Even the reopening of Hormuz is not enough? Massive congestion of fertilizer ships remains unresolved, global urea trade recovery may take months

Although the impending peace agreement between the US and Iran is paving the way for the reopening of the Strait of Hormuz, the recovery of the global fertilizer supply chain will remain slow and complex.

According to Bloomberg, ship owners are still waiting for more security details to assess the safety of passage, and the resumption of fertilizer shipments is not expected to be immediate. Market observers believe that as hundreds of various vessels stranded in the region vie to pass through, the recovery of fertilizer transport will be gradual.

Since mid-April, urea prices have fallen by more than 30% in total, indicating that the market is quickly pricing in the expected easing of geopolitical tensions. However, current fertilizer prices in the US market are still about 10% higher than a year ago, indicating that supply chain pressures have not completely subsided.

The Strait of Hormuz has effectively been closed since late February, and it handles about one-third of the world’s urea trade. According to Bloomberg and Kpler vessel tracking data, there are currently more than 40 ships loaded with fertilizer stranded nearby. Since the outbreak of the conflict, weekly fertilizer export volumes have fallen by 90% compared to pre-conflict levels, dropping sharply from nearly 600,000 tons in late February to about 60,000 tons in early June.

Analysts expect that even if the strait reopens, fertilizer carriers are unlikely to be among the first to be allowed to pass. Oil tankers and liquefied natural gas vessels, which are crucial for global energy flows, will be given priority. Alexis Ellender, Senior Dry Bulk Analyst at Kpler, said: "Once normal passage resumes through the Strait of Hormuz, oil tankers and LNG vessels will be at the front of the queue—the priority for fertilizer is not as high."

CRU Senior Analyst Pranshi Goyal pointed out that the ships stranded in the Gulf region collectively carry about 1 million tons of nitrogen fertilizer, of which approximately 40% has already been committed for supply to India. Once passage is restored, the remaining supply will return to the market and may exert further downward pressure on fertilizer prices.