FocusIndia phosacid buyers vie for major Q4 fall

16 September 2008 13:39  [Source: ICIS news]

By Mike Nash

LONDON (ICIS news)--Indian fertilizer producers are demanding a fall of more than $700/tonne in fourth-quarter phosphoric acid prices from North Africa as sulphur prices falls and some third-quarter business remains to be settled, traders said on Tuesday.

“Buyers are talking now of $1,600/tonne P2O5 [nutrient content] CFR [cost and freight],” said one trader. Some third-quarter contracts were settled at $2,310/tonne P2O5 CFR.

However, many contracts were still to be settled even for the third quarter, with the recent plunge in finished phosphate fertilizer prices - $200/tonne in CFR prices in India alone in the last two weeks - and the softening in sulphur prompting buyers in India to hold off.

Last week, Indian sulphur prices dropped $180/tonne from last business to $500/tonne CFR after a purchase by Indian Farmers Fertilizer Cooperative (IFFCO) amid falling international prices.

Sulphur is used to make sulphuric acid, itself a feedstock in the making of phosphoric acid.

IFFCO since confirmed that it would not pay any more than $2,200/tonne P2O5 CFR for third-quarter phosphoric acid.

So far, only Tata Chemicals, Paradeep Phosphates (PPL) and Zuari had agreed to the higher levels with their Moroccan supplier, Office Cherifien des Phosphates (OCP).

Another North African supplier, Groupe Chimique Tunisien (GCT), had only agreed with GSFC (Gujarat State Fertilizers and Chemicals) at $2,310/tonne P2O5 CFR.  

The impasse on third-quarter contract negotiations has slowed acid shipments to India, in turn hitting domestic fertilizer output.

“Not one tonne of acid has been shipped from Tunisia or Jordan in the third quarter,” said a trader.

Normally, Jordan exports around 40,000 tonnes P2O5 of phosphoric acid, while GCT exports 75,000 tonnes.

Theoretically, this would equate to around 55,000 tonnes of lost diammonium phosphate (DAP) fertilizer production, which has, in turn boosted demand for DAP imports.

A delegation from OCP was expected in India on 23 September to discuss fourth-quarter contracts, sources said, but negotiations were expected to be tough, given the lack of conclusion on the third quarter.

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By: Mike Nash
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