Fertiglobe reroutes fertilizer exports around chokepoint risk

Fertiglobe is diversifying UAE export routes to maintain fertilizer shipments during a prolonged Hormuz closure, CEO Ahmed El Hoshy told Bloomberg. “We still expect to export through Hormuz, but we want flexibility to continue producing and moving products if it is closed,” El Hoshy said.

REMEMBER- El Hoshy previously said that the company continued operations by trucking fertilizer cargoes overland to ports outside Hormuz before loading into ships — a workaround involving “double handling” and higher transport costs.

Rail could be next: Fertiglobe is working with Etihad Rail as it explores using trains alongside trucks and alternative ports to strengthen its export network, El Hoshy said. The talks remain at the exploratory stage, with no MoU or binding agreement disclosed.

Keeping the barrels — or rather, the bags — moving: The company exported volumes equivalent to 56% of its UAE production during 2Q despite the logistical constraints. It avoided disruption-related shutdowns by expanding storage across several locations, with production interruptions limited to scheduled and critical maintenance.

IN NUMBERS- Fertiglobe’s revenues jumped 92% y-o-y to USD 1.1 bn in 2Q, with higher fertilizer prices partly offsetting lower sales volumes and the additional logistics costs.

IN CONTEXT- Red Sea insecurity remains a significant risk for fertilizer markets, particularly for ammonia shipments to Europe, El Hoshy said. Uncertainty surrounding Saudi exports through the Red Sea is widening price spreads between markets east and west of the Suez Canal, creating a window for Fertiglobe to capitalize on its geographically diversified production base.

Energy shocks have amplified the pressure since natgas is the main input for nitrogen fertilizers. “Natural gas’ key role as a fertilizer input could hit agricultural producers, impacting food prices,” MENA Director at Horizon Engage Andrew G. Farrand previously told EnterpriseAM.

Geography is doing the hedging for Fertiglobe. The fertilizer producer can export all of its Egyptian production through the Mediterranean, avoiding both Hormuz and the Red Sea, while its Algerian shipments remain unaffected. That gives the company greater routing flexibility than producers whose capacity is concentrated inside the Gulf or along the Red Sea.

The broader market is taking the latest disruptions more calmly. The Hormuz closure came after the main fertilizer application season in North America and Europe, while rising grain prices could improve farmers’ ability to absorb higher fertilizer costs. China's return to the urea export market in June has also helped reset supply, with El Hoshy expecting the country to ship some 5 mn tonnes this year, slightly more than last year.

What to watch: Natural gas prices will likely be the main fertilizer-market driver during 2H, El Hoshy said. Strong cooling demand and supply constraints could intensify competition for gas between Europe and Southeast Asia, raising production costs and supporting fertilizer prices.