Iran Conflict Continues to Disrupt Fertilizer Markets Amid Ceasefire Announcement
The Iran conflict has caused a significant supply shock for global fertilizer markets, with Western nitrogen producers filling the gap at elevated prices.
Nitrogen feedstock from natural gas is a crucial input for urea and ammonia production. Iran's natural gas supply disruption, coupled with the Hormuz blockade cutting off 20% of global energy flows, has increased global gas prices, squeezing producers who rely on spot gas while benefiting US producers locked into cheaper domestic supply.
The Strait of Hormuz remains closed under a US blockade, despite a ceasefire announcement. This means that the supply relief thesis is not yet dismantled.
CF Industries (CF) stands out as the standout beneficiary with a 31.56% increase in just six months and a P/E of 10.8x despite rising earnings. US producers use relatively cheap domestic natural gas, giving them a structural cost advantage when global gas is elevated.