Key takeaways

• Nitrogen markets are returning to pre-war levels, but risks remain. Urea and ammonia prices have fallen from earlier peaks, though seasonal demand could drive new increases if disruptions continue.
• Phosphate supplies remain tight and costly. Prices have stayed elevated as sulfur shortages continue to constrain production and trade.
• Sulfur has emerged as a major bottleneck. Reduced exports, transport disruptions, and export restrictions are raising costs across global fertilizer markets.

More than six months after the start of the U.S.-Israeli attacks on Iran and the subsequent closure of the Strait of Hormuz, fertilizer shipments out of the Persian Gulf region—both a key global transit point and producer of fertilizers and related products—remain largely halted. Though a ceasefire allowed some shipping to resume between mid-June and mid-July, fertilizer products accounted for only a very negligible share, according to the WTO. Since the resumption of hostilities in mid-July, shipments through the strait tracked by IMF-Portwatch have fallen back to near zero.

Yet global exports of nitrogen and phosphate fertilizers have fallen by only about 9%, with exporting countries outside the Gulf, including China and the United States, making up some of the difference. At the same time, the market reaction has been mixed. Some fertilizer price spikes triggered by the start of the war in February have eased, reducing pressure on importing countries and farmers, while others remain high (Figure 1).

Urea prices were almost 80% above January 1 levels in late April but fell back to January levels by the end of August. Similarly, ammonia prices have largely recovered after peaking in May. But phosphate fertilizer prices (for monoammonium phosphate or MAP and diammonium phosphate or DAP) increased 25% to 30% after the closure of the Strait and have remained at those elevated levels since then. Sulfur, an important feedstock for many phosphate fertilizers, has seen prices more than double over the past six months.

This post examines these shifting dynamics in fertilizer trade over the past six months. Using up-to-date trade data, we look at how major exporters and importers have reacted to the challenges of the ongoing strait closure and assess the pace of imports and exports. As in other recent crises, many countries have adapted to some Gulf supply interruptions by turning to exporters elsewhere, though for some items such as sulfur, options are limited.

Figure 1

Nitrogen markets are falling back to pre-war levels, but seasonal demand increases loom

Prices for urea, ammonia, and other nitrogen-based fertilizer products have fallen 25% to 45% since late May. The decline reflects, in part, China’s decision to increase nitrogen fertilizer exports and low seasonal demand from large importing countries like Brazil.

In part due to higher nitrogen prices earlier this year, global trade in nitrogen fertilizers is lower than last year. (Figures 2a and 2b). A number of large exporting countries, including Russia, Saudi Arabia, and Qatar, do not report exports; for these countries, we use so-called mirror trade methods by totaling data from reporting importers. Total mirror trade, based on data from 77 reporting importers, shows global nitrogen exports of urea, nitrogen sulfate, nitrogen nitrate, and anhydrous ammonia (expressed in nitrogen equivalents) down 9% from January to June 2026 compared to the same period in 2025.

Not surprisingly, Gulf exporters such as Saudi Arabia (down 63%), Qatar (down 37%), and the United Arab Emirates (down 29%) accounted for much of the overall decline, though other non-Gulf exporters such as Russia (down 11%) and Trinidad and Tobago (down 30%) also exported less in the first half of 2026 (Figure 2a). Russian exports have been constrained by export quotas and, more recently, by renewed disruptions in Black Sea shipping due to the Russia-Ukraine war that have forced exporters to divert more urea and ammonia to the country’s Baltic ports. Trinidad and Tobago’s decline was a result of a closure of its Nutrien facility in December 2025 due to high natural gas prices.

However, other countries, notably China and the U.S., have partially filled this void. China exported 2.8 million metric tons (MT) of nitrogen fertilizers (nitrogen equivalents), an increase of about 47% over the first six months of 2025. Much of the increased exports went to India (up over 200%), Australia (up 92%), Indonesia (up 51%), and Thailand (up 49%).

Likewise, U.S. exporters took advantage of high urea prices and the seasonal domestic demand slump after spring plantings and exported 1.2 million MT of nitrogen fertilizers, an increase of almost 60% over 2025 January-June levels. U.S. exports of anhydrous ammonia were up more than 56% over 2025 levels, with most of the increase going to Morocco, Norway, Chile, and Mexico. U.S. urea exports almost tripled, with more than half of that increase going to Canada. Canadian urea imports from the U.S. are at record levels, despite the ongoing trade frictions between the two countries.

