Fertiliser production in India is increasingly feeling the effects of the ongoing West Asia crisis, which has disrupted critical energy supply routes and strained industrial supply chains. According to a report by Morgan Stanley, these disruptions are beginning to impact key sectors, including fertilisers, chemicals, and petrochemicals. As a result, industries dependent on imported energy feedstocks are facing operational challenges and rising uncertainty.
Energy Supply Disruptions Shake Regional Stability
At the heart of the issue lies the disruption around the Strait of Hormuz, a crucial global energy transit route. Constraints in crude oil and natural gas flows have tightened feedstock availability across Asia. Notably, Asia imports nearly a quarter of its energy requirements in the form of crude oil, LNG, and propane. Furthermore, the Middle East serves as a major fertiliser production and trade hub, supplying around 14% of Asia’s fertiliser needs. Consequently, any disruption in this region directly affects the resilience of Asia’s energy-linked value chains.
Fertiliser and Petrochemical Production Under Pressure
The report highlights significant disruptions across industrial sectors. Approximately 25 million tonnes per annum of petrochemical capacity across Asia is experiencing varying degrees of curtailment. At the same time, around 10 million tonnes of fertiliser production capacity has been impacted in countries such as South Korea, Taiwan, Thailand, and India. In particular, shortages of critical feedstocks like propane and naphtha have forced several companies to either reduce operating rates or temporarily shut down units. This has further intensified pressure on production cycles.
India Faces Feedstock Constraints
In India and neighbouring Bangladesh, fertiliser output of nearly 10 million tonnes has been affected due to limited feedstock availability. Beyond regional impacts, the crisis is also affecting global nitrogen fertiliser production. Several plants worldwide have scaled down operations due to feedstock shortages and rising energy costs. According to Morgan Stanley, these disruptions could reduce effective urea output by over 5.5 million tonnes annually—equivalent to nearly 4% of global supply. As a result, the tightening supply scenario is likely to influence global fertiliser markets in the coming months.
Rising Petrochemical Prices Add to Pressure
In addition to supply constraints, downstream petrochemical prices have surged sharply. Prices of polymers and intermediate products have increased by 15–25% over the past two weeks. This price escalation reflects both feedstock shortages and supply chain disruptions, further increasing cost pressures for manufacturers across sectors.
Outlook: Shift Toward Alternatives and Demand Control
The report warns that prolonged disruptions could force economies to adopt alternative strategies. These may include shifting toward fuels such as coal for power generation or curbing industrial consumption to manage shortages. Overall, the ongoing crisis underscores the vulnerability of energy-dependent industries to geopolitical risks. As reported by knnindia.co.in, for India, ensuring stable fertiliser production will require diversifying feedstock sources, strengthening domestic capabilities, and enhancing supply chain resilience. As global uncertainties persist, the fertiliser and petrochemical sectors are likely to remain under close watch.
