait, equivalent to 12% of the total fertiliser shipped through the waterway in 2024. 

Meanwhile, Yara reports that supply disruption has already pushed up the price of urea by 60-70% since the war began at the end of February. And, referring to fertilisers, Holsether warned of the “rather dramatic consequences for those that cannot afford them”. Storage of cargoes that cannot be shipped is another major headache. 

Yara International is the world’s largest producer of ammonia and nitrogen and one of the top producers of fertilisers. It was spun off from Norsk Hydro in 2004.