ICC says Hormuz has taken nearly 40 percent of fertiliser capacity off the market

John Denton, secretary-general of the International Chamber of Commerce, has told the Wall Street Journal that available fertiliser capacity has fallen by nearly 40 percent since traffic through the Strait of Hormuz was disrupted, taking about 2.7 million tonnes off the market. The ICC'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 fertiliser shipments normally pass the strait, on figures from the UN Conference on Trade and Development. World Trade Organization data show those shipments essentially collapsed after the conflict began. Export limits in other producing countries, including China, have tightened the same market from the other side.

The Gulf's weight is heaviest in nitrogen. The International Food Policy Research Institute has pointed to urea and ammonia as the products for which the region is hard to replace. Both are made from natural gas. A strait that blocks the product and a war that lifts the gas price hit the same tonne twice: once in freight, once in feedstock.

The 40 percent figure is capacity, not a measured drop in every farmer's delivery. Capacity off the market means plants and cargoes that cannot move, not a census of warehouses. The 2.7 million tonnes is the ICC's translation of that capacity loss into volume. A buyer who still has a contract with a plant west of Suez will not see the full 40 percent. A buyer whose contract ran through Hormuz will see something closer to a stoppage. The WTO collapse in strait shipments is the second of those cases.

Cereal prices are the lagged effect. Fertiliser applied this season shows up in the next harvest. The ICC's 80 percent is a scenario, not a spot quote. It assumes the disruption drags on and that fertiliser and energy stay very expensive. It is the upper case Denton put in front of the Journal, and it is the number food importers will test against their own stocks.

Shipping attacks in the same waterway are already in the UKMTO file for the first week of October, including a projectile strike on the Liberia-flagged LIPSI that started an engine-room fire. A fertiliser cargo is not an oil cargo, but it uses the same lane. A master fighting a fire and a plant that cannot ship urea are two ends of one route.

What the public record does not yet have is a country-by-country table of missed urea loadings. Until that table exists, the usable figures are Denton's: nearly 40 percent of capacity, 2.7 million tonnes, and a cereal-price case above 80 percent if the lane stays shut. UNCTAD's one-third share says why a single strait can move a world price. IFPRI's note on urea and ammonia says which product moves first.

Farmers heading into the next application window will not buy the ICC scenario. They will buy the tonne in front of them. The scenario is the warning that the tonne may not be there, or may cost what an 80 percent cereal move implies for the crop that follows.

Denton is not a price-reporting agency. The ICC speaks for companies that move the cargo. A 40 percent capacity figure from that desk is a shipper's number, and it should be read next to the WTO's finding that fertiliser shipments through the strait collapsed. The two statements fit. Capacity that cannot transit is capacity off the market, even if the plant itself is intact on the northern shore of the Gulf.

The cereal case above 80 percent is the figure most likely to be quoted without its condition. The condition is a long disruption and energy costs that stay very high. A reopening of the lane, or a diversion of urea through a longer route that actually delivers, would retire that case. Until one of those happens, the 2.7 million tonnes is the volume Denton says is already missing.

Importers in South Asia and East Africa, who take a large share of Gulf urea in a normal year, are the buyers exposed to that missing volume. The ICC note does not name a tender that failed. It names the lane those tenders use. That is the information a food ministry can act on this week, ahead of any revised spot quote.