Russia-Ukraine conflict affecting the fertilizer trade in India

The ongoing war has been adversely affecting the supplies of fertilizers worldwide with the global fertilizer supply getting interrupted in India as well. Exports are being affected by both Ukraine and Russia. The closing down markets of Ukraine and Russia for fertilizers is forced to have a significant impact on the Indian imports. An upsurge in the prices of nitrogen in Asia resulted in an increment in the prices of Potassium Nitrate water-soluble Fertilizer.

Water-soluble potassium nitrate fertilizer is used in large-scale agriculture or home gardens. It consists of nitrogen and potassium where nitrogen is applied to the crops for gentle growth and potassium regulates biological functions for the crops. This fertilizer is beneficial from the middle stage of the crop. In March, the sowing of crops in India started but the disturbances in the supply of fertilizers is adversely affecting India’s agriculture sector.

Russia has large reserves of natural gas and supplies about 40% of the natural gas used in Western Europe. Gas pipelines from Russia to Western Europe pass through Ukraine. We are concerned that the war in Ukraine may affect the supply of natural gas. If the natural gas availability is lower, it may reduce the production of nitrogen fertilizers, hence increasing the imports. Rising nitrogen demand from key crop regions will certainly result in increased nitrogen fertilizer prices.

The production of nitrogen fertilizers requires a large amount of natural gas. According to ChemAnalyst data, the prices of natural gas has been rising in Asia (China, India) since October 2021 due to cold weather and increased heating consumption.

Russia is one of the important suppliers of fertilizers and related raw materials worldwide. Last year, it was recorded that the country was the largest exporter of urea, multi-component NPK (nitrogen, phosphorus, potassium), ammonia and ammonium nitrate. Hence, anticipating as to how long the ongoing Russia-Ukraine conflict lasts, fertilizers prices is estimated to follow drastic changes, mostly increment.