Re-correction of a grammatical error in paragraph nine

LONDON, June 26 (Reuters) - Data showed that fertilizer shipments through the Strait of Hormuz have started to increase following a temporary agreement to end the war with Iran, but analysts say it will take some time before those shipments return to pre-conflict levels and provide some relief to the market.

Before the United States and Israel launched their war on Iran on February 28, about a third of the world's traded urea, the most widely used fertilizer in the world, and nearly half of the seaborne sulfur, a key ingredient in fertilizer production, usually passed through the Strait.

However, the near-total closure of this vital waterway during most of the conflict led to a sharp decline in those shipments.

The latest flow analysis by Argus, a flow analysis firm, indicates that since the announcement of the agreement between Washington and Tehran on June 15, approximately 640,000 tons of sulfur, a key component in fertilizer production such as diammonium phosphate, have left the Strait of Hormuz en route to destinations including Indonesia, Morocco, Tanzania, and China. This compares to a total of only 80,000 tons during the entire three-and-a-half-month war.

Meanwhile, the latest data from CRU Consulting revealed that around 427,000 tons of uroea crossed the strait following the interim agreement, up from 275,000 during the war.

Shipments of other key fertilizers, such as phosphates and ammonia, also rose slightly after the agreement was reached.

Fears of a food crisis have eased.

Fertilizer prices rose sharply during the war, prompting farmers to reduce their use. This raised concerns that a prolonged closure of the strait could lead to a decline in agricultural production and trigger a global food price crisis.

There are currently more than 500 ships stranded in the Gulf. Although traffic has picked up this week, it still represents a fraction of the pre-war average of 125 ships per day that transited the strait.

“The flow of shipments through the strait is reassuring,” said Sarah Marlow, head of fertilizer pricing at Argos. “But at the same time, most of it will be tied to old deals. It won’t bring new volumes of goods to the market.”

Marlow added that bulk carriers are slowly leaving the strait, while empty tankers are not returning to load new shipments, noting that traders are concluding very few new fertilizer sales deals in the region.

Analysts say restoring normal shipping traffic requires removing several war-related obstacles. For example, the waterway must be successfully cleared of mines. Stranded vessels must also be freed, and shipping companies must feel confident enough to return to the strait.

The interim agreement between the United States and Iran is supposed to lead to a permanent truce.

However, the UN's International Maritime Organization suspended its ship escort operations through the strait on Thursday, following a report from a vessel that it had been attacked, raising fresh concerns about the viability of the agreement.

* Best-case scenario

Willis Thomas, senior fertilizer analyst at CRU, said, "Trans-strait fertilizer volumes will not return to pre-conflict levels for some time... Even in the best-case scenario, August remains the earliest we will see a significant recovery in traffic."

CRU data indicates that approximately 600,000 tons of urea remain trapped inside the strait, while Argus estimates that between 300,000 and 400,000 tons of sulfur are waiting to exit the waterway.

Fertilizer production facilities in the Gulf were also attacked during the war and require repairs. Although experts say the damage is relatively limited, it will nevertheless slow the decline in fertilizer prices.

The shipping association PIMCO said, "Fertilizer production in the Gulf is likely to see a significant recovery."

She added, "However, exports from Qatar and the UAE may remain below pre-war levels (in the medium term) due to damage to gas fields and refineries."