Figure 2a

Meanwhile, higher prices and more limited supplies led to nitrogen import declines in many countries in the first half of 2026 (Figure 2b). European Union imports of nitrogen fertilizers fell by 1.6 million MT compared to the first half of 2025, a 51% decline. In Brazil, one of the world’s largest importers, they fell by 461,000 MT, a 19% decline. Brazil imports most of its nitrogen from September to December for its safrinha maize crop, which is planted in January and February following the soybean harvest. Brazilian farmers may be delaying purchases in hopes of lower prices later this fall.

India, another major nitrogen importer, saw imports rise by more than 1.1 million MT in the first half of 2026 compared to 2025, a 52% increase. The main reason for the increase: the Strait of Hormuz closure has choked off supplies of liquified natural gas from the Gulf key to the country’s domestic nitrogen fertilizer production, forcing it to seek supplies on global markets. India has made up for the loss of nitrogen fertilizer imports from Saudi Arabia and other Gulf States by turning to alternative suppliers such as China, Egypt, Viet Nam, and Russia.

Figure 2b

Nitrogen fertilizers could rise again later this calendar year as many Northern Hemisphere countries make purchases for fall applications. Nitrogen demand for second-season rice crops throughout South and Southeast Asia, and for Brazil’s safrinha crop, could also boost prices if the strait remains closed throughout the fall.

Beyond the case of nitrogen, the Strait of Hormuz closure has kept prices for other types of fertilizer high amid constrained supplies.

Phosphate market remains tight

Phosphate fertilizer prices rose about 30% after the start of the Iran war and have remained at those levels since mid-May. While the Gulf States (principally Saudi Arabia) account for about 20% of global phosphate exports, the strait closure has also curtailed exports of sulfur, an important feedstock in phosphate fertilizer production. That has, in turn, adversely affected production and export of phosphate fertilizers outside of the region.

Based on mirror trade data from reporting importers of MAP, DAP, and triphosphates, global phosphate exports (expressed in phosphorous equivalents) were down more than 9% in January-June 2026 over the same period in 2025 (Figure 3a)—approximately the same amount as nitrogen exports. While Saudi Arabian exports were off 22%, large declines—driven by scarce sulfur supplies—were also reported for China (down 450,000 MT), Morocco (down 374,000 MT), and Russia (down 182,000 MT). Some of the decline in exports was offset by increased exports from the U.S. over the period (up 303,000 MT).

Figure 3a

At the same time, imports of phosphate fertilizers declined for most of the large importers in the first half of 2026, with total imports based on mirror trade down 9% relative to 2025 (Figure 3b). Imports decreased sharply for India (down 27%), the EU (down 31%), and the U.S. (down 14%). Imports for Brazil and Australia declined as well, but less than 5% compared to levels a year earlier.

Figure 3b

Disruption in sulfur trade complicates fertilizer markets

Sulfur is an important input in the production of phosphate fertilizers. Some sulfur is also used as a crop nutrient. Elemental sulfur enters the market largely as a byproduct of sour gas sweetening (reducing the concentration of toxic hydrogen sulfide in natural gas) and petroleum refining; once recovered, it must be sold or stored. This accounts for most global supply, as mining produces little.

Sulfur prices have more than doubled since the first of the year and have increased more than 40% since the closure of the Strait of Hormuz.

Based on mirror trade data, exports of elemental sulfur fell 33% in the first half of 2026, from 13.5 million MT to 9 million MT (Figure 4a). That fall combines three developments: the Strait of Hormuz closure; a retreat by Kazakh exports following two unusually high years, compounded by new transport restrictions; and export controls in three producing countries.

Figure 4a

The Gulf region accounts for almost three quarters of the total export reduction. Shipments from the UAE fell 41%, and those from Oman, Qatar, and Kuwait all dropped by more than 50%. In raw numbers, by June, Gulf shipments had dropped to 147,000 MT, below the 11-year June range of 730,000 MT to 1.2 million MT.

This reflects an emerging strategic issue. Gulf producers have increasingly held more of the global supply of traded sulfur—close to half in every year from 2016 to 2025. Over that decade, Gulf volumes increased 22% while shipments from other origins fell 12%. The concentration follows the geography of gas sweetening and oil refining and drew little attention before the current disruption. Now it has become a serious chokepoint for the global sulfur market.

