India cuts urea output after Qatar LNG supplies suspended due to Iran war

By Pratik Parija

 

Fertiliser manufacturers in India are beginning to cut output after Qatari supplies of liquefied natural gas, a key feedstock, were suspended due to hostilities in the Middle East. 

Some manufacturers, like Indian Farmers Fertiliser Cooperative Ltd., have started reductions at certain urea plants, according to people familiar with the matter, who asked not to be identified. Any prolonged disruption may compel companies to shut facilities, the people added, without providing details.

 

LNG is the primary feedstock for the production of urea, serving as both an energy source and a key input in the manufacturing process of the most widely used fertilizer. 

 

 

India’s production cuts come as supply disruptions ripple through commodities markets, raising prices and stoking broader economic concerns. Rising prices of other raw materials used to make fertilizer, such as ammonia and sulfur, are adding to fears of higher production costs.

 

Pakistan’s Sui Northern Gas Pipelines Ltd. has also informed customers it will be unable to supply regasified LNG to their fertilizer plants due to the Middle East conflict, according to a company notice seen by Bloomberg. The country receives most of its LNG from Qatar and the suspension takes effect from midnight Wednesday. 

The geopolitical situation is being continuously monitored, and there is no current shortage in gas supplies, a senior official in India’s fertilizer ministry said, without commenting on the urea cutbacks.

 

There are enough stockpiles to meet demand for the near-term, according to Suresh Kumar Chaudhari, director general of Fertiliser Association of India. 

 

“We are very much optimistic that the war may end soon,” Chaudhari said in an interview on Tuesday. “If the war continues, it will be matter of concern for us,” he added, without elaborating.

 

If the cuts last, India could be forced to step up costly imports ahead of peak agricultural demand during the monsoon season that begins in June. The country is the world’s biggest grower and exporter of rice and No. 2 producer of sugar, wheat and cotton.

 

Expensive fertilizer imports would complicate New Delhi’s efforts to rein in spending on nutrient subsidies for farmers, potentially derailing reductions planned in the annual budget. The government is seeking to trim its fiscal deficit target to 4.3% of gross domestic product next fiscal year, from a goal of 4.4% in 2025-26.