02 December 2011 17:37 [Source: ICIS news]
LONDON (ICIS)--Indian potash imports could fall by 30–35% in the next fiscal year as international suppliers have rejected local importers’ demands to cut prices, according to US Awasthi, managing director of the Indian Farmers Fertiliser Co-operative (IFFCO).
“Even if we meet our contractual agreements [for this fiscal year], we will have to carry forward the stock [to next year] since there is no demand. So there is no space to buy more,” he said.
He does not foresee any further purchases until after March 2012.
Awasthi’s statement comes after Russian potash producer Uralkali refused buyer requests to cut its prices, after a devaluation of the Indian rupee.
He sees IFFCO importing 30–35% less potash in 2012–2013, if discussions with international suppliers do not go as planned at an industry conference in New Delhi next week.
Indian importers are asking for a discount of $20–30/tonne (€15–23/tonne) in potash prices, as costs have shot up due to the slump in the rupee against the US dollar.
Buyers are under contract to import 5.5m tonnes of potash this fiscal year at a price of $490/tonne CFR (cost & freight) in the second and third quarters and $530/tonne CFR in the fourth quarter.
“Suppliers are sensible people. They will see the reality. Demand has really come down,” Awasthi said.
IFFCO recently decided it will not hike domestic retail prices – for now. Domestic prices have risen to more than Indian rupee (Rs) 11,300/tonne ($217/tonne) in October from Rs4,440/tonne in the same month last year.
But suppliers are not relenting. Apart from Uralkali, Belarusian Potash Company has also maintained its prices. Canada-headquartered Canpotex is to make a decision on pricing next week after discussions with buyers, but the firm is expected to toe the same line as other suppliers.
“Our feeling is no major supplier will agree to renegotiate current supply contracts as all markets are faced with forex [foreign exchange] volatility,” an official with a top international supplier said.
But these suppliers will have to tread carefully as Indian demand been declining.
India imported 6.36m tonnes of muriate of potash (MOP) in the last fiscal year, but has imported just 1.24m tonnes so far this year, Awasthi said.
IFFCO imported 1m tonnes of potash in 2010–2011, but has purchased only 400,000 tonnes this year, he added.
All eyes are now on Indian Potash – the country’s biggest potash importer. However, market participants believe its stance will be no different than that of IFFCO.
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