India Set to Acquire Urea Fertilizer at Substantially Higher Post-War Price

India Agrees to Buy Urea at Sharply Higher Prices Amid Middle East Conflict

India, the world's top importer of urea, has reached an agreement to purchase the nitrogen-based fertilizer at significantly higher prices than previously tendered due to the ongoing Middle East conflict. The conflict has disrupted global supplies and driven up benchmark prices.

According to people familiar with the matter, Indian Potash Ltd., the government's designated importer of crop nutrients, will secure 1.5 million tons of urea for delivery on the west coast at $935 per ton and an additional 1 million tons for delivery on the east coast at $959 per ton. These prices represent an almost 90% increase from the previous tender, where India agreed to pay $490 per ton for urea from the Middle East, as reported by Green Markets data.

A total of over two dozen firms submitted offers last week, with prices ranging from $935 to $1,136 per ton. This purchase marks India's first since the US-Israel strikes on Iran and occurs at a critical period ahead of sowing for monsoon crops such as rice, corn, and soybeans. Although the tender has not been formally awarded, it is expected to be confirmed by Thursday.

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India's urea production heavily relies on natural gas from the Middle East, used to produce ammonia, a crucial feedstock for the fertilizer. Supply disruptions resulting from the effective closure of the Strait of Hormuz led some regional producers to idle their plants last month. In response, Indian authorities are in talks with major producers and exporters to secure direct shipments of nitrogen-based and phosphatic fertilizers.

Global urea prices have surged by nearly 45% since the war began, with the Persian Gulf accounting for nearly 45% of global supply, according to Bloomberg Intelligence. Any prolonged disruptions could further drive up prices.