ICIS reports on newest fertilizer market shifts

The phosphate market is being forced to confront a possibility that would have seemed unthinkable only months ago: that the disruption at the Strait of Hormuz has not been a short-term shock, but a semi-permanent feature of the global supply landscape.

After weeks of disruption, the shift in perception may now matter more than the disruption itself. While markets can be adaptable, they struggle with uncertainty.

Traders, producers, and distributors are beginning to plan for a world in which familiar phosphate trade lows do not resume quickly.

As a result, some market players are not just seeking alternatives but beginning to accept that some of the market’s long-standing paradigms may have changed.

From disruption to reorientation

In recent conversations with European buyers, one theme reoccurs: there is no realistic substitute for Moroccan phosphate in the near term.

One European source put it bluntly: “I don’t see any other option right now.” Another added that, while alternatives exist on paper: “For P [phosphate] fertilizers I do not see any realistic alternative source, but prices for Moroccan product will be high.”

While some sources point to farmers potentially skipping phosphate application amid poor affordability, the acceptance that Moroccan supply is pivotal marks the first clear sign of reorientation.

Europe’s phosphate market has not yet fully pivoted to Morocco, but psychologically it is already there. In a world where shipping through the strait remains constrained, the question increasingly asked is not whether Moroccan fertilizer producer OCP plays a larger role, but how much larger that role becomes – and at what cost?

This comes as product availability is an increasing concern. The producer has confirmed that up to 30% of its capacity will be affected by maintenance in 2Q26; while also insisting it remains responsive to market needs.

One trader summarised: “The price is now too high and demand is not existing.”

Yet, higher prices alone do not translate into higher volumes. In fact, the next phase of adjustment may be less about supply chains and more about demand destruction.

Brazil, as it so often does, offers an early signal. Sources noted a decline in the country’s phosphate fertilizer imports during the first four months of 2026, with a 4.2% drop y/y.

“When the analysis is conducted in terms of P₂O₅, the contraction is more pronounced, reaching a 9% decline,” a source said.

This suggested that Brazilian buyers are not stepping away from phosphates entirely but have been changing how they purchase them. Triple superphosphate (TSP) imports surged by 50%, according to the source. TSP is often used in blending facilities to manufacture various grades of nitrogen, phosphorus, and potassium (NPK), in order to get the necessary phosphate into the ground.

However, farmers have been finding costs too high, as there are serious affordability concerns. One way forward is through reduced application, with implications not just for fertilizer balance sheets, but also for yields, product variety on offer, and ultimately, food availability.

Can phosphates bypass the Strait of Hormuz?

In theory, markets adapt. The same thing happened in 2022, at the outbreak of the Ukraine-Russia conflict, when the market diversified.

In practice, however, phosphate lows are stubbornly physical this time around, as a significant portion of global supply passes through the Strait of Hormuz. Another concern is the price of sulfur and ammonia, as well as availability of those important feedstocks.

When asked whether phosphate lows could be re-routed around the strait, respondents were sceptical. Longer voyages as well as insurance costs were but some of the concerns on participants’ minds.

When asked whether the phosphate market will find ways around the strait, one participant stated: “I don’t think [so] – the more it is shut, prices can shoot further.”

Another participant stated they already see demand destruction rather than alternative an supply in key countries, warning that “demand destruction [is] occurring in key markets such as Brazil and India.”

They added that India’s subsidies may delay the adjustment, but not eliminate it, while Brazil is already showing how high prices can translate into reduced phosphate use.

What could adaptation look like?

With few viable logistics alternatives, adaptation is more likely to occur in shifting product strategy and demand behaviour than through new trade routes.

If the disruption at the strait lasts longer, three adjustments are likely.

Firstly, a migration away from diammonium phosphate (DAP) and monoammonium phosphate (MAP) and towards TSP, single superphosphate (SSP), and custom NPK formulas that stretch each unit of phosphorus further.

Secondly, it is likely that buyers may accept heavier reliance on Morocco and other suppliers in the absence of traditional suppliers like China, which has in effect banned all phosphate exports, and Saudi Arabia. Indian buyers are understood to be in discussions with Moroccan suppliers for large quantities of DAP and TSP, although concerns over TSP remain.

Thirdly, it is possible that markets witness significant demand destruction, even if it is not evenly distributed. Some regions can absorb the shock, but others, including parts of sub-Saharan Africa, could be priced out, with potential food security implications.

Regardless of the outcome at the strait, the phosphate market has been thrust into a new era.

Market players have to adjust to the fact that price and availability risks have to be managed together, not in sequence. It is also likely that we see some innovation around product use and nutrient deficiency, which will matter more than absolute tonnage.

However, food security discussions will move from theoretical to practical if high prices persist into 2027.

Read the article online at: https://www.worldfertilizer.com/phosphates/05052026/icis-reports-on-newest-fertilizer-market-shifts/