India urea producers shut plants as Iran war cuts LNG flows

India’s urea producers are reducing output as liquefied natural gas (LNG) supplies from Qatar, a critical feedstock, face disruptions due to escalating hostilities in the Middle East. Some manufacturers, including Indian Farmers Fertiliser Cooperative Ltd., have initiated production cuts at select plants, with prolonged interruptions potentially forcing temporary shutdowns according to reports. LNG serves as both an energy source and key input for urea, the most widely used fertilizer in the country as industry data shows.

The supply crunch coincides with rising prices for other fertilizer raw materials, such as ammonia and sulfur, amplifying concerns over production costs. Pakistan has also suspended LNG deliveries to fertilizer plants, citing the conflict, as it relies heavily on Qatari supplies according to reports. While India’s fertilizer ministry reports no immediate gas shortages, industry officials acknowledge stockpiles are sufficient only for the short term as officials stated.

A prolonged disruption could force India to increase costly urea imports ahead of the monsoon season, which begins in June and drives peak agricultural demand. This would strain the government’s efforts to reduce fertilizer subsidies and curb its fiscal deficit, which targets 4.3% of GDP for the next fiscal year.

Fertiliser Association of India director general Suresh Kumar Chaudhari expressed optimism that the conflict will resolve soon but warned of growing concerns if hostilities persist. With 30 of 32 urea plants dependent on natural gas and 60% of LNG imports sourced from Qatar, the sector remains vulnerable to further supply shocks.