From Gas Cuts to Freight Spikes: Why Fertilizer Prices Are Climbing in India

The pressure on prices in India’s fertilizer sector increased in early March 2026 following the disruption of LNG supplies, shipping routes, and imports caused by the West Asia war. Urea, ammonia and DAP prices rallied on strong stocks, but supply uncertainties were exacerbated before the Kharif season by geopolitical tensions and rising freight costs.

Urea

The chart presumably indicates flat Urea prices in February 2026 and then a strong rise in the beginning and mid-March, disrupted by geopolitical tensions. The first ~6% increase in early March corresponds with the onset of the West Asia–Middle East conflict, which caused interruptions in LNG supplies from Qatar, a major feedstock supplier to India’s fertilizer manufacturing. With gas supplies to fertilizer manufacturers at 70% of their requirements several producers have cut output or brought forward plant maintenance shutdowns, reducing supplies.

The additional ~9% increase by mid-March, amidst increasing market speculation on urea availability for the Kharif sowing season (June–July) The Kharif sowing season runs from June to July. Low domestic production and uncertain futures for LNG sent urea prices around the world higher, including India’s importinarily cost. In response, India started to look for other sources of supply like China.

Yet the rise in the graph is offset to some degree by robust fertilizer stocks, which were 36.5% higher YoY as of 6 March, 2026. This provides a short-term shielding from an even higher price spike. Should the conflict continue to disrupt LNG supplies and the graph find further upward pressure in the near term as agricultural demand rises this would make a lot of sense for the Kharif season.

Ammonia

The chart probably reveals a steep increase in ammonia prices in March 2026 more recently, after a fairly steady market in previous years. This rise corresponds to the intensification of the Iran–US / Israel tensions in early March, disrupting ammonia supply corridors from the Middle East to India. (Since around 65% of India’s ammonia imports come from the Arab Gulf (Saudi Arabia and Oman), availability of import was greatly curtailed after several suppliers declared force majeure, caused a supply crunch in Indian market.

The escalating graph may also be attributed to rising costs in logistics and freight. Middle East shipping lanes turned out to be dangerous areas, so freight and insurance rates for chemicals shipments doubled at times. These added transportation expenses raised the cost of imported goods and decreased the number of cargo deliveries, intensifying the supply shortage.

The graph: dropping LNG supply, which is necessary for the production of domestic ammonia. A few fertiliser producers were forced to curtail output due to a lower supply of gas, while downstream chemical producers were hit by production disruptions. For example, Balaji Amines has temporarily shut down some plants in mid-March owing to an ammonia shortage, suggestive of further tightening of feedstock availability in the chemical value chain.”

These pressures notwithstanding, the graph may display a degree of moderation instead of an extreme spike as India had entered March with ample fertilizer stocks, which were said to be 36.5% higher year-on-year. These reserves serve as a temporary cushion and can stop shortages from happening right away. Still, with the war continuing and shipping disruptions ongoing, there could be further shocks and more increases, particularly if demand kicks up ahead of the Kharif sowing season (June–July). 

Di Ammonium Phosphate (DAP)

Stable Availability but Rising Price Trend

The graph for March 2026 likely shows DAP prices trending upward despite stable physical availability in India. Although the country holds around 2.5 million tonnes of inventory, the escalation of the Iran–Israel–US conflict in West Asia has increased uncertainty in the global fertilizer market. As a result, market participants expect supply disruptions later in the year, prompting traders and distributors to price in geopolitical risks. This explains why the graph shows price volatility and an upward movement even when domestic stock levels remain comfortable for the end of the Rabi season.

Import Cost Pressure and Subsidy Burden

The graph’s upward slope also reflects higher international procurement costs. Global DAP prices are hovering near $760/MT CFR, and a weaker rupee approaching ?93/USD increases import costs further. Since India subsidizes fertilizer to maintain affordable farm prices, this cost escalation significantly raises the government subsidy burden. In the graph, this is visible as a steady price increase in March, driven more by import cost inflation rather than domestic supply shortages, creating a “high-cost, high-subsidy” market environment.

Shipping Disruptions Driving Market Uncertainty

Another key driver reflected in the graph is logistical disruption caused by the West Asian conflict. Shipping routes through the Red Sea and Strait of Hormuz have become high-risk zones, forcing vessels to reroute and increasing freight and insurance costs. These disruptions delay fertilizer shipments and tighten near-term supply expectations. As a result, market participants anticipate higher procurement costs, which contributes to the upward pressure seen in the graph during early March 2026.

Import Dependency and Global Supply Tightness

India’s heavy reliance on imports for DAP, phosphoric acid, and sulphur makes the market highly sensitive to geopolitical disruptions. The graph’s rising trend is further supported by China’s export restrictions on phosphate fertilizers, which limit global supply availability. With fewer exporters in the market, buyers must compete for limited cargoes. This tightening of global supply chains is reflected in the graph as persistent price firmness and volatility throughout March.

Demand Surge Ahead of Kharif Season

The graph also reflects increased early-season procurement by farmers and distributors. Anticipating possible shortages and price spikes later in the year, many farmers are purchasing DAP during February and March to secure supply before the Kharif sowing season (June–July). This precautionary demand has added to market momentum, contributing to the upward movement visible in the graph despite comfortable stock levels.

Government Mitigation and Long-Term Outlook

To reduce dependency on imports, the government is promoting Nano-DAP adoption and strengthening supply agreements with producers in Saudi Arabia and North Africa. While these strategies aim to stabilize supply, the graph indicates that short-term market conditions remain vulnerable to geopolitical disruptions. If the conflict continues, the graph could show further price volatility leading into the Kharif season, highlighting the importance of timely procurement and supply diversification.

Comparative Stock Status (As of March 10, 2026, in LMT):

Source: PIB

Conclusion:

Fertilizer prices in India witnessed a steep upsurge in the first half of March 2026, driven by geopolitical tension in West Asia. There were notable effects on markets of Urea, Ammonia and DAP due to interruptions in LNG supply, high freight costs and doubts concerning main import routes. Relatively strong domestic fertilizer stocks have cushioned the blow to some extent, though not enough to prevent a full-blown crisis. But ongoing war and import-dependency have potential to keep price volatility high. With the Kharif sowing season ahead, stable supply chains and procurement on time will be important to ensure fertilizer availability and manage the subsidy burden.