05 January 2011 17:00 [Source: ICIS news]
LONDON (ICIS)--Morocco’s Office Cherifien des Phosphates (OCP) has scaled back its offer by $40/tonne for first quarter 2011 shipments of phosphoric acid, a raw material used in the manufacture of phosphate fertilizers, Indian fertilizer traders confirmed on Wednesday.
OCP wrote to its phosphoric acid customers offering a price of $860/tonne P2O5 (nutrient content) CFR (cost and freight) for first quarter shipments (up $120/tonne P2O5 from fourth quarter prices). The offer was down on the initially touted price of $900/tonne P2O5 CFR.
Buyers were citing the $800/tonne P2O5 CFR deal agreed between the Indian Farmers’ Fertilizer Cooperative (IFFCO) and Industries Chimiques du Senegal (ICS) and saying that that they could not pay above this level.
However, IFFCO has an 18.54% major stake in ICS leading one trader to comment that: “its like me offering to buy from myself,” indicating that the price was not comparable.
Moreover, a source at phosphoric acid supplier Groupe Chimique Tunisien (GCT) said Indian buyers had countered at $820/tonne P2O5.
According to one trader, the government reportedly told phosphoric acid importers that it will not provide additional subsidy assistance hence less acid will be imported.
Local sources acknowledged this was probably designed to put pressure on phosphoric acid sellers.
Indian trader sources voiced their confusion at the recent price developments.
“It doesn’t really make much sense,” said one. “$900/tonne doesn’t cut it anyway given the current subsidy, so why decrease it by $40/tonne to a price that still doesn’t work. [It is] confusing.”
The phosphoric acid settlement is a key factor in how the phosphate fertilizer market shapes up during the first quarter. ?xml:namespace>
The Indian government is reported to have responded by making a major push to import more blended fertilizers to compensate, and that this could lead to a reduction in DAP imports during 2011-12 of 1.5-2m tonnes.
Sources largely dismissed this notion, arguing that DAP was still the preferred choice of many Indian farmers and that the government was trying to play down DAP import demand.
($1 = €0.75)
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