02 April 2012 16:06 [Source: ICIS news]
LONDON (ICIS)--Indian fertilizer importers are hoping the price of new potash contracts is lowered to $470/tonne CFR (cost and freight) when prices are finalised later this year, in line with the price China is paying in the second quarter, sources said on Monday.
However, demand is expected to rebound only when prices fall to $400/tonne (€300/tonne) ?xml:namespace>
“As a first step, we hope suppliers will reduce prices in
He expects negotiations to be delayed further than expected to September-October. The initial estimation was that contracts would be settled by July.
Contract negotiations for fiscal year 2012-2013 have been delayed as a sharp rise in prices over the last year has hit demand for the fertilizer.
High inventory levels in the country have also made it possible for importers to delay signing fresh contracts.
Out of the 6m tonnes of muriate of potash (MOP) contracted in fiscal year 2011-2012, around 3.8m tonnes has arrived so far. About 2m tonnes of potash, which was initially meant to be delivered in January-March, is due to arrive in
Shipments for January-March were delayed on requests by importers because of the rupee devaluing against the dollar.
“The material is enough to probably last us until December. The year 2012 may go without any sales, or we may contract a small quantity unless prices are reduced,” Awasthi said.
Indian Farmers Fertiliser Cooperative (IFFCO) has an inventory of 160,000 tonnes of potash at present, more than double its usual level.
Inventory levels have surged as farmers have stopped buying potash due to high prices. MOP is priced at Indian rupee (Rs) 11,300/tonne ($222/tonne, €166/tonne), more than double compared with a year ago.
Indian companies have been unable to hike prices because of severe demand disruption. Sales for direct application in February fell by over 30% to 331,470 tonnes compared with a year ago.
“Prices are already too high. We cannot raise prices,” Awasthi said.
Meanwhile, margins are set to be hit further as the Indian government cuts the subsidy on potash by 10% to Rs14,400/tonne from 1 April.
Russian potash major Uralkali cut production by 40% in January-March. A delay in the sale of 600,000-700,000 tonnes that was meant to be shipped to
($1 = €0.75, $1 = Rs50.88, €1 = Rs67.88)
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