Prolonged Middle East war could disrupt fertiliser market

 The region is a key supplier of natural gas, urea, ammonia, and sulphur – essential inputs for global fertiliser production.

The Fertiliser Industry Association of Malaysia (FIAM) said the plantation and agriculture sectors must be prepared for rising costs, supply shortages, and operational delays if Malaysia’s fertiliser market is disrupted due to the Middle East war.

PETALING JAYA:

 The ongoing war in the Middle East could severely disrupt Malaysia’s fertiliser market if it continues, warns the Fertiliser Industry Association of Malaysia (FIAM).

The association noted that the region is a key supplier of natural gas, urea, ammonia, and sulphur – essential inputs for global fertiliser production.

FIAM said prolonged instability in the region could reduce production capacity and disrupt exports, reported Bernama.

“In a worst-case scenario, the plantation and agriculture sectors must be prepared for rising costs, supply shortages, and operational delays,” FIAM said in a statement today.

FIAM highlighted that the biggest impact would be on maritime logistics.

Heightened risks along shipping routes such as the Red Sea, Strait of Hormuz, and Suez Canal may force fertiliser vessels to reroute via the Cape of Good Hope, adding 10 to 14 days to transit times. This would increase fuel consumption by up to 40% and drive up freight costs.

Insurance premiums for ships passing through conflict zones could also triple, further raising landed costs, said FIAM.

“The combined effect of longer voyages, higher freight charges, and reduced vessel availability would create global supply bottlenecks, particularly affecting Asia and Africa, which rely heavily on Middle East exports,” FIAM said.

Traders and distributors may stockpile in anticipation of disruptions, adding speculative pressure to already limited supplies.

FIAM also said volatility in natural gas markets would raise ammonia production costs. Delayed shipments could disrupt fertiliser application schedules, increase yield risks, and force rationing or the use of lower-grade alternatives. - FMT