08 July 2008 09:37 [Source: ICIS news]
LONDON (ICIS news)--State-owned phosphate producer Jordan Phosphate Mines Co (JPMC) has called an effective force majeure on phosphate rock contracts with buyers as it wanted to renegotiate prices, Indian sources said on Tuesday.
JPMC has told customers that it could not supply at existing contract levels and had to renegotiate prices as the Jordanian government had withdrawn all subsidies on petroleum products recently. This has increased JPMC’s production costs by about 300%.
The increase in oil prices in Jordan prompted a strike on the railways, followed by a strike by railway workers and finally a strike by truckers.
About 40% of JPMC’s rock is railed from the mines to the port of Aqaba and 60% moves by truck.
JPMC had notified its customers in India and elsewhere that it had to increase rock prices under existing contracts to cover the rise in production costs, sources said.
It was asking for prices of $300-325/tonne FOB (free on board). JPMC has told Indian buyers it would supply the quantities agreed under the contracts, provided it did not lose money on them.
In 2007, JPMC exported 2.6m tonnes of phosphate rock to India, out of total exports to all destinations of 3.6m tonnes.
In India, it had contracts for 2008 shipment ranging from $84.50/tonne FOB to $155/tonne FOB.
Indian buyers have little choice but to accept the higher prices as there were no alternative suppliers with sufficient rock available.
Moreover, the world’s largest phosphate rock exporter, OCP of Morocco recently raised its prices for shipments in the third quarter of 2008 to $430-510/tonne FOB, depending on grade.
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