Fertiliser Stocks Jump Up To 14% On Hopes Of Strait Of Hormuz Reopening

Fertiliser stocks rallied sharply on Tuesday, with shares gaining up to 14%, as investors cheered the possibility of the Strait of Hormuz reopening following a preliminary peace agreement between the United States and Iran.

The rally was driven by expectations that the easing of tensions in the Gulf region would reduce supply-chain risks for critical raw materials used in fertiliser production and help normalise cargo movement through one of the world's busiest energy and commodity shipping routes.

Shares of The Fertilisers and Chemicals Travancore (FACT) emerged as the top gainer, surging as much as 14% to ₹1,029 on the NSE. Chambal Fertilisers & Chemicals rose 5%, while Rashtriya Chemicals and Fertilizers (RCF) gained 4%. Gujarat State Fertilizers & Chemicals (GSFC) advanced around 3%.

Why the sector is reacting

Investor sentiment improved after US President Donald Trump said a preliminary agreement to end the conflict between the US and Iran had been signed. The proposed agreement is expected to extend the existing ceasefire and facilitate the reopening of the Strait of Hormuz, a key maritime route that has faced disruptions in recent months.

The development is particularly significant for India's fertiliser industry, which remains heavily dependent on imports routed through the Gulf region.

According to industry data, nearly 79% of India's anhydrous ammonia imports and about 96% of sulphur imports come from economies linked to the Strait of Hormuz. Both ammonia and sulphur are crucial inputs for manufacturing fertilisers such as urea and di-ammonium phosphate (DAP).

Any prolonged disruption in the movement of these commodities can raise input costs, affect production schedules and create supply concerns ahead of the important kharif sowing season.

16 fertiliser ships stranded

The fertilisers ministry recently disclosed that 16 India-bound vessels carrying fertiliser-related cargo are currently stranded in the Strait of Hormuz.

According to Joint Secretary Bandana Preyashi, a total of 16 India-bound fertiliser cargo vessels are currently stranded in the Strait of Hormuz, including eight ships carrying 330,000 metric tonnes of urea, four vessels loaded with 257,000 metric tonnes of di-ammonium phosphate (DAP), one ship carrying ammonia and three vessels transporting 110,000 metric tonnes of sulphur. The reopening of the crucial shipping route is expected to accelerate deliveries of these key fertiliser inputs, easing concerns over raw material availability and ensuring smoother supplies ahead of the ongoing kharif sowing season.

Supply situation remains comfortable

Despite the disruption, the government has indicated that fertiliser availability remains adequate for the ongoing sowing season.

India has already imported around 5 million tonnes of fertilisers and related nutrients while also ramping up domestic production. Additionally, the country has floated a global tender to import another 1.7 million tonnes of urea to ensure sufficient supplies.

Officials have maintained that there is currently no major threat to fertiliser availability for the kharif season, during which total consumption is estimated at 38.39 million tonnes.

The market reaction suggests investors are betting that lower logistical risks, smoother imports and easing raw material costs could improve earnings visibility for fertiliser manufacturers in the coming quarters.