The global fertilizer trade is undergoing a significant structural realignment, shifting traditional supply and demand relationships and having notable implications for the dry bulk shipping market. Total fertilizer trade exceeded 190 million tonnes in 2024, highlighting the scale of these changes.
Realigning Supply and Demand
Several key shifts are redefining global fertilizer trade patterns:
- China-India Urea Trade Near Cessation: Historically, India was the world’s largest urea importer and heavily reliant on Chinese supply. However, India has actively diversified its import sources in the short term and is pursuing self-reliance in the medium term, nearly ending its dependence on Chinese urea. Concurrently, China has tightened its export restrictions to prioritize domestic availability, creating a void in the market.
- Rise of Alternative Suppliers: This shift has opened opportunities for other suppliers, particularly Russia, to capture increased market share in the global urea trade.
- Diversification of Russian and MENA Exports: Russia and Middle East and North Africa (MENA) producers, who traditionally focused on Asian markets, are now increasingly exporting to more distant destinations like Latin America and Australia. For instance, Brazil’s fertilizer imports from Russia and Australia’s imports from MENA have substantially increased average voyage lengths.
- India’s Diversification Strategy: India’s move away from nearby China to more distant suppliers in the Gulf and Black Sea for its fertilizer imports has also significantly lengthened haulage distances.
Impact on Tonne-Mile Demand and Dry Bulk Shipping
These shifting trade patterns are having a profound impact on the dry bulk shipping market:
- Tonne-Mile Growth Outpacing Volume Growth: Between 2024 and 2030, the total global fertilizer trade is projected to expand steadily at approximately 2-3% annually, driven by strong agricultural demand in Asia, Latin America, and Africa. However, due to the longer voyage distances from new supply sources, tonne-mile growth is expected to outpace volume growth. The redirection of Russian and MENA exports from closer Asian markets to more distant destinations in Latin America and Oceania is a primary driver of this trend.
- Shift Towards Larger Vessels: Fertilizer has traditionally been shipped on smaller Handysize and Supramax vessels. However, a combination of increasing parcel sizes and improved port handling capabilities worldwide is leading to a structural shift towards larger ships.
- The Panamax share of fertilizer shipments increased from 21% in 2020 to 24% in 2024, while the Handysize share dropped from 36% to 32% over the same period.
- Supramaxes have gained significant market share on specific routes. For Russian exports, Supramax use surged from 49% to 76% between 2020 and 2024, as Handysize utilization declined from 51% to 24%.
- Similarly, Brazilian imports have almost entirely shifted to Supramaxes, reducing the Handysize share from 51% to 19%. This change is largely attributed to port upgrades in Santos and Paranaguá, which now enable the handling of larger vessels.
Overall, the global fertilizer trade is moving towards longer average haul distances and a preference for larger dry bulk vessels, factors that will continue to support firm demand for Supramax and Panamax capacity in the coming years.
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Source: Drewry
