14 July 2009 14:35 [Source: ICIS news]
LONDON (ICIS news)--Pakistani producer and importer Fauji Fertilizer Company (FFC) has scrapped its purchase tender for phosphate fertilizers due to high prices offered and low domestic prices, trader sources in Pakistan said on Tuesday.
The tender, which closed on 7 July for 30,000-40,000 tonnes of diammonium phosphate (DAP), attracted numerous offers at prices around $355-360/tonne (€256-259/tonne) CFR (cost and freight) and above.
However, just prior to this tender closing another importer, Chawla, bought a floating cargo of Lithuanian DAP at a much lower price: around $336-339/tonne CFR.
Given the wide variance in prices, many sources had speculated that unless Fauji managed to achieve a similar price in the $330s/tonne CFR, the tender would eventually be scrapped.
At one point, it looked like a deal might have been struck, with sources at Fauji earlier confirming that the company had managed to persuade many companies that had offered to extend the validity of these offers to give them more time to negotiate a compromise price.
Sources at Fauji also said that the delay in making a decision had been partially down to key personnel being out of the country.
A source at Fauji said that there was still a need to import DAP as the company felt there was a gap between demand and availability. However, the problem lay in the domestic price, which did not support paying higher import prices.
Fauji confirmed that it had reduced the price of a 50 kg bag of DAP by Pakistan rupees (PRs) 140/bag to PRs1,760/bag ex-Karachi to stimulate some interest. Unconfirmed reports indicated that another fertilizer company, Engro Chemicals, had also reduced its DAP price by PRs175/bag to PRs1,750/bag.
Under the Fauji tender, offers of DAP cargoes were understood to have been made by Australian producer Incitec Pivot, while US cargoes were reported to have been offered by the US-based Phosphate Chemicals Export Association (PhosChem) plus trader companies Keytrade and Trammo.
Trader companies Dreymoor and Swiss Singapore were also reported to have offered product of an unknown origin.
($1 = €0.72, $1 = PRs82.56)
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