At nearly 2x price, India to import record urea amid Hormuz crisis

India has moved to secure a record volume of urea imports at sharply higher prices, Reuters reported on Thursday.

New Delhi has reportedly agreed to purchase 2.5 million metric tonnes of urea in a single tender – equivalent to roughly a quarter of its annual import requirement – at nearly double the rates seen just two months ago.

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Indian Potash Ltd (IPL), the state-run importer, finalised the deal after suppliers matched the lowest bids, allowing the full quantity to be contracted. It will buy 1.5 million tonnes at $935 per tonne for west coast delivery and 1 million tonnes at $959 per tonne for the east coast, the report said.

The tender attracted offers totalling 5.6 million tonnes, but only a limited portion was priced at the lowest levels, with most bids clustering near $1,000 per tonne and reaching as high as $1,136.

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“Many suppliers agreed to match the lowest bid offered for both west and east coast shipments, which is why the entire 2.5 million ton purchase was possible,” one of the sources was quoted as saying.

The price jump is stark compared with the previous tender issued by Rashtriya Chemicals and Fertilizers, where bids stood at just over $500 per tonne.

India, the world’s largest urea importer, typically buys around 10 million tonnes annually. The latest procurement alone covers nearly a quarter of that requirement, potentially limiting availability for other buyers.

A Mumbai-based fertiliser industry official told Reuters that the scale of India’s buying could leave other importers scrambling, as producers have already committed supplies under the current tender.

Shipments under the deal are scheduled to depart by June 14.

Earlier reports had warned that supplies of urea – a key fertiliser used in farming – could come under pressure because of the ongoing conflict in the Gulf and the ongoing blockade of the Strait of Hormuz.

The tensions between the US and Iran have pushed up crude oil prices and also led to an LPG crunch, disrupting oil and gas supplies. This is affecting several sectors that depend on petrochemical products, including agriculture.

Experts have said that any disruption in Liquefied Natural Gas (LNG) supplies could also impact India’s urea production.