India DAP demand to reach 4.7m tonnes - ministry

22 April 2008 15:41  [Source: ICIS news]

LONDON (ICIS news)--Indian Ministry of Agriculture (MoA) demand for diammonium phosphate (DAP) will reach 4.7m tonnes for the kharif season (October 2008 to March 2009), up 1.1m tonnes on 2007 levels, fertilizer traders confirmed on Tuesday.

The figures were announced at a meeting of the Department of Fertilizers (DoF) in New Delhi on Tuesday.

The numbers were “bizarre” in the words of one trader present. “The MoA makes an assessment of demand based on what individual states tell them.

“So the MoA has an agenda to push for maximum food production,” said the trader. “That means they can overestimate fertilizer requirements without accountability to other government ministries.”

The Indian Finance Ministry would have to find the subsidy funds to sanction a high level of importation, the trader said.

This also comes at a time when international prices of imported DAP are at an all-time high, with the key reference Tampa price having doubled from $600/tonne (€378/tonne) FOB (free on board) to more than $1,200/tonne FOB currently.

 The price rise has been driven by strong demand for food and biofuel crops and tight supply globally.

Domestic DAP production has lagged well behind target in 2008, due to problems with feedstock supply, financial issues and technical outages. This has meant that India will have to buy more DAP from the international market.

“There is still huge demand in India,” said the trader.

“Even accounting for what has already been bought from the US and Russia, I estimate that India still requires 800,000-1m tonnes of DAP for importation before November.”

The response of the DoF had been to push for a “curtailment in consumption,” the trader said.

“For the first time, the DoF is asking the states: ‘Do you really need this fertilizer?’”

According to the trader source, “this represents quite a departure in stance for the DoF. But it is the right thing to do.”

($1 = €0.63)

By: Mike Nash
+44 20 8652 3214

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