From semiconductor inputs helium and bromine to fertilizers and aluminum, supplies are blocked [U.S.–Iran War]

According to Financial News correspondents Lee Byung-chul in New York City and Yoon Jae-joon in Seoul, the war between the U.S. and Israel on one side and Iran on the other has entered its second week, and warning lights are flashing over supplies of key components for major global industries. Prices are rising not only for crude oil and liquefied natural gas (LNG) but also for helium and bromine, which are essential materials for semiconductors, and for fertilizers, which are critical to agriculture. The Middle East, now a war zone, is home to many of the main producers, and these goods have been shipped worldwide through the Strait of Hormuz, which has been effectively shut down. The conflict is shaking both the region’s energy facilities and its logistics networks at the same time.
Consumer News and Business Channel (CNBC) and The Wall Street Journal (WSJ) reported on the 10th (local time), citing data from the United States Geological Survey (USGS), that the Middle East plays an indispensable role in supplying helium, which is essential to semiconductor manufacturing.
■ Supply chains for helium, bromine and more are under strain
The State of Qatar produces more than one-third of the world’s helium supply. Helium is used to remove heat generated during semiconductor manufacturing and is also a critical material in lithography processes that etch microscopic circuits. There are virtually no substitutes.
Operations at the Ras Laffan Industrial City, run by the State of Qatar’s national energy company QatarEnergy, were recently halted after a drone attack by Iran. Because helium is produced as a by-product in the process of making LNG, disruptions at LNG facilities translate directly into reduced helium supply.
If the war becomes protracted, helium production is expected to be shut down for at least two to three months, and it could take four to six months for global supply chains to return to normal. Should the Strait of Hormuz remain blocked for an extended period, more than 25% of the world’s helium supply would effectively disappear from the market.
Bromine, another key material used in semiconductor manufacturing, is also heavily dependent on the Middle East. According to USGS, roughly two-thirds of global bromine production takes place in Israel and Jordan. Bromine is a chemical material used in processes such as etching and is employed across the semiconductor industry.
■ Urea prices surge as fertilizer supply chains face emergency Fertilizer supply chains worldwide are also under severe strain. With the Strait of Hormuz paralyzed, urea prices have spiked, sending shockwaves through U.S. agriculture and the global food market. The impact of the war has shown up first and most clearly in fertilizer supplies. The Strait of Hormuz is a critical maritime route through which about one-quarter of the world’s nitrogen fertilizers pass. As shipping traffic has ground to a halt, the fertilizer market has tightened rapidly.
Concerns are particularly acute over supplies of urea, the main type of nitrogen fertilizer. Iran is a major supplier, accounting for 10–12% of global urea exports. The State of Qatar, which provides about 11% of global supply, is also experiencing disruptions in LNG production after the Ras Laffan facilities came under attack. Because natural gas is a key feedstock for nitrogen fertilizer, any disruption to LNG supplies inevitably leads to problems in fertilizer production.
Wayne Winegarden, an economist at the Pacific Research Institute, warned, "A shortage of fertilizers could reduce agricultural productivity and push up food prices, threatening global food security." Market participants are even more alarmed by the lack of obvious alternative suppliers to fill the gap in the near term. Production in Europe is weak, and China has limited capacity to export until August, leading analysts to conclude that global urea supply risks will not be easily resolved.
Prices have reacted immediately. At the port of New Orleans in the U.S., the barge price of urea jumped from 475 dollars per ton just before the airstrikes to 683 dollars per ton on the 6th of this month. That is an increase of more than 40% in just a few days, and many expect prices to keep climbing.
Aluminum prices have also climbed to their highest level in more than four years. As shipments from the Middle East were suspended on the 9th, prices have surged about 8% in this month alone. Smelters in the State of Qatar and the Kingdom of Bahrain, which together account for 8% of global supply, have either halted operations or stopped shipping, prompting buyers to turn to the Asian market. Industries ranging from aircraft and power cables to can manufacturing are now on high alert. Chris O'Keefe, a director at Logan Capital Management, told WSJ, "Rising input costs have put inflation back at the center of market concerns," warning that "as companies pass on higher costs to protect their margins, the burden on household finances will also grow."
pride@fnnews.com Reporter