Morocco’s OCP agrees Q1 phosphoric acid price cut with India

17 February 2012 12:04  [Source: ICIS news]

HandshakeLONDON (ICIS)--Moroccan fertilizer producer Office Cherifien des Phosphates (OCP) has agreed to cut first-quarter phosphoric acid prices for Indian buyers, the company said on Friday.

Protracted talks, which had entered their seventh week due to price disputes, were concluded with an agreement to slice fourth-quarter prices for India by $120/tonne (€91.20/tonne).

OCP and its Indian joint venture partners Paradeep Phosphates Limited (PPL), Zuari, and Tata Chemicals Limited (TCL) have settled first-quarter contracts at $960/tonne CFR (cost and freight), which nets back to around $880/tonne FOB (free on board).

Due to the delay in concluding the contracts, OCP will ship a smaller volume than usual, up to a maximum of 50,000 tonnes of phosphoric acid by the end of March.

Declining international prices for finished product diammonium phosphate (DAP) had led to expectations that contract prices for raw materials phosphate rock and phosphoric acid would be lowered.

OCP had already agreed to cut first quarter phosphoric acid prices by $50/tonne from fourth quarter settlements to $9501,085/tonne FOB for European buyers at the end of January.

PPL, Zuari and TCL had initially targeted $930/tonne CFR, citing low domestic demand for DAP and the $80100/tonne plunge in the benchmark US Gulf export price for DAP in late December.

Although OCP declined to comment on the negotiations, it is understood the supplier was targeting $1,000/tonne CFR.

OCP usually leads supplier-buyer contract negotiations for raw materials, but the stalled talks resulted in smaller players such as South African phosphoric acid producer Foskor concluding at $960/tonne CFR with Indian joint venture partner Coromandel earlier this month.

The reduced phosphoric acid price is likely to place pressure on US phosphate fertilizer producer PhosChem to similarly drop the price of DAP sold to India under a three-year contract to supply 6m tonnes.

The current DAP contract price of $677/tonne CFR is due to be renegotiated during annual talks next month.

($1 = €0.76)

For more information on phosphates and other fertilizers, please visit icis pricing fertilizers

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By: Karen Thomas
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