Asia’s Fertilizer Factories Have a Hidden Import Problem as Supply Risks Rise

A UN official warned on October 14 that fertilizer movements through the Strait of Hormuz need to resume within weeks or parts of Asia and Africa could enter key planting periods short of supply.

India relies on foreign suppliers for several materials used in fertilizer production. Official estimates put import dependence at 100% for muriate of potash, 86% for rock phosphate and 75% for ammonia used in complex fertilizers.

More than half of the phosphoric acid and sulphur used by the sector also comes from abroad, along with most of the natural gas feeding urea plants.

Indian factories continue to produce large volumes of urea, DAP and NPK. West Asian disruption has raised freight and insurance costs and complicated shipments of ammonia, phosphoric acid and sulphur before they reach those plants.

China has a larger domestic potash industry, but demand still requires substantial overseas supply.

Asia manufactures fertilizer at scale while relying on imported materials at several points before production begins.

Potash Is the Import Gap Asia Cannot Manufacture Away

Commercial potash production depends on economically viable potassium deposits, with most large reserves concentrated in Canada, Russia and Belarus.

India has no meaningful domestic muriate of potash production and relies on imports. China produces more potash domestically, but output still falls short of agricultural demand.

Urea and compound-fertilizer capacity can be expanded where feedstock and infrastructure are available. Potash production depends on where commercial mineral deposits exist.

Asian fertilizer producers can manufacture the finished product at home while sourcing potassium from mines outside the region.

India’s Factories Expose the Wider Feedstock Problem

Indian fertilizer plants also depend on imported rock phosphate, phosphoric acid, ammonia and natural gas.

Rock phosphate and phosphoric acid feed phosphate-fertilizer production, while ammonia is used in complex fertilizers. Urea plants rely heavily on natural gas, much of it sourced from abroad.

India is trying to reduce part of that dependence inside the manufacturing chain. In March, the government signed off on green-ammonia supply agreements covering 724,000 tonnes a year for 13 fertilizer units, including plants operated by IFFCO, Coromandel International, Paradeep Phosphates and Indorama.

The contracts run for 10 years and are intended to replace imported grey ammonia used by non-urea fertilizer producers.

The same pressure is visible elsewhere in the sector. India has expanded domestic urea capacity and is securing long-term supplies of DAP, NPK and other inputs while West Asian disruption continues to affect shipments of ammonia, phosphoric acid and sulphur.

Domestic fertilizer production is growing, but more of the supply work is now happening before material reaches the factory.

Hormuz Can Hit Fertilizer Before It Reaches the Farm

India sources part of its urea and DAP from Gulf producers, while domestic fertilizer plants also depend on LNG and industrial chemicals moving through West Asian trade routes.

The current disruption has raised freight and insurance costs and delayed shipments of ammonia, phosphoric acid and sulphur used in production.

Gas availability to fertilizer plants also fell temporarily before emergency procurement restored supply.

Imported fertilizer cargoes are arriving at higher cost, while interruptions in gas and chemical feedstocks can reduce output at plants inside India.

That leaves domestic production exposed to the same shipping disruption affecting fertilizer imports.

Asia’s Fertilizer Investment Is Moving Upstream

Asia’s potash constraint sits largely outside its fertilizer factories. Commercial production still depends on access to viable potassium deposits.

India has expanded exploration in Rajasthan and Punjab, where the Geological Survey of India has identified substantial potash resources at different grades.

The government has also backed potassium derived from molasses and other domestic alternatives, although these sources have yet to displace imported muriate of potash at scale.

Gujarat State Fertilizers and Chemicals owns 47.73% of Canadian potash developer Karnalyte Resources, while India and Canada have discussed additional long-term MOP contracts. Canada currently supplies roughly a quarter of India’s requirement.

India has also secured longer-term MOP arrangements with Jordan and continued fertilizer supply agreements with producers in Morocco, Saudi Arabia and Russia.

Exploration at home has not removed the need for overseas mines and long-term contracts.

The largest commercial deposits remain concentrated in countries such as Canada, Russia and Belarus.

For Asian fertilizer producers, access to those deposits remains part of the supply equation.