Global Fertiliser Market Commentary
Fertiliser Market Disruption
The ongoing Middle East conflict has caused direct supply disruptions to global gas, ammonia, urea and sulphur markets with consequences that are structural rather than transient – meaning the effects are in ATOME’s opinion likely to reshape global supply for years, not weeks. The imperative now is to understand the cascading effects on global trade flows, fertiliser affordability, and food security.
Direct Supply Consequence
Following Iranian strikes on Qatar’s Ras Laffan and Mesaieed complexes, Qatar Energy closed its LNG and downstream production operations, immediately curtailing Qafco’s 5.6 million tonne per year urea facility. Iranian facilities producing ammonia and urea – the key ingredients in most fertiliser – are considered largely non-operational; inland facilities may be sustaining partial domestic supply, but continued air strikes to key complexes on the Persian Gulf create significant medium-term uncertainty.
The Strait of Hormuz – the narrow waterway through which flows 20-30% of the world’s fertiliser-grade nitrogen and 45% of its sulphur – is now at risk of extended disruption, with potentially severe consequences for global food supply.
Price impacts are already measurable[1]:
· Urea FOB Egypt last recorded USD 800/t FOB Egypt – up 65% from pre-crisis levels
· Urea CFR Brazil last recorded at US$720/t – up 52%
· Ammonia peaking at USD 800/t CFR Europe – up from $670/t pre-conflict levels
· Sulphur prices up 40% from already elevated levels, with CFR China/Brazil forecast at USD 700/t – over 100% above June 2025 levels
Asia faces acute secondary pressure. India has invoked emergency gas rationing, restricting nitrogen fertiliser production to approximately 70% of capacity. Pakistan and Bangladesh have closed multiple urea plants. Asia – which currently produces enough nitrogen to broadly meet its own needs – now risks becoming heavily dependent on costly imports, with food producers and farmers bearing the cost.
Structural and Long-Term Implications
Supply shocks of this magnitude have consequences that extend well beyond spot price movements. For instance, the 2022 Russia-Ukraine conflict demonstrated how geopolitical disruption can permanently reshape global supply chain architecture; the current crisis has the potential to accelerate that process further.
Several structural shifts are now in train:
· Geopolitical risk premiums are rising materially for supply originating from the Middle East, Russia, and North Africa – structurally improving the relative economics of stable, locally situated production.
· Government policy is accelerating the transition toward domestic energy and fertiliser security. India, Brazil and key Mercosur economies are under increasing pressure to prioritise local, resilient supply – regardless of short-term cost differentials.
· Commodity nitrogen routes dependent on long-haul gas upgrading are demonstrably more vulnerable than demand-led, value-added fertiliser systems positioned close to end markets.
· Regulatory frameworks – including Brazil’s Fertiliser Plan and the EU’s Carbon Border Adjustment Mechanism – are increasingly aligned with local, low-carbon production models.
· Leading fertiliser multinationals are actively restructuring their sourcing to reduce exposure to concentrated, politically unstable supply chains. This trend, which accelerated following 2022, is likely to intensify further.
The aggregate effect is a structural revaluation of supply chain resilience – in which proximity to end markets, renewable energy access, and political stability command a growing premium.
Strategic Significance for ATOME
The immediate and longer-term structural changes to the global energy and fertiliser markets validate ATOME’s business model and the Villeta Project’s strategic rationale, focused on:
· Local resilience: Mega nitrogen complexes concentrated in the Middle East and Russia are demonstrably vulnerable. Villeta – powered by long-term, stable 100% hydropower, in the heart of the Mercosur agricultural hub – offers security that markets now urgently require.
· Risk premium shift: Geopolitical risk premiums for competing supply from the Middle East, Russia and North Africa are rising sharply, improving the relative investment case for ATOME’s stable, Paraguay-based production.
· Regulatory tailwinds: Brazil’s Fertiliser Plan, EU CBAM and equivalent Mercosur initiatives are accelerating support for local, low-carbon fertiliser production – directly aligned with ATOME’s model.
· Offtake: ATOME’s long-term offtake agreement with Yara International, one of the world’s largest fertiliser companies, for 100% of production, demonstrates how leading agricultural and commodity players are supporting supply chain transition away from vulnerable, politically exposed geographies.
Terje Bakken, Director of Ammonia and Fertiliser Markets at ATOME PLC, commented:
“Current events are a stark validation of what we are building at ATOME. Whilst supply effects can be short term – we believe the consequences of the crisis will be long term. There is already a “New Normal” as companies and governments create their own “war rooms” assessing the vulnerabilities and risks of old supply systems. The world cannot continue to rely on concentrated, fossil-fuel-dependent supply from geopolitically unstable regions to feed its population. Villeta, being in the centre of one of the most important agricultural regions of the world, is exactly the locally resilient, renewably powered fertiliser solution that markets, and the sector now are urgently seeking.”