New Delhi [India], March 6 : The ongoing conflict in West Asia is likely to disrupt logistics for India's fertiliser imports and could significantly impact the agrochemical sector due to its dependence on petroleum-based inputs, said Nand Kishore Aggarwal, Chairman of the Chemical and Plastic Committee at PHD Chamber of Commerce and Industry and Chairman of Crystal Crop Protection.
Speaking about the immediate impact of the conflict, Aggarwal said the main concern at present is logistics rather than raw material costs.
"The war is definitely (impacting) because of logistics. Most of our fertiliser imports are from the Middle East, Uzbekistan and Russia. So, because of this war, there will be logistical problems and disturbances," he said, talking to ANI.
Aggarwal noted that crude oil prices may not immediately affect the cost of key fertilisers such as potash, phosphatic fertilisers and even urea, since crude oil is not a direct raw material for these products.
"I don't think the prices of crude oil will have a big impact on fertiliser, especially potash and phosphorus-based fertilisers. Because crude oil is not the raw material of potash or phosphoric fertiliser. Even with urea, there is no requirement for crude oil in this," he said.
However, he cautioned that a prolonged conflict could still have wider economic implications because crude oil is a key source of energy.
"But definitely, because oil is a source of energy and definitely, if the shortage of oil and the price increases of crude oil, it will definitely have an impact on the price of petrol and diesel," Aggarwal said, adding that "not now, but if this war continues, it will definitely have an impact on the price and supply chain."
Aggarwal said the agrochemical industry is more vulnerable because it relies heavily on petroleum-based raw materials and intermediates.
"But I am more concerned about agrochemicals. Because agrochemicals, the total raw material is from the crude oil, the different solvents and all byproducts of crude oil," he said.
According to him, prices of intermediate goods for agrochemicals that are coming from China have shot up.
"And we are expecting that they will increase the price considering this war situation," Aggarwal said, referring to Chinese suppliers.
Logistics costs have also risen sharply in recent days, he said. While the industry is not facing major shortages yet, Aggarwal said supply disruptions could emerge if the conflict continues.
As an industry body, he said, members are being advised to exercise caution and avoid excessive price hikes.