Some urea companies in India have shut down plants or moved up annual maintenance after Qatari supplies of liquefied natural gas, a key feedstock, were suspended due to the Iran war.
Manufacturers, including top producer Indian Farmers Fertiliser Cooperative Ltd., have either halted some of their facilities or started routine upkeep, according to people familiar with the matter. Restarting a paused plant could take as long as a month, provided LNG supplies resume, they added, asking not to be named because the matter is private.
LNG is the primary feedstock for urea production, serving as an energy source and a key input in making the world’s most widely used fertiliser. Gas supplies to India’s fertiliser industry are currently about 70% of their requirement, the people added.
Any long-drawn halt to LNG supplies could force India — the world’s top importer of urea — to ramp up purchases, pushing up global prices and hampering government efforts to trim its subsidy burden. Fertilizer demand peaks during the monsoon season that begins in June.
Higher farm input costs in the South Asian nation would also have implications for crop prices — and broader inflation — as the country is the world’s biggest grower and exporter of rice and the No. 2 producer of wheat, cotton and sugar.
The government has taken measures to ensure that at least 70% of the average LNG needs of fertiliser makers are met while the Middle East conflict snarls supply, a spokesperson for the fertiliser ministry said. Stockpiles of fertiliser, including urea, were about 18 million tons as of March 10, up almost 37% from a year earlier, ministry data show.
A senior official at fertiliser maker IFFCO didn’t immediately respond to an email sent after office hours.
Thailand, Bangladesh, India and Vietnam are dipping into the spot market to secure near-term LNG supplies, but some tenders for this month — from India’s Gail and GSPC — have gone unawarded, indicating a shortage of immediately available fuel.
India’s fertiliser sector relies heavily on LNG imports, with a significant share sourced from the Middle East, according to the Fertiliser Association of India. The industry is working with the government to prioritize allocations for urea output, the group added.
India’s fertiliser production and imports — including urea, di-ammonium phosphate and potash — rose to 65 million tons in the 10 months ended Jan. 31, up from 57 million tons a year earlier, the industry group said. So far, strong domestic production and timely imports have ensured that supplies will meet farmers’ demand, it added.
