The Red Sea conflict has impacted fertiliser supplies from the Middle East to India, delaying the shipment period by about 15 daysand increasing the freight cost. However, prolonging of the conflict may raise even the global fertiliser prices as seen in the past, which will push India’s subsidy burden.

“As of now Indian companies are getting their supplies from alternate route, which has increased the freight cost and also delayed the delivery by 14 to 15 days,” said N Suresh Krishnan, Chairman of Fertiliser Association of India (FAI). For prior contracts, delivery until December 31, suppliers had absorbed the increase in insurance and ocean freight costs, he said, adding negotiations are on with suppliers on delivery in January and beyond.

Jordan and Israel, two key destinations of Indian fertiliser import, have been majorly affected and about one lakh tonnes of consignments are yet to be despatched from there, industry sources said.

India imports about 0.6 million tonnes (mt) of phosphoric acid, 3.7 mt of rock phosphate, and about 0.5 mt of muriate of potash (MoP) from Jordan; while about 0.5 mt of MoP from Israel annually, industry sources said.

Though vessels carrying Israel’s flag are more prone to attack, even for Jordan, the ship owners are scared and reluctant to move the cargo through the Red Sea area, the sources said. One vessel supposed to deliver MoP to a company in India is yet to start from Eilat port, Israel, even after loading got completed last week, the sources said.

The fertilizer ministry is closely monitoring the supply situation at the highest level due to concerns about availability during the upcoming kharif season, set to begin in June with the onset of the monsoon. India had imported 7.58 mt of urea, 7.08 mt of DAP, 1.39 mt of MoP and 2.75 mt of complex fertilisers during 2022-23.

The import during April-November of the current fiscal was 4.77 mt of urea, 4.6 mt of DAP, 1.76 mt of MoP and 1.67 mt of complex. While 100 per cent of potash is imported, the import share for phosphatic fertilizer exceeds 80 per cent, encompassing both finished DAP and its raw materials.

After China put a halt to export urea and DAP to India, companies are now dependent on Middle-East and Russia to secure the supplies. Fortunately, supplies from Saudi Arabia (for DAP and Ammonia) and from UAE, Oman, Qatar and Kuwait (for urea) have not been affected. Nevertheless, shipments from Russia, Morocco, and even North America have been circumventing the conflict in the Red Sea zone by opting for the Cape of Good Hope route.

As Houthi rebels fired a missile, striking a ship of the US on January 15,off the Yemen coast, fertiliser industry officials are not optimistic about any immediate normalisation of the situation and may soon ask the government to raise subsidy if the freight costs leads to an overall increase in imported fertiliser prices.

Currently, imported urea from Middle East costs $335-340 per tonne, DAP $595 per tonne and MoP about $320 per tonne.