FACT, Coromandel, other fertiliser stocks fall up to 7% as China blocks specialty fertiliser exports

New Delhi, June 26, 2025 — Shares of Indian fertiliser companies, including Fertilisers and Chemicals Travancore (FACT), Coromandel International, Chambal Fertilisers, and Deepak Fertilisers, witnessed a sharp decline of up to 7% in Wednesday's trading session. The downturn followed reports that China has imposed fresh restrictions on the export of specialty fertilisers, aimed at securing domestic supply amid rising agricultural demand.

Specialty Fertiliser Export Ban Sends Ripples Through Market

China, the world’s largest producer and exporter of specialty fertilisers such as potassium nitrate, monoammonium phosphate (MAP), and calcium ammonium nitrate (CAN), has suspended new export permits effective immediately. This development comes amid its renewed focus on food security and concerns over fertiliser affordability for Chinese farmers.

The Ministry of Commerce of China stated that the decision was "temporary and precautionary" and will be reviewed based on domestic availability in the coming quarters. However, industry experts anticipate prolonged restrictions through the kharif season, a peak fertiliser demand period in India.

Impact on Indian Fertiliser Stocks

The immediate fallout was visible on Indian bourses. As of market close:

• FACT dropped 6.7% to ₹697.40

• Coromandel International declined 5.2% to ₹1,038.10

• Chambal Fertilisers fell 4.9% to ₹378.20

• Deepak Fertilisers slid 6.1% to ₹482.75

• GSFC and RCF also ended the day in the red, down 3-4%

The Nifty PSE (Public Sector Enterprises) Index fell 1.6%, underperforming the broader Nifty 50, which closed marginally lower.

Analysts Weigh In: Supply Chain Challenges Loom

"The Chinese ban is significant because India depends heavily on imports for specialty fertilisers like MAP and NPK complexes," said Meera Chawla, Agri Inputs Analyst at Emkay Global. "While bulk urea and DAP production is more diversified, specialty fertilisers are not easily substitutable and are crucial for high-yield crops."

She added that domestic producers will need to ramp up production rapidly to offset the shortfall, a task made difficult by input cost volatility and logistical delays.

Harshavardhan Pillai, head of commodity research at Motilal Oswal, commented, “The ban could lead to near-term price spikes globally, and Indian companies with limited inventory might face margin compression. This is especially true for import-heavy players like Coromandel.”

Government Response: Seeking Alternative Supply Channels

India’s Department of Fertilisers has acknowledged the export halt and said it is in touch with countries like Russia, Jordan, and Morocco to secure alternative supplies. Officials are also considering providing a buffer subsidy package to offset rising input costs and ensure timely kharif season distribution.

A senior government official told reporters, “The situation is dynamic, but we are confident that with strategic sourcing and domestic ramp-ups, we can limit any major supply disruptions to Indian farmers.”

Investor Sentiment Turns Cautious

The market reaction was swift, with investors offloading positions in fertiliser counters amid concerns over supply bottlenecks and reduced margin visibility. Trading volumes in these stocks were significantly higher than average, suggesting broad institutional participation in the selloff.

Ravi Mehta, a portfolio manager at Axis Securities, said, “The broader impact will depend on how long China maintains these restrictions. A prolonged disruption could hurt quarterly earnings for companies with high reliance on Chinese imports.”

He added that investors should monitor inventory levels and management guidance in the upcoming Q1 earnings season.

Global Fertiliser Prices Already Reacting

According to international pricing agency ICIS, spot prices for MAP and potassium nitrate have surged by 8-10% in the past 48 hours following the announcement. Supply tightness is expected to persist at least until September, which could push up prices further during India’s peak application period.

This price rise will not only affect stock valuations but also potentially increase the government’s fertiliser subsidy burden in FY26.

Investor Outlook: Volatility Ahead, But Not All Doom

Despite the negative sentiment, some analysts believe the sell-off may be overdone. Suresh Bhatia, Director of Fundamental Research at Prabhudas Lilladher, opined, “Valuations of fertiliser companies have already factored in policy uncertainty and raw material price swings. Long-term demand remains intact, and the government's proactive stance may cushion the impact.”

Stocks with diversified sourcing and domestic manufacturing capabilities, such as Chambal and GNFC, may be better positioned to weather the disruption, he noted.

While China's export curbs on specialty fertilisers have injected fresh uncertainty into India’s agri-input sector, experts believe the situation is manageable with quick policy and sourcing interventions. However, short-term investor sentiment is likely to remain subdued, with earnings visibility clouded by global supply chain shifts and raw material inflation.