28 November 2007 11:49 [Source: ICIS news]
In advance of the tender deadline, MMTC was reported to have agreed up to 150,000 tonnes of urea with traders at a price around $407/tonne (€273/tonne) CFR (cost and freight).
However, traders estimate India needs around 400,000 tonnes of urea in total.
With freight to India estimated at around $30/tonne, this would suggest CFR prices of approximately $440/tonne.
In previous tenders, traders offered substantial volumes of lower priced Chinese product, which enabled India to buy at lower prices.
For example, in the last MMTC tender on 1 November, MMTC purchased all its 550,000 tonnes at prices around, or equivalent to, $366-380/tonne CFR.
However, traders are now reluctant to sell more Chinese material due to freight and vessel availability and the likely increase in export tax from 1 January.
It is estimated that more than 2m tonnes of urea is scheduled to load in China for India during Q4 2007.
With Saudi Basic Industries Corp (SABIC) and Egypt Fertilizers Co fully committed to the end of the year, and Kuwait’s Petrochemicals Industries Co (PIC) opting not to offer, Middle East producers offered limited tonnage.
Moreover, continued high levels of inquiry from Europe and the US strengthened the hand of those producers with product and enabled them to adopt a bullish stance.
Indian fertilizer demand outstrips domestic supply. As a result, the Indian government imports large quantities of urea through two trading agencies, MMTC and Indian Potash Limited (IPL).
($1 = €0.67)
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