October 9 International Fertilizer and Agriculture News

Iran steps up vessel attacks as the pool of targets keeps growing

Iran has recently increased the frequency of its attacks on vessels in the Strait of Hormuz, most likely because the number of strikeable targets in the area has grown. It remains unclear, however, whether the renewed attacks will curb the continued growth in oil shipments through the strait. Over the past week Iran has accelerated the pace of its attacks on commercial shipping, and the casualties resulting from those attacks have become more severe. Two attacks occurred around the Strait of Hormuz on Wednesday, one of which was the first inside the Gulf in nearly a month and has caused multiple casualties. The casualty count for this incident has not yet been confirmed.

Joshua Tallis, director of research programs at the Center for Naval Analyses, told Argus: "It appears that Iran has more targets to choose from at the moment. That means that even if the probability of a strike hitting its target stays the same, the absolute number of successful attacks will rise." Tallis noted that the United States claims to have destroyed part of Iran's shore-based radar facilities during a round of strikes in July; without that shore-based radar capability, it is difficult to determine whether Iran's ability to strike vessels has improved. There is, however, reason to believe that Iran has made tactical adjustments.

Claire Jungman, head of shipping risk and intelligence at ship-tracking firm Vortexa, told Argus: "Higher traffic volumes mean more exposure to risk; and the shuttle transfer operating model means the same vessels transit these high-risk waters repeatedly." As of September 24, Vortexa counted 148 tankers engaged in shuttle transfer operations, of which 85 were active in September, compared with just 11 in April. Of those 85 active tankers, 42 have transited the Strait of Hormuz four or more times. "The fact that vessels keep transiting is critical: for a core group of ships, shuttle transits have become a routine operating pattern," Jungman said.

It remains unclear whether the recent increase in tanker attacks will hinder the recovery of crude exports. Crude exports are still moving out through the Strait of Hormuz, albeit at high transport cost and low efficiency. Tomer Raanan, senior shipping intelligence analyst at Lloyd's List Intelligence, told Argus: "It is too early to tell whether these latest rounds of attacks will have an impact. But looking back, the attacks have not stopped the main participants in the shuttle shipping business from continuing to ship."

Kuwait Petroleum Corporation cuts its October sulphur price by USD 45/t

State-owned Kuwaiti sulphur producer Kuwait Petroleum Corporation (KPC) has set its October Kuwait Sulphur Price (KSP) at USD 820/t FOB Kuwait, down USD 45/t from the September FOB price of USD 865/t.

The latest freight assessment shows that on October 1, the freight rate for a 30,000-35,000t cargo from Middle East ports inside the Strait of Hormuz to Chinese ports was USD 150-160/t. Freight remains elevated amid the volatile security situation; on that basis, the China CFR (cost and freight) delivered cost is estimated at USD 970-980/t. The midpoint of the granular sulphur China CFR assessment fell from USD 1,050/t on August 6 to USD 965/t on October 1, a decline of 8%. This reflects demand destruction at the global level, as fertilizer producers and sulphur buyers in the chemical industry are unable to absorb the excessively high feedstock prices. The market expects that once the majority of downstream sulphur users return to profitability, lower supplier offers will drive a degree of recovery in spot demand.