ICC says Hormuz has cut fertilizer capacity nearly 40 percent, about 2.7 million tons

The International Chamber of Commerce says the war's disruption of the Strait of Hormuz has cut available fertilizer capacity by nearly 40 percent, taking about 2.7 million tons off the market. Secretary-general John Denton gave those figures to the Wall Street Journal. The chamber's worst case, if the disruption and high energy costs continue, is a rise in global cereal prices of more than 80 percent.

About one-third of the world's fertilizer shipments normally pass through the strait, according to the UN Conference on Trade and Development. World Trade Organization figures cited in the same reporting show fertilizer cargoes through Hormuz essentially collapsed after the conflict began. Export limits in other countries, including China, have tightened the market further.

Which products move, and which do not

The Gulf matters most for nitrogen. The International Food Policy Research Institute has pointed to urea and ammonia as the cargoes at risk. Gulf producers account for more than 40 percent of seaborne urea trade, so a cargo that does not leave a Gulf berth is a cargo the market does not have. Phosphate is a different problem. A producer can own the rock and the export berth and still be unable to run if the sulphur used to process it does not arrive. ICIS has described that as a shift from a price market to an access market.

The price tape shows the split. Qatar's sulphur contract has risen to 805 dollars a tonne FOB. Tampa ammonia has eased to about 775 dollars a tonne CFR. Diammonium phosphate in India was assessed at 930 to 935 dollars a tonne CFR, and monoammonium phosphate in Brazil at 900 dollars a tonne CFR. Finished phosphate has not fully tracked the feedstock jump. Subsidy regimes in importing countries cap how much of a sulphur increase can be passed on. Demand is also weaker. The missing tonnes are still missing.

What 2.7 million tons means for a season

Denton's 2.7 million tons is capacity withdrawn, not a forecast of a single country's import bill. Nitrogen registers the shock faster than phosphate because the Gulf share of seaborne urea is so large. A cereal-price rise of 80 percent is the chamber's worst case, not a price already printed. It depends on the strait staying disrupted and on energy costs staying high. Brent crude was near 98 dollars a barrel on Tuesday after a G7 stockpile release, down about 2 percent on the day, which is a different tape from the fertilizer one.

Farmers plant on a calendar the strait does not share. A missed urea cargo in this window shows up as a lower application rate, then as yield, then as a cereal price. The ICC has put a number on the first step. It has not put a date on the reopening.

The open variable

The variable that moves Denton's worst case is shipping through Hormuz, not a speech about food security. WTO data already show the fertilizer lane has collapsed. If that lane stays shut through the next planting window in the big importing regions, the 2.7 million tons stay off the market and the 80 percent cereal case is the one the chamber has already written down. If cargoes resume, the capacity figure is reversible in a way a lost harvest is not.