Suppliers agree India fertilizer import discounts on falling rupee

25 November 2011 16:08  [Source: ICIS news]

LONDON (ICIS)--Suppliers have agreed to substantial discounts on the price of Indian fertilizer imports which were requested after a sharp devaluation of the rupee, buyers in India said on Friday.

The Indian Farmers Fertiliser Co-operative Ltd (IFFCO) had called for diammonium phosphate (DAP) import prices to be dropped by $50/tonne, nitrogen-phosphate-potassium (NPKs) by $45/tonne and muriate of potash (MOP) by $36/tonne.

Importers said that Russian fertilizer producer PhosAgro had negotiated a 5% discount on cargoes of DAP due to be shipped until March 2012 under contract agreements.

This reduction would lower the established contract price of $677/tonne (€508/tonne) CFR (cost and freight) for DAP by $35/tonne to $642/tonne CFR.

PhosAgro was not available to confirm any agreement on the proposed discounts.

The depreciation of the rupee – which fell to a low of Rs52.1 against the US dollar – was increasing the cost of imports, which was then being passed to end users.

The higher retail price of DAP had pushed farmers to source cheaper alternatives and increasingly expensive imports threatened further maximum retail price hikes.

The call for discounts at the same time as the US Gulf export price dropped by $20/tonne to $600/tonne FOB (free on board) Tampa has caused disquiet.

Responses from suppliers have been cool.

“I would be flabbergasted if they do it,” said one source. “It is not the dollar value, it is the precedent it sets if it did happen.”

Others have acknowledged the role that India – which represents around 50% of the DAP market -  plays in a market that is going through a seasonal lull.

“A discount to $50/tonne is a big step. But India is the only active buyer [at the moment] and an agreement will be reached.”

The spot market has dropped below the $677/tonne CFR contract price in recent weeks and the $25-30/tonne premium usually achieved is considered no longer possible.

($1 = €0.75)

For more on fertilizers visit ICIS pricing fertilizers

By: Karen Thomas
+44 208 652 3214

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