In early April, fertilizer sacks were still being unloaded from cargo ships at the port of Lianyungang on China’s eastern Jiangsu coast. This scene appeared almost ordinary in comparison to everything else going on. Rice farmers in Southeast Asia were calculating harvests they could no longer afford to grow, gas stations were closing, and airlines were halving their flights. Supply chains from the Gulf to the Mekong Delta were disrupted by the war in Iran and the subsequent closure of the Strait of Hormuz. China was observing. Take caution. And from a position that is far more comfortable than most.
There was more to the crisis that erupted on February 28, 2026 than just oil. It was about fertilizer, more especially the nitrogen and sulfur compounds that enter agricultural supply chains throughout Asia and beyond from the Middle East. Approximately one-third of the world’s fertilizer exports come from or travel through that area. Prices moved quickly after the Strait of Hormuz closed. Almost immediately, urea prices in Malaysia increased by more than 50%, putting pressure on farmers who grew rubber, rice, and palm oil in a nation that had thought its supply lines were steady. It turned out that the assumption was incorrect.
| Category | Details |
|---|---|
| Crisis Trigger | Closure of the Strait of Hormuz following outbreak of war in Iran on February 28, 2026 — disrupting global sulphur, nitrogen, and oil supply chains |
| China’s Global Rank | World’s second-largest fertilizer exporter; suspended all NPK compound fertilizer exports in mid-March 2026 |
| Sulphur Dependency | China imports sulphur primarily from the Middle East — used to produce sulphuric acid critical for phosphate fertilizers and ammonium sulphate |
| Urea Advantage | Urea production does not require sulphuric acid — giving China flexibility to resume urea exports without sulphur supply constraints |
| Brazil-China Fertilizer Link | Over 90% of China’s ammonium sulphate exported to Brazil in 2025 — used for soybean, corn, and sugar cane; Brazil is China’s largest soybean supplier |
| Regional Impact | Malaysia: urea prices surged 50%+; Philippines declared national energy emergency; Vietnam cut flights by 50%+; Cambodia shut 2,000+ petrol stations |
| Alberta Sulphur Reserve | Canada’s Alberta held ~11 million tonnes of sulphur inventory at end-December 2025 — a potential alternative source for China |
| China’s Strategic Framing | Premier Li Qiang described China as a “cornerstone of certainty” at the China Development Forum, March 2026 |
| Expert Assessment | Eric Olander, China Global South Project: China unlikely to share substantive food, energy, or fertilizer reserves with other countries despite diplomatic posturing |
| New Regulation | From May 1, 2026, China’s updated Hazardous Chemicals Safety Law places significantly stricter controls on ammonia production, storage, and transport |
This disruption is not unique to China. It imports a lot of sulfur from the Middle East, which is needed to make sulfuric acid, which is used to make phosphate fertilizer and ammonium sulfate, which it has been exporting to Brazil for years. China quietly imposed an export quota on sulfuric acid back in January, before the war even began, when sulfur imports slowed. This suggests that someone in Beijing had been running the numbers ahead of time. It’s difficult to determine if that was a coincidence or true foresight. However, the timing is noteworthy. In order to protect its domestic supply chain at the expense of worsening shortages elsewhere, China halted all exports of NPK compound fertilizer in the middle of March.
China has a structural advantage over its neighbors in terms of flexibility. Sulfuric acid is not needed to make urea, the most commonly traded nitrogen fertilizer worldwide. Unlike ammonia, urea doesn’t need special storage facilities or hazardous chemical logistics to be exported, and China has a huge capacity to produce urea. Beijing has significant geopolitical weight if it chooses to reintroduce urea into international markets, and it can do so fairly quickly. In Malaysia, a 50% price increase becomes a negotiating factor. Declaring a national energy emergency and already under stress from energy shortages, the Philippines is discreetly reevaluating its stance toward Beijing. In late March, President Marcos Jr. hinted that a “reset” in relations between China and the Philippines might be “inevitable.” The impetus included the energy and fertilizer crises.
This is a pattern that is worth noticing. China has successfully negotiated the US-China soybean trade war in part by increasing its reliance on Brazilian supplies and by sending ammonium sulphate to Brazil to fertilize the very fields that produce the soybeans it requires. In 2025 alone, Brazil received over 90% of that ammonium sulphate. It goes beyond simple trade. China now has a level of protection that most other major economies just do not have thanks to a food security loop that was meticulously constructed over many years. Even though that architecture was created piecemeal rather than all at once, it’s difficult to ignore how intentional it appears in hindsight.
About 11 million tonnes of sulfur are stored in Alberta, Canada; China is most likely considering using this stockpile as a partial replacement for Middle Eastern supplies. It will take time to move, and it won’t completely close the gap. However, China’s current position differs from that of the nations scurrying around it because it has options. In late March, Chinese Premier Li Qiang referred to China as a “harbour of stability” during the China Development Forum. At the time, that statement might have sounded like diplomatic platitudes. It now reads somewhat differently in light of the events that have transpired since; it is less of a catchphrase and more of a declaration that Beijing had been secretly preparing for a longer period of time than most people were aware.
