Urea, DAP heading towards $ 1,000/tonne?
With both crude oil and liquefied natural gas (LNG) prices trending upward, fertiliser prices have followed suit. As demand is expected to rise in the coming days, particularly for urea and its key feedstock, LNG, due to India’s upcoming sowing season, experts fear that current disruptions could push urea prices beyond $1,000 per tonne. This follows statements from US President Donald Trump suggesting the conflict could last more than four to five weeks.
DAP, Urea Price Surge
“DAP is likely to cost at least $1,000 per tonne (FOB), up from around $850 last week, while urea may take longer to breach the $1,000 mark (CFR),” said a fertiliser industry expert. They added that Egypt had finalised deals to buy urea at $492 per tonne just days before the US-Israel alliance launched military action against Iran, which triggered an immediate price spike to $530 per tonne. Egypt had also finalised DAP purchases at $750 per tonne around February 19.
Import Dependence Worries
Since fertilisers are not traded on commodity exchanges, prices are largely determined by suppliers based on demand and the geographical concentration of raw materials. Morocco holds 70 per cent of the world’s phosphate reserves, while Canada and Belarus are the primary producers of potash. Notably, global urea prices previously breached the $1,000 mark in early 2022 and exceeded $900 per tonne in 2021.
FAI Data Signals Gap
Data from the Fertiliser Association of India (FAI) shows that urea sales in India during April–December 2025-26 increased by 3.8 per cent to 31.16 million tonnes (mt), compared to 30.02 mt during the same period last year. However, domestic urea production for the same period fell by 3 per cent to 22.44 mt, while imports surged by 85.3 per cent to 8 mt.
Government Steps In
Urea imports, which are strictly controlled by the government, dropped 20 per cent to 5.65 mt in 2024-25 from 7.04 mt in 2023-24. Following widespread reports of scarcity across the country, the government recognised the need for large-scale imports in September and subsequently directed canalising agencies to issue tenders sequentially.
Strait Of Hormuz Risk
Qatar, which supplies 40 per cent of India’s annual 27 mt of LNG imports, has halted production after its facilities came under attack. Additionally, Iran’s closure of the Strait of Hormuz, through which India typically receives 55 per cent of its LNG, is a critical factor for the market. Maersk, the Denmark-based logistics giant that handles 15–20 per cent of global container trade, has already announced an indefinite suspension of operations in the region.
IMMA Flags Agri-Trade Impact
According to Rahul Mirchandani, President of the Indian Micro-Fertilisers Manufacturers Association (IMMA), “Disruptions or heightened risks in the Strait of Hormuz can significantly affect India’s agri-trade flows, as fertilisers, sulfur, phosphoric acid, and other critical inputs face longer transit times, higher freight rates, and increased insurance premiums.”
He further noted that a significant portion of global sulfur is recovered from oil and gas processing in West Asia. Any shipping disruptions could tighten supply and spike prices for sulfur-based fertilisers. “This translates into higher nutrient costs, pressure on fertiliser subsidies, and potential delays during key sowing seasons,” Mirchandani said.
Subsidy Allocation Under Pressure
In the current fiscal year, the subsidy for Phosphatic and Potassic (P&K) fertilisers was ₹49,000 crore at the Budget Estimate (BE) stage, which later rose to ₹60,000 crore in the Revised Estimate (RE). Despite India being over 90 per cent dependent on imports for P&K, the subsidy allocation has been cut to ₹54,000 crore. Similarly, the urea subsidy has been reduced by 7.6 per cent to ₹1,16,805 crore for FY27, down from ₹1,26,475 crore in FY26 (RE).
Published on March 4, 2026