Russia's Uralkali rejects Indian demand to cut potash prices

30 November 2011 17:08  [Source: ICIS news]

LONDON (ICIS)--Russian potash producer Uralkali has rejected demands by Indian importers to cut potash prices by $20-30/tonne (€15-23/tonne) as it does not believe in offering discounts to individual markets, sources said on Wednesday.

Indian importers were hoping for a discount to tide over the recent slump in the rupee against the dollar.

“There won’t be a price revision. We cannot offer discounts for individual markets while global demand is high and our plants are working at full capacity,” said Vladislav Baumgertner, Chief Executive Officer of Uralkali.

India entered into contracts with global suppliers to import 5.5m tonnes of potash this fiscal year at a price of $470/tonne CFR (cost and freight) in the second and third quarters and at $530/tonne CFR in the last quarter.

But because of the rupee depreciating around 17% against the dollar since April, imports have become more expensive.

There are worries now that Indian importers may not honour their contracts. But global suppliers have maintained a firm stand and are expected to follow Uralkali’s stance. Belarusian Potash Co (BPC), which markets potash for Uralkali and Belaruskali, is also believed to have rejected demands for a price cut.

Indian importers have not given up all hope and will hold further discussions with suppliers next week at a conference organized by the Fertilizer Association of India in New Delhi.

“We are still expecting some discounts. We have been buying from them [global suppliers] for decades and are expecting some sort of concession,” an official with a top Indian importer said. They are seeking a discount of at least $20/tonne for muriate of potash (MOP).

Giving buyers hope is an apparent $35/tonne discount on diammonium phosphate (DAP) imports from Russian fertilizer producer PhosAgro, and the $25/tonne discount for nitrogen-phosphate-potassium (NPK) or complex fertilizers.

Importers believe that demand for potash could be hit if prices are not reduced as retail prices of MOP have more than doubled over the last year to Indian rupees (Rs) 11,300/tonne ($217/tonne) in October from Rs4,440/tonne in the same month of 2010. They have ruled out any further hike in domestic prices for the time being.

Suppliers, however, refuse to bite the bullet and believe these are negotiating tactics before discussions begin for contracts for the next fiscal year.

“There has been no demand disruption [in India] so far. It will not be a problem,” an official at a global supplier said.

($1=€0.75, Rs52.09)

For more on potash visit ICIS pricing fertilizers

By: Deepika Thapliyal
+44 208 652 3214

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