West Asia Crisis Disrupts Asia's Fertiliser and Energy Supply Chain

The escalating crisis in West Asia is increasingly impacting India's fertiliser production, as disrupted energy supply routes reverberate through Asia's fertiliser, chemical, and manufacturing sectors. A report from Morgan Stanley underscores how disruptions in the Strait of Hormuz, alongside constraints in crude and natural gas flows, are hindering feedstock availability and industrial operations across the region.

The report highlights Asia's heavy reliance on West Asia for energy supplies, noting that the region imports about a quarter of its energy from there. This dependence renders it vulnerable to prolonged disruptions. "Asia relies on the Middle East for approximately 14 per cent of its fertiliser needs," the report remarked, pointing to the significant ramifications for the sector.

The crux of the impact is evident in the production setbacks across various sectors. Notably, approximately 25 million tonnes per annum (mntpa) of petchem capacities face curtailment, and around 10 million tonnes of fertiliser capacity across Asia have been affected. The shortage of pivotal petrochemical feedstocks like propane and naphtha has hit countries such as South Korea, Taiwan, Thailand, and India the hardest, with several companies reducing operations or halting production entirely.