India ferts producers worried over feedstock hikes

09 January 2008 15:49  [Source: ICIS news]

LONDON (ICIS news)--Indian fertilizer producers have expressed concern over 2008-2009 phosphoric acid feedstock contract prices being touted by North African producers, trader sources said on Wednesday.


North African producers recently sold phosphoric acid into Latin America and Europe at $1,430-1,450/tonne (€972-986/tonne) P2O5 (nutrient content) CFR (cost, insurance and freight). This represented more than a doubling of the fourth quarter price level of $605-615/tonne CFR.


Producers cited increased costs of feedstocks for phosphoric acid, including phosphate rock and sulphuric acid, plus the high prices of finished fertilizer, as justification for the increase.


India is the largest importer of phosphoric acid globally, accounting for 53% of world trade. It secured April 2007 to March 2008 contracts at $566.25/tonne CFR. A comparable price increase to that seen in other markets could triple costs for 2008-2009.


One Indian trader described suppliers as “arrogant,” and expressed considerable concern as to whether India could import significant volumes of phosphoric acid at such price levels.


Negotiations for new contracts may be brought forward to the second-half of January rather than in March/April as is usual, the trader added.


Existing contract shipments from North Africa remained slow as producers enjoyed better returns in other markets. However, the chance of existing contracts being reneged upon had receded, traders concluded.


India faced being squeezed by the high costs of raw materials used for phosphate fertilizer production and the high cost of imported finished fertilizer product.


This came at a time when pre-budget consultations were being conducted to ascertain the level of subidy available for the next fiscal year.


($1 = €0.68)

By: Mike Nash
+44 20 8652 3214

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