Why spike in fertiliser prices could boost China’s political clout

The US-Israel war on Iran has crippled exports of fertiliser from the Persian Gulf, raising the spectre of higher food prices if the conflict drags on.

The disruption could hand China – the world’s largest fertiliser producer – greater political leverage over countries already locked in disputes with Beijing, though it is unlikely to weaponise exports, according to analysts.

Global fertiliser prices have soared since Iran effectively blocked shipping through the Strait of Hormuz, through which exports flow from major producers such as Saudi Arabia and Qatar.

Since the war began in late February, the price of urea – the world’s most widely used nitrogen fertiliser – has reportedly jumped from around US$400 per tonne to US$700.

Southeast Asia has been hit especially hard. Researchers say 80 per cent of the fertiliser used in the region is imported from elsewhere. Indonesia, Vietnam and the Philippines are among the region’s largest buyers of Gulf urea and ammonia.

With the first planting season of the year just months away in much of Asia, Beijing could see its strategic leverage grow amid a rush to secure fertiliser.

South China Morning Post