Muted reaction in fertilizer markets to Strait of Hormuz reopening

Fertilizer market participants reacted with caution to the announcement by Iran's Foreign Minister April 17 that the Strait of Hormuz is now "completely open" for all commercial vessels.

"In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organization of the Islamic Republic of Iran," Abbas Araghchi said in a statement on X.

The ceasefire is due to expire on April 22, meaning that without an extension, the Strait could potentially re-close on that date.

"Unless an extension is agreed [the announcement] is not worth anything" said a Middle Eastern ammonia producer.

An ammonia shipbroker said the relatively short remaining duration of the ceasefire means "shipowners may take the view that the ceasefire needs to be extended beyond the initial two weeks. They don't want to to take the risk of sailing in, only to get stuck if the situation deteriorates."

An ammonia seller to NW Europe said they were "cautiously optimistic," but flagged that insurance remained a potential barrier to ships sailing through the Strait. "[It's] way too early to draw any conclusions," they said.

An Indian buyer said it was "good news," and "hope it works," a second said, "obviously everything will go down [in price]."

A Middle East ammonia producer said it "remains to be seen if vessels mobilize, if owners and insurers are willing to do it."

Three ammonia vessels have been stuck west of the Strait of Hormuz since the conflict began - the 25,000 mt Searambler, the 25,000 mt Green One, the 25,000 mt Eco Oracle. The latter two are loaded with full cargoes from Saudi Arabia and Qatar, respectively, according to data from S&P Global Commodities at Sea.

Platts, part of S&P Global Energy, assessed ammonia FOB Middle East at $740/mt April 16, the highest since January 2023 and up from $475/mt on Feb. 25, immediately prior to the outbreak of war.

"Let's see how long it lasts" said a fertilizer producer in Europe. "Fingers crossed it does, but as we know it's going to take some time for the market to [even] if peace holds."

In the sulfur market, "supply [into Asia] will remain constrained as refineries will take some time to get back... sentimental sulfur will go down [in price]" said a trader. The closure of the Strait has halted sulfur supply from the key EMEA production hub and brought FOB Middle East (excluding Iran) prices to $710/mt on April 16, the highest since at least 2017 and likely the highest of all time.

Another fertilizer trader said he was "wondering what will happen to [the] Indian urea tender, especially those who booked cargoes with high prices." India's IPL is currently tendering for 2.5 million mt of granular urea.

Platts assessed granular urea FOB Middle East at $656-$910/mt April 16, from $436-$494/mt on Feb. 26, immediately prior to the outbreak of war in Iran.