Global fertilizer shipments could rebound in the coming weeks following the ceasefire agreement between the United States and Iran, after volumes fell 11% year-on-year since the outbreak of the conflict, according to shipping association BIMCO.
Filipe Gouveia, Shipping Analysis Manager at BIMCO, said disruptions in the Strait of Hormuz severely impacted fertilizer exports from the Persian Gulf, a region that normally accounts for around 16% of global fertilizer shipments. The restrictions tightened global supply and pushed fertilizer prices higher.
Among the hardest-hit commodities were phosphates, urea and sulphur, with shipments declining 28%, 12% and 30% year-on-year, respectively, since the conflict began. Higher sulphur and natural gas costs also disrupted fertilizer production, as sulphur is a key input for phosphate production while natural gas is essential for urea manufacturing.
The downturn particularly affected the supramax and handysize dry bulk segments, where fertilizer cargoes represent a significant share of demand. Fertilizer volumes carried by supramax and handysize vessels fell 13% and 7% year-on-year, respectively. However, overall dry bulk freight rates remained supported by stronger grain trade and robust demand in the panamax and capesize sectors.
Under the ceasefire arrangement, the US is expected to lift its naval blockade within 30 days, while Iran has agreed to facilitate the safe passage of commercial vessels through the Persian Gulf and Strait of Hormuz for at least 60 days. The agreement is intended to create a window for negotiations toward a permanent settlement.
With the waterway reopening, fertilizer exports are expected to increase as pent-up demand is released. BIMCO estimates that at least 30 fertilizer-laden vessels are already waiting in the Persian Gulf, while another 70 ballast ships are positioned to load cargoes.
Looking ahead, BIMCO expects fertilizer production and exports from the Gulf region to largely recover, as direct damage to production facilities has been limited. However, exports from Qatar and the UAE may remain below pre-conflict levels due to damage sustained by gas fields and refining infrastructure, with key facilities expected to operate below full capacity in the coming months.
