Hormuz reopening could ease pressure on India’s fertilizer market
India’s fertilizer industry expects relief in supply chains and input costs after the US-Iran peace deal reopened the Strait of Hormuz.
The reopening of the Strait of Hormuz after the US-Iran agreement to end the war could bring significant relief to India’s fertilizer sector. LiveMint reported that disruptions in West Asia had been pushing up the cost of urea, ammonia, sulphur and liquefied natural gas, all of them critical inputs for fertilizer production and trade. A more stable shipping route would therefore affect both import availability and domestic production costs.
The route matters enormously for India. Industry estimates cited by the report say the country depends on West Asia for around 40% of its fertilizer imports. Domestic manufacturers have also been dealing with shortages of LNG and ammonia, with roughly 80% of those supplies tied to the same conflict-prone region. At the height of the war, fertilizer and raw material prices jumped by 40-100%, raising concerns over supply disruptions for the kharif 2026 season.
Analysts expect lower input costs if Gulf trade normalizes. Prashant Vasisht of Icra said imported LNG prices should moderate once Qatari supplies resume, which would reduce the cost of domestic urea production. He also noted that global urea prices have already softened, with recent Indian tender values falling to around $450 per tonne after China restarted exports. That matters because the fertilizer industry accounts for roughly 30% of India’s total natural gas consumption.
India is the world’s second-largest fertilizer consumer, yet domestic output still does not cover demand. The country imports about 60% of its diammonium phosphate requirement, roughly 15% of its urea and NPK demand, and major intermediates such as rock phosphate, phosphoric acid and potash. Sanjiv Kanwar of Yara South Asia said a US-Iran peace deal should facilitate smoother supplies of urea, DAP and NPK fertilizers, although the pace of normalization will depend on how quickly shipping companies rebuild confidence and restore regular operations.
Cheaper global prices would also matter for India’s budget. The government has budgeted Rs 1.77 trillion for fertilizer subsidies this fiscal year, but the fertilizers department had earlier sought a 100% increase to Rs 3.5 trillion because of higher LNG and raw material import costs. For reference, India’s fertilizer subsidy bill had already crossed Rs 2.17 trillion in FY26. Lower freight, insurance and raw material costs would therefore ease fiscal pressure as well as improve sector profitability.
Officials say the physical stock situation is comfortable for now. For kharif 2026, India’s fertilizer requirement was reassessed at 38.39 million tonnes, while stocks on June 11 stood at about 19.57 million tonnes, or more than 51% of total seasonal needs. That is well above the usual level of about 33% for this point in the season. If trade through Hormuz stabilizes, the industry could gain not just a short-term price break but a more predictable supply base for a key cropping cycle.