COVID-19 Impact on Pesticides and Fertilizers in Chemicals and Materials Industry
The entire world is facing the effects of the COVID-19 pandemic in various sectors and industries. As China is the producer and supplier of most of the raw materials or inputs in many industries, the outbreak of Coronavirus in China has disrupted the entire economy. The fertiliser industry has been most affected by China, which is the most important producer and consumer of phosphates, sulphur and sulfuric acid.
After China, the fertilizer industry will be affected severely in Brazil and India. The prices of various fertilizers have shown mixed reactions with tighter supply of phosphates, due to the production constraints in China.
This constraint has initiated a downward trend in the prices of phosphates while for sulfuric acid the prices were already on the lower side and with this constraint, they have collapsed severely. The Ministry of Agriculture and Rural Affairs has announced, following the rise in domestic phosphate prices after the outbreak, that it will closely track the supply and market adjustments of chemical fertilisers in order to avoid "unreasonable increase of prices"
As the movement of fertilisers, pesticides and other raw materials within the country and outside the country had suffered, the outbreak of novel coronavirus in China had the most critical impact on the Chinese agricultural sector. Most of the industries were shut down from the beginning of January 2020, which has restricted both demand and supply for fertilizers and pesticides.
As per the vice president of farm input analysis at Robobank, Mr. Samuel Taylor, “What we do know is that the production of many the macronutrients and also the active ingredients for Ag inputs is heavily concentrated to China. So what happens in China will have profound effects in the short term for sure.”

GLOBAL IMPACT OF COVID-19
The situation in China may have improved, but the virus is spreading all around the globe and has been declared a pandemic by the WHO. The logistic issues, labour issues, and all the other problems are now being felt in most of the countries of the world.
India being one of the greatest contributor in total phosphate production, is experiencing shut down of plants which has increased the concern for decline in supply. Everywhere, borders were closed, boats were quarantined, and the flow of people and goods, including fertilisers and their raw materials, was constrained.
Many countries have posed restriction on any kind of movement from China as the virus originated from China. So to control the spread of virus, these restrictions have been imposed. Due to the combination of higher labour requirements and the occurrence of road blockages in a bid to quarantine entire regions, the Chinese trucking sector was the worst affected medium of transport.
Countries that are more reliant on truck transportation are going to be worst affected in terms of logistics constraints. One such country is Brazil. In comparison to China, Brazil is heavily dependent on transport trucks and has no back-up in the form of a secure river (barge) or rail system.
In most countries, the agricultural sector depends heavily on trucks to move crops over large distances to ports and carry back fertilisers and raw materials. Since the general shutdown of truck freight in 2018, some firms, such as Bunge, Cargill and cooperatives, purchased their own truck fleet, minimising the risk of a potential shutdown.
It has been noted that the sales of heavy trucks that are used for handling and carrying grains has increased by a wide margin as compared to last few years. This is because many companies are in favor of acquiring their freights. To minimize the impact and to balance out the logistics, many independent dockers generate a migration of cargo to own terminals, such as Coopersucar and Rumo.
The Brazilian government has started to curb the effect by proposing to state that due to the spread of covid-19, logistics networks such as ports will not be closed and that it will aim to do all it can to stop any interruption to the movement of main resources and goods in the coming weeks.
Countries such as India where the population is very high and from a fertilizer perspective, a prominent importer, producer and consumer, the concern over the impact is very high. The central government is continuously looking forward to curb the impact with the help of state government.
Considering the logistics, India does not heavily reply on trucks but instead uses its widespread rail network. But as the lockdown prevails in the country, the rail transportation along with road transportation are shut and has created a havoc in the supply chain. The movement of goods and people is restricted throughout the country which has created a situation where some cities and states are facing over stocking of fertilizers while some are struggling for minimum supply. Not only the availability has suffered but the demand has also gone down drastically.
Also, for water transport, the Indian government has imposed a strict 14-days quarantine rules for vessels arriving from affected areas. In some ports, the state government has imposed the quarantine rule for any kind of movement from any part of the world.
Few plants have reported curtailments or closures, such as Zuari, RCF and GSFC, while many fertiliser plants undergo annual maintenance, so any disturbance should be mitigated accordingly in the coming weeks. For imported fertilisers and raw materials, the further strengthening of the INR against the USD would also further erode margins.

IMPACT ON CHINA
Hubei accounts for almost 45% and 27% of the country's MAP and DAP power in the Chinese phosphate market respectively. As it is situated next to the Yangtse River and its super strong barging system, Hubei phosphate fertiliser producers get a direct freight advantage on Read more…