IFA '08: Pakistan phosphate buyers mull next step

21 May 2008 09:18  [Source: ICIS news]

VIENNA (ICIS news)--Pakistan importers are pondering their next move after China extended its 135% duty on phosphate exports to year-end, sources said on the sidelines of the 76th International Fertilizer Industry Association (IFA) conference on Wednesday.

The importer’s situation was compounded by news that the Pakistan government had reportedly sent a note to the Finance Ministry ordering it to base it subsidy calculations on the existing Pakistan rupees (PRs) 470/50 kg ($6.76/50 kg) bag subsidy level for diammonium phosphate (DAP), a figure unchanged from 2007-2008, the source added.

Importers were debating by how much prices would rise as a result in a tightening market.

“We do expect the non-supply from China to firm prices further,” a source said, “so we are wondering whether to step in now or wait for further developments.”

“We have received numerous offers of Lithuanian, US and other material,” said one importer, who also said that it was considering imports from other non-traditional suppliers to Pakistan, including Mexico.

DAP prices had more than doubled in the international market since the subsidy level was introduced for 2007-2008.

“The government is angry that last year, the farmer did not get the benefit of the subsidy as dealers held on to imported stocks in a rising market and sold later at the current replacement cost,” the source explained. “In effect, the subsidy got swallowed up.”

Sellers were encountering resistance to current price levels of PRs 3,050/50 kg bag, the source added.

“Even this current price does not reflect the replacement cost if we were to buy DAP at the current international level.”

Pakistan still required around 250-350,000 tonnes of DAP for the winter (rabi) season, the source said.

“But we are already building inventory due to the low offtake as prices are so high,” the source lamented.

The IFA conference runs from 19-21 May.

($1 = Prs69.40)

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By: Mike Nash
+44 20 8652 3214

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