Global fertilizer shipping could rebound in the coming weeks following the ceasefire agreement between the United States and Iran, after cargo volumes fell sharply due to disruptions caused by the conflict and the closure of the Strait of Hormuz, according to BIMCO.
Filipe Gouveia, Shipping Analysis Manager at BIMCO, said global fertilizer shipments have declined 11% year-on-year since the outbreak of hostilities, as restrictions on exports from the Persian Gulf tightened global supply and pushed fertilizer prices higher.
Under normal circumstances, approximately 16% of global fertilizer shipments originate from the Persian Gulf and transit through the Strait of Hormuz. The closure of the strategic waterway significantly impacted trade flows, particularly for phosphates, urea and sulphur, where shipments dropped by 28%, 12% and 30% year-on-year, respectively.
The disruption has also affected fertilizer production globally. Sulphur, a key raw material in phosphate production, became more expensive and less available, impacting major producers such as Morocco and China that rely on imports. Meanwhile, higher natural gas costs and reduced supply have constrained urea production. Global LNG shipments have fallen 7% year-on-year since the conflict began, further pressuring the fertilizer sector.
The dry bulk market has felt the effects unevenly. According to BIMCO, the supramax and handysize segments have been the most affected by the decline in fertilizer cargoes, with volumes falling 13% and 7% year-on-year, respectively. Fertilizers account for around 5% of overall dry bulk demand but represent a significantly larger share of cargoes carried by these vessel classes.
Despite the reduction in fertilizer shipments, freight rates have generally strengthened, supported by robust grain exports and improved market conditions in the panamax and capesize sectors.
The ceasefire agreement aims to halt hostilities and provides a 60-day window for negotiations toward a permanent truce. As part of the arrangement, the United States is expected to lift its naval blockade within 30 days, while Iran has pledged to facilitate the safe passage of commercial vessels between the Persian Gulf and the Sea of Oman without additional charges for 60 days.
BIMCO expects fertilizer exports to increase rapidly once the Strait of Hormuz is fully reopened, supported by pent-up demand. The association estimates that at least 30 vessels are already loaded with fertilizer cargoes in the Persian Gulf, while another 70 ballast vessels are positioned to load additional cargoes.
Looking further ahead, BIMCO believes fertilizer production and exports across the Gulf region could largely recover, as direct damage to production facilities has been relatively limited. However, exports from Qatar and the UAE may remain below pre-conflict levels due to damage sustained by gas fields and refinery infrastructure.
In Qatar, the Ras Laffan industrial complex is expected to operate at only 50–80% of capacity over the coming months, while the UAE’s Habshan complex is projected to remain below 80% capacity through the end of the year.
The gradual restoration of Gulf fertilizer exports is expected to provide additional cargo opportunities for dry bulk operators and help ease supply pressures in global fertilizer markets.
