Disruptions around the Strait of Hormuz have cut roughly 30% of seaborne fertilizer exports, sending urea and ammonia prices sharply higher and widening producers’ margins. That squeeze helped Yara International post first-quarter core earnings (EBITDA ex) of $896 million, above analysts’ $825 million estimate; the Norwegian group's shares rose about 4% in early trade.

How the Iran war tightened markets - Shipping through the Strait of Hormuz has been severely disrupted since strikes on Iran at the end of February, removing a significant share of available seaborne fertilizer, industry analysts say. - Chris Lawson, vice president of market intelligence and prices at CRU, said the region accounts for a sizeable share of exportable urea and other nitrogen products: “We estimate around 30% of exportable suppliers aren't really available to the market right now,” naming Saudi Arabia, Qatar and Bahrain as affected, and noting the inclusion of Iran. - Traders pointed to jumps in benchmark prices: free-on-board granular urea from Egypt moved to about $700/ton from roughly $400–$490 pre-conflict. Oxford Economics’ Alpine Macro flagged roughly 50% and 20% increases in urea and ammonia prices, respectively. - Fertilizer markets are less liquid than oil or metals, making prices more volatile when flows are interrupted. Dawid Heyl, co-portfolio manager at Ninety One, warned farmers risking yields if they skip nitrogen applications, increasing urgency for available supply. - Analysts at J.P. Morgan said developments around the Strait of Hormuz will likely remain the primary driver of nitrogen prices and fertilizer producers’ shares in the near term. Yara’s quarter: margins, deliveries and cost moves - Yara reported EBITDA excluding special items of $896 million for the March quarter, up from $638 million a year earlier and above the $825 million analysts' poll expectation. The company attributed the upside to stronger nitrogen margins, improved deliveries and operational gains. - CEO Svein Tore Holsether said the quarter was a strong start toward the company’s 2027 targets, noting cost reductions and savings achieved in 2025 and this year. - Yara reported $180 million in fixed-cost reductions in 2025 and a further $46 million in savings this year, which helped offset higher energy and gas costs and positioned the company to capture benefits from tighter nitrogen markets. - Investors reacted positively: Yara’s shares, which had risen nearly 30% year-to-date before the report, traded about 4% higher in early European trade after the results were released. Costs, gas exposure and project bets - Natural gas remains a central input cost for ammonia and urea production. Yara warned gas costs would be higher year-over-year, estimating additional costs of about $150 million in Q2 and $120 million in Q3. - Those higher feedstock bills can temper gains from price spikes, making earnings more volatile even as producers' pricing power increases when supplies are constrained.

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"Developments in the Middle East put significant pressure on the global food system, with knock-on effects across the value chain and growing challenges for farmer affordability," Yara CEO Svein Tore Holsether said.

This article was created with AI assistance.