MCFL issues further DAP tender to address shortfall

30 July 2008 16:43  [Source: ICIS news]

LONDON (ICIS news)--India fertilizer producer Mangalore Chemicals and Fertilizers (MCFL) has issued a tender for an unspecified quantity of diammonium phosphate (DAP) as its own production has been curtailed due to phosphoric acid supply problems from North Africa, an Indian trader said on Monday.

 

“MCFL is desperate for DAP,” said the trader, adding the short notice of the tender’s announcement highlighted the precarious position of some Indian phosphate producers.

 

MCFL receives its phosphoric acid, a feedstock for DAP production from Morocco, but a lack of agreement on third-quarter acid contract prices had led to disruptions in supply, sources said.

 

“The Moroccans are really digging their heels in over phosphoric acid,” said one source.

 

Moroccan suppliers were targeting $2,500/tonne CFR (cost and freight) for the third quarter, up by over $500/tonne on second-quarter prices in order to cover higher sulphur feedstock costs as a result of a tight market.

 

Sources said it remained unlikely any DAP purchase would take place by any other importers other than by Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Indian Potash Limited (IPL), which had the financial clout and had imported the vast majority of the 3.5m tonnes of DAP already shipped to India in 2008.

 

However, sources were unanimous in their assessment that Indian demand would be very strong.

 

“Any concerns that a partial drought might occur in the south and west of the country have disappeared following good rainfall this week,” said an importer.

 

“There have been rains from Gujarat in the west to Andhra Pradesh in the east,” the source added.

 

Another major producer of DAP was even more bullish.

 

“I’ve just returned from India and I can tell you the farmers there are making more money than at any other time in their history,” he said. “These guys only pay a fraction of the real DAP price because the government pays the rest - so why wouldn’t they throw more fertilizer on the ground?”

 

MCFL produces various fertilizers including DAP and complex phosphate fertilizer blends at its Karnataka plant in Panambur, 9km north of New Mangalore and close to the port of New Mangalore.

 

The MCFL DAP tender closes on 31 July.

 

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By: Mike Nash
+44 20 8652 3214

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