Fertiliser groups cut production as Iran war squeezes sulphur supplies

{"text":[[{"start":8.65,"text":"Fertiliser companies around the world are cutting production of one of the most vital crop nutrients as the conflict in the Middle East upends supply chains, intensifying concerns over future food shortages."}],[{"start":21,"text":"Disruption to shipping in the Strait of Hormuz has hit global supplies of sulphur — required to make phosphate fertilisers that are used on crops including corn, soyabeans, rice and palm oil."}],[{"start":33.4,"text":"“This situation around Hormuz was in the beginning a raw material problem that has turned into a fertiliser supply shock,” said Faris Derrij, chief executive of OCP Nutricrops, whose parent OCP Group is the world’s biggest phosphate exporter."}],[{"start":48.5,"text":"Before the Iran war began in late February, about 50 per cent of the world’s sulphur trade passed through the strait."}],[{"start":56.2,"text":"Phosphorus is one of the three main macronutrients needed by commercial crops to survive, along with nitrogen and potassium."}],[{"start":63.45,"text":"The phosphate market was already constrained before the war because of rising demand for sulphur in other industries such as battery metals processing."}],[{"start":72.2,"text":"“The phosphate supply situation is grim,” said Chris Lawson, vice-president of market intelligence and pricing at consultancy CRU. “Every major source of phosphate supply is under pressure simultaneously.”"}],[{"start":null,"text":"

"}],[{"start":86.35000000000001,"text":"US-based Mosaic, one of the world’s largest fertiliser producers, has reduced phosphate production in Brazil and the US after soaring sulphur costs hit its profitability. "}],[{"start":98.00000000000001,"text":"OCP has also reduced output after bringing forward maintenance at some plants, although Derrij said the company always maintained “strategic inventories, both of sulphur and finished products”."}],[{"start":109.00000000000001,"text":"“These stocks today provide us the capacity to continue producing until end of July and beyond,” he said."}],[{"start":115.30000000000001,"text":"In response to tightening supplies, China has halted exports of key phosphate fertilisers until at least August."}],[{"start":122.75000000000001,"text":"Importers are racing to secure supplies before conditions worsen. India recently launched a tender for 1.6mn tonnes of phosphate fertiliser. This included 1.3mn tonnes of diammonium phosphate (DAP), the world’s most widely used phosphorus fertiliser, a record amount for a single tender."}],[{"start":142.15,"text":"Saudi producers, such as Ma’aden and Sabic, have attempted to keep exports flowing by trucking products across the kingdom to Red Sea ports. Even so, shipments from the country have roughly halved because of disruption around Hormuz, according to CRU."}],[{"start":157.25,"text":"“There is simply no sulphur,” said Christian Wendel, president of fertiliser trader Hexagon Group."}],[{"start":163.55,"text":"Sulphur prices, which traded at between $150 and $180 a tonne a year ago, have surged to as much as $850-$900 a tonne, with some delivered prices approaching $1,000, he said. "}],[{"start":178.95000000000002,"text":"Even if they can secure sulphur, the economics for phosphate producers “just don’t work out when you have very expensive sulphur coming in”, said Willis Thomas, head of fertilisers at CRU. “In China right now, phosphate margins are negative just from those inputs — and that’s not even including processing costs.”"}],[{"start":null,"text":""}],[{"start":197.60000000000002,"text":"Disruption to the fertiliser industry had initially centred on widely used nitrogen products, such as urea and ammonia. Roughly 30 per cent of ammonia trade passed through the Strait of Hormuz before the conflict."}],[{"start":211.40000000000003,"text":"But analysts warn that even if the strait were to reopen to more vessels tomorrow, phosphate markets could take longer to recover because they are more geographically concentrated and heavily dependent on Gulf sulphur flows. Morocco and the western Sahara hold most of the world’s reserves of phosphate rocks, which are treated with sulphuric acid to make fertiliser."}],[{"start":232.40000000000003,"text":"The squeeze is accelerating a push to produce fertilisers that require less sulphur and ammonia, such as triple superphosphate, or TSP.  "}],[{"start":241.60000000000002,"text":"OCP said it had already been expanding production of TSP for several years before the war as part of a broader strategy to promote more customised fertiliser blends. It is also exploring alternative sulphur sources including pyrite and pyrrhotite, which are byproducts generated during metal processing."}],[{"start":259.75,"text":"Chris Vlachopoulos, phosphate editor at commodity research group ICIS, warned the fertiliser market was splitting in two, with wealthier countries still able to secure supplies and poorer nations at risk of being priced out."}],[{"start":274.2,"text":"“The way the market has been operating up till now is slowly breaking down,” Vlachopoulos said. "}],[{"start":280,"text":"Farmers, particularly in poorer agricultural regions of Sub-Saharan Africa and south-east Asia, were already delaying purchases or reducing how much phosphate they applied to crops because of high prices, said Vlachopoulos. But this risked lower yields."}],[{"start":293.9,"text":"“If one nutrient is depleted, then yields will be as high as the lowest one,” he warned."}],[{"start":300.04999999999995,"text":"The fallout could hamper harvests and hit food production as early as next year, according to Wendel. "}],[{"start":305.65,"text":"“We believe . . . that already for next year we will see smaller crops,” he said. “I think we really might steer towards famine [in certain places] because there won’t be enough food or enough grains in some parts of the world.”"}],[{"start":319.4,"text":"Additional reporting by Andres Schipani in New Delhi and carousel by Carolina Vargas"}],[{"start":332.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779700953_7719.mp3"}