Exports outside the Gulf dropped 18%, of which Kazakhstan accounted for roughly two-thirds of the decline. By comparison, exports from other non-Gulf sulfur-producing countries have declined just 9%.

Some of Kazakhstan’s drop was a normalization after two unusually high years (and in a generally high decade: Kazakh sulfur shipments for the first half of 2026 were still 61% above the 2015-2020 average). By April 2026, the shift had brought exports down 28% below the previous year’s level. Then, on May 24, Russia imposed a ban on Kazakh transshipments, which travel about 3,000 km by rail across Russia to Ust-Luga, Russia’s major port on the Baltic Sea.

The market impacts were immediate. Before the ban, Brazil had imported more Kazakh sulfur through April 2026 than during the entire first half of 2025, and none after it. Kazakhstan stopped sulfur exports on June 27. The ban was lifted on July 24, but it is unclear as to how much has been shipped since then.  

The global drop in sulfur exports has hit China the hardest. The country’s elemental sulfur imports dropped by 58% over the first six months of 2026 compared to 2025 levels, which in turn has reduced domestic production (and exports) of phosphate fertilizer. Over the same period, imports by Morocco dropped by 12% (Figure 4b). Morocco lost 724,000 MT of Kazakh-origin supply and replaced some of it with imports from eight other countries that virtually supplied nothing in 2025.

Figure 4b

Substitution options for elemental sulfur are limited. A phosphate plant can receive sulfur in two other forms (as sulfuric acid or as roasted pyrites). Two of the three inputs showed a decrease in 2026. In addition to the 4.4 million MT drop in elemental sulfur exports, sulfuric acid fell by 346,000 MT, while exports of roasted pyrites rose by 62%, though the much smaller volume offset a very small portion of the drop in elemental sulfur exports.

Policies have exacerbated sulfur shortages

As with nitrogen and phosphates, some countries have imposed sulfur export restrictions to protect domestic supplies and production, tightening global markets. Russia announced in June that it would extend the temporary ban on sulfur exports put in place in November 2025 through the end of 2026. India has also suspended sulfur exports to protect its domestic fertilizer production. Kazakhstan restricted exports (other than rail shipments through Russia) in June.

China, the world’s largest producer of sulfuric acid, suspended exports in May to support domestic industries. Exports fell from 2.19 million MT in the first half of 2025 to 784,000 MT a year later, including only 1,000 MT in June.

The distinction among sulfur products matters: China accounts for effectively none of world elemental sulfur exports but about one-sixth of the global sulfuric acid and four-fifths of the ammonium sulfate markets. Exports of the latter continued a decade-long downward trend and did not accelerate when acid exports stopped, so the data do not support a redirection from acid to ammonium sulfate. The restriction fell instead on import-dependent industrial users: Chile, which leaches copper with purchased acid, lost 541,000 MT of Chinese supply, more than a third of China’s entire reduction.

Conclusions

In the seventh month following the closure of the Strait of Hormuz, fertilizer markets remain tight with little relief in sight. Shipping disruptions in the Black Sea and the Red Sea (due to expanded Houthi activity in the Bab el-Mandeb Strait) have also added increased shipping costs for some routes.

The strain has been becoming more evident, as reported in various public supply chain disruptions. For example, U.S. fertilizer producer Mosaic idled phosphate production at its two Louisiana plants in late August, citing the reduced availability and high cost of sulfur. Maaden, the Saudi state-owned mining company, cut its 2026 phosphate production guidance and withdrew its ammonia guidance, citing sulfur supply and logistics disruptions. The Canadian company Nutrien closed its urea facility in Trinidad in December 2025 due to high natural gas prices.

The disruptions may also start placing significant strains on public budgets as governments seek to shield farmers from high prices. India’s fertilizer subsidy bill may exceed 3 trillion rupees ($31 billion) this year compared to the budgeted 1.71 trillion. The European Commission also set up a temporary state aid framework for the Middle East crisis in April that enabled member states to cover as much as 70% of farmers’ additional purchasing costs for fuel and fertilizers since late February. Brazil’s fertilizer industry has requested emergency government subsidies to cover the cost of sulfur imports. Whether these measures remain temporary or mark a more durable policy shift will depend on how long the Strait stays closed.

Joseph Glauber is a Research Fellow Emeritus with IFPRI’s Director General’s Office; Shawn Arita is Associate Director of the Agricultural Risk Policy Center at North Dakota State University. Opinions are the authors‘.