(Bloomberg) — India has asked China to allow the sale of some urea cargoes as the war in the Middle East curtails the nation’s gas supplies, threatening fertilizer production in the agricultural powerhouse.
Indian officials have asked their Chinese counterparts to consider easing export restrictions as the expanding conflict upends supplies of liquefied natural gas — a key feedstock — and forces some fertilizer makers in the South Asian nation to shut plants, according to people familiar with the matter.
The move is a sign of the unusual measures countries are taking to secure key commodities as US-Israeli attacks in Iran snarl global trade and raise risks for food and energy supplies. Discussions are ongoing and a decision has yet to be made, said the people, who declined to be named as they were not authorized to talk to the media.
Global benchmark prices of urea, the most commonly used nitrogen fertilizer that’s crucial to world food production, jumped 21% to the highest in more than three years in the first week of the war, according to the latest available data.
China controls urea exports under a quota system. While some shipments were permitted last year — including to India — it has yet to allocate allowances for outbound shipments in 2026, one of the people said. The country is the world’s top urea producer and farmers are gearing up for spring planting, the peak period for fertilizer use.
A spokesperson for India’s fertilizer ministry did not immediately reply to a request for comment. China’s commerce ministry did not immediately reply to a fax seeking comment.
India’s request comes just as it eased investment rules for bordering countries to support local manufacturing, a step largely aimed at China that signals improving economic ties with its largest neighbor and geopolitical rival.
Though India faces no immediate fertilizer shortage, the country is the world’s biggest urea importer and any prolonged gas disruption could force the nation to seek more supplies before the main planting period begins in June with the arrival of monsoon rains.
Possible sources of urea to offset the shortfall from the Middle East include China, Russia, Indonesia, Malaysia and Egypt, one of the people said.
India has imported 9.8 million tons of urea so far in the fiscal year ending March 31, with another 1.7 million tons scheduled to arrive over the next three months, according to the fertilizer ministry. The country is expected to issue a new urea import tender by the end of this month or early April, the people said.
The world’s most populous nation is the largest grower and exporter of rice, as well as a major producer of wheat, sugar and cotton.
Qatar, a major LNG supplier, cut fuel shipments to Indian buyers last week after hostilities erupted in the Middle East. Fertilizer makers, ranked second in priority for gas allocation in India, are receiving about 70% of their requirements, with some companies beginning to trim production last week, Bloomberg previously reported.
(Updates with prices in 4th paragraph.)
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