Fertilizer Industry: MIDDLE EAST TENSION – FERTILIZER PRICES SURGE

In 2026, global fertilizer supplies are predicted to tighten due to geopolitical tensions. The factors include:

(1)Domestic demand continues to grow thanks to favorable agricultural products prices, especially for key crops such as rice, coffee, and cashew nuts. In 2026, estimated domestic fertilizer consumption is expected to maintain a slight increase of 2%, reaching 10.7 million tons. Within the product structure, urea fertilizer continues to maintain stable demand. Domestic consumption of organic fertilizers is estimated to grow by approximately 15% per year, accounting for nearly 28% of the total market.

(2)In normal condition , domestic fertilizer prices are expected to remain stable or decrease slightly in 2026.

(3)Fertilizers continue to play an increasingly important role in the international market. Exports are expected to maintain a 14% share of total production in 2026, reaching approximately 1.8 million tons, thanks to stable international fertilizer prices and demand from major markets such as India and Brazil.

(4)The policy of imposing a 5% VAT on fertilizers, officially effective from mid-2025, will continue to have a positive impact in 2026. The VAT deduction allows domestic manufacturers to deduct input VAT on raw materials (gas, chemicals), helping to reduce production costs and significantly enhance competitiveness compared to imported goods.

(5)Hormuz tension in March 2026​ causes ship blockage – approximately 33% of the world’s fertilizers, including sulfur and ammonia, are transported through the Strait of Hormuz. Blockage in this area could inflate fertilizer price.