Prolonged West Asia Conflict Could Disrupt Malaysia’s Fertiliser Market -- FIAM
KUALA LUMPUR, March 19 (Bernama) -- The ongoing conflict in West Asia, if prolonged, could lead to severe structural disruptions in the Malaysian fertiliser market, says the Fertiliser Industry Association of Malaysia (FIAM).
"In a worst-case scenario, the plantation and agriculture sectors must be prepared to contend with sustained cost escalation, supply rationing and operational delays," it said in a statement today.
FIAM said the West Asia region is currently a major supplier of natural gas, urea, ammonia and sulphur, the important materials for the production of fertilisers globally, and prolonged instability would constrain production capacity while simultaneously disrupting export flows.
It noted that the most critical impact would be on maritime logistics as heightened risks along key shipping routes, including the Red Sea, Strait of Hormuz and Suez Canal, could force vessels carrying bulk fertiliser to reroute via the Cape of Good Hope.
"Such diversion would add 10 to 14 days to transit times, increase bunker fuel consumption by as much as 40 per cent, and significantly drive up freight rates.
"In addition, insurance premiums for ships transiting conflict zones would rise dramatically, in some cases tripling, further inflating landed costs," it added.
FIAM said the compounded effect of longer voyages, higher freight charges and reduced vessel availability would create a bottleneck in global supply chains, with importing regions in Asia and Africa, which rely heavily on Middle East exports, likely to face delays and shortages.
"Traders and distributors, anticipating further disruption, would continue to stockpile, adding speculative demand pressure on top of physical scarcity.
"At the same time, volatility in natural gas markets would push up ammonia production costs, and with shipping inefficiencies layered on top," it said.
It added that fertiliser application schedules would also be disrupted by delayed shipments, and yield risks would rise if fertilisers had to be rationed or substituted with lower-grade alternatives.
-- BERNAMA