India buyers agree $50/tonne rise on Moroccan Q1 phosphoric acid

07 January 2011 16:17  [Source: ICIS news]

LONDON (ICIS)--Indian buyers have agreed first-quarter prices for phosphoric acid imports from Morocco at a price up $50/tonne (€39/tonne) P2O5 (nutrient content) compared with the fourth quarter of 2010, due to higher raw material costs, producer sources said on Friday.

Morocco’s Office Cherifien des Phosphates (OCP), the world’s largest supplier of phosphoric acid, a major feedstock used in the manufacture of phosphate fertilizers, settled first-quarter contracts with its Indian customers at $830/tonne P2O5 CFR (cost and freight), an increase of $50/tonne P2O5 from levels in the fourth quarter of 2010.

US, South African, Senegalese and Tunisian suppliers are expected to follow suit.

The significance of the increase lies in the fact that it is the first phosphoric acid price increase since the introduction of the nutrient-based subsidy (NBS) in India at the beginning of the second quarter of 2010.

Phosphoric acid had previously been settled at $780/tonne P2O5 CFR, in line with the import parity price of diammonium phosphate (DAP) at $500/tonne CFR set by the government. This price held through 2010.

The new phosphoric acid price paves the way for 2011-2012 DAP contract negotiations. In 2010-2011, India contracted 8m tonnes of imported DAP at $500/tonne CFR or below. The new acid price equates to an import price in the $520s-530s/tonne CFR, $25/tonne above the current import price.

In November 2010, the Indian Department of Fertilizers (DoF) indicated that the import parity price for DAP for 2011-2012 would be $450/tonne CFR. However, this announcement was greeted with derision in the market given the stronger market fundamentals - tight supply and improving demand globally - relative to 2010.

($1 = €0.77)

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By: Mike Nash
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