The war on Iran and the closure of the Strait of Hormuz are affecting not only fossil fuel prices but also the fertilizer market for agriculture. It is known that under normal conditions, about one-fifth of all natural gas and oil transported by sea passes daily through the Strait of Hormuz. But this waterway also carries a third of the global fertilizer trade: the Persian Gulf region is indeed a significant production hub for urea and ammonia, among the main components of nitrogen fertilizers that promote plant growth.
WHAT DOES CHINA HAVE TO DO WITH IT
The crisis in fertilizer prices and supplies is also challenging Europe. There are alternatives to supplies from the Middle East, but they are not easily feasible: among the main fertilizer exporting countries are Russia and China.
– Also read: Is Russia preparing to cash in on fertilizers?
In 2025, Chinese exports of these products were worth more than 13 billion dollars, but Beijing tends to monitor foreign sales – and possibly limit them – to ensure low prices for its farmers, protecting food and energy security. In this regard, the war in the Persian Gulf is a problem for China: it is the country that imports the most natural gas and oil in the world and is also dependent on supplies passing through the Strait of Hormuz; in other words, it is threatened by rising hydrocarbon prices and potential shortages of these fuels.
CHINA RESTRICTS EXPORTS
According to Reuters, 50-80 percent of Chinese fertilizer exports – mainly destined for Asia and South America, for example Brazil, Indonesia, and Thailand – are subject to restrictions. It is clear that Beijing, as mentioned, wants to safeguard its domestic market from international instability.
CHINA’S SELF-SUFFICIENCY IN UREA: COAL IS THE KEY
China, moreover, is almost self-sufficient in producing urea, a fertilizer with a high nitrogen content: nitrogen is a fundamental element for plant growth, which plants cannot obtain “naturally” – unlike oxygen and carbon, which they “take” from air and water – but must receive from soil and fertilizers. Besides nitrogen, other essential nutrients for plants are phosphorus and potassium: urea does not contain these.
Unlike Russia, Qatar, or Saudi Arabia, China does not produce urea – an inorganic fertilizer – using natural gas but coal. This way, it protects itself from gas price increases and supply crises by exploiting an inexpensive fuel of which it has vast reserves.
This is why today in China urea prices are one-third of international benchmarks; the latter have risen by about 70 percent since the beginning of the war on Iran.
HOW UREA PRODUCTION FROM COAL WORKS
Producing urea from coal instead of gas is not very different. The main change is in the initial phase of the process: coal is converted into synthesis gas, or syngas, through a gasification process involving high temperatures and the presence of oxygen and steam. Natural gas used in urea production must also be converted into syngas but follows a different process called steam reforming.
Both gasification and steam reforming produce hydrogen and carbon dioxide: hydrogen is combined with nitrogen (extracted from air) to form ammonia, which is then combined with carbon dioxide to form urea.
Almost 80 percent of urea produced in China is obtained from coal.
COAL CONSUMPTION IS A PROBLEM FOR CLIMATE ACTION
Coal, however, is a fossil fuel that emits much more than natural gas. China is the country that emits the most CO2 in the world (accounting for over 30 percent of the global total) and consumes more coal than any other nation combined.
The Chinese chemical industry uses 380 million tons of coal, an amount greater than the total consumption of Japan, for example, or Indonesia. Furthermore, forecasts by the International Energy Agency – reported by Bloomberg – say that China’s coal-to-chemicals sector will grow in the coming years at a rate of 5-10 percent.
NOT ONLY FERTILIZERS
The process used by China to produce urea from coal is the Fischer-Tropsch process: dating back to 1925, it allowed the Nazi regime during World War II to create liquid fuel from coal instead of foreign oil. Beijing has innovated the Fischer-Tropsch process and today also applies it to the production of petrochemical products, such as olefins for plastics.
ENERGY SECURITY AND EMPLOYMENT
In summary, despite CO2 emissions, it is advantageous for China to use coal in the chemical industry because it allows “saving” natural gas and imported oil, allocating them to other uses, while simultaneously guaranteeing employment in the mining regions of Inner Mongolia and the provinces of Shanxi and Shaanxi.
