Govt to buy 200,000 tonnes of urea amid Hormuz crisis

The government seeks to procure another 200,000 tonnes of urea amid supply concerns centring on the unrest in the Middle East. US-Israel’s war on Iran has significantly disrupted the shipment of the major crop nutrient through the Strait of Hormuz, which handles nearly one-third of global fertiliser trade.

State-run Bangladesh Chemical Industries Corporation (BCIC) floated two separate tenders on April 2, seeking quotations from international suppliers on or before April 16 to supply the input through Chittagong and Mongla ports.

The latest move comes less than a week after the corporation, which runs six urea factories and two non-urea fertiliser factories, issued revised tenders to buy 200,000 tonnes of urea from a wide range of suppliers to build stocks before the start of the major rice crop season, rain-fed Aman.

“We are opening all the windows so that we get the fertiliser wherever possible and in whatever quantity we get,” said BCIC Chairman Md Fazlur Rahman. “But we are preferring government-to-government contracts to tenders to get supplies,”

Except for the state-to-state contract, there is no plan to float any more tenders to procure urea now.

Bangladesh requires over 26 lakh tonnes of the nitrogen-based fertiliser, and three-fourths of urea demand is met through imports as local factories can not operate fully amid gas diversion to other sectors.

The government, early last month, shut five out of six urea factories in the country after the closure of the Hormuz Strait fuelled price hikes due to supply fears from the Gulf, especially Qatar, one of the world’s largest exporters of liquefied natural gas.

As of last week, the Bangladesh government had a stock of 373,100 tonnes of urea, according to the Ministry of Agriculture.

While there is no supply shortage until June, the country requires a reserve of around 600,000 tonnes of urea ahead of the July-September Aman sowing period, the BCIC chairman said.

Bangladesh imports urea mainly from Saudi Arabia, the United Arab Emirates (UAE), and Qatar, all of which ship fertiliser, gas, and oil through the Strait of Hormuz.

As supply through the shipping chokepoint has shrunk, fertiliser prices have gone up, raising concern over crop yield in the coming seasons. For example, urea surged to $725.6 per tonne in March, up by 54 percent from the pre-war period of $472 a tonne, according to World Bank Commodities Price Data (the Pink Sheet).

The BCIC chief said Saudi Arabia can ship 100,000 tonnes of urea, and his office informed the Foreign Affairs Ministry so that it can receive clearance from Iran regarding shipment through the Strait.

The UAE has informed that it could supply nearly 30,000 tonnes through other routes, he said, adding, “We have kept close communication with Russia and China.”

Officials at the agriculture ministry said the government is exploring all sources to procure both urea and non-urea fertiliser to ensure that crop production is not hampered due to a shortage.