Hormuz reopening is useless? The "massive congestion" of fertilizer ships remains unresolved, and it may take months for global urea trade to recover.

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Although the near conclusion of a peace agreement between the US and Iran paves the way for the reopening of the Strait of Hormuz, the restoration of the global fertilizer supply chain will still be slow and complex.

According to Bloomberg, shipowners are still waiting for more safety details to assess transit security, and the recovery of fertilizer shipping is not expected to be immediate. Market observers believe that as hundreds of various cargo ships stranded in the area compete to pass through, the recovery of fertilizer transportation will be gradual.

Since mid-April, urea prices have fallen by more than 30% in total, indicating that the market is rapidly digesting expectations of eased geopolitical tensions. However, current US fertilizer prices are still about 10% higher than a year ago, showing that supply chain pressures have not completely disappeared.

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

Analysts expect that even if the strait resumes passage, fertilizer cargo ships are unlikely to be prioritized for transit. Oil tankers and LNG carriers, critical to global energy flows, will be given priority. Kpler dry bulk senior analyst Alexis Ellender said: “Once the Strait of Hormuz returns to normal transit, oil tankers and LNG carriers will be at the front of the queue; fertilizers are not as high in priority.”

CRU senior analyst Pranshi Goyal noted that ships stranded in the Gulf region collectively carry about one million tons of nitrogen fertilizer, of which around 40% has already been pre-committed to India. The remainder, once transit resumes, will re-enter the market and may put further downward pressure on fertilizer prices.

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