IFA ’12: Indian delegation withdraws in phosphate price protest

21 May 2012 03:00  [Source: ICIS news]

DOHA (ICIS)--An Indian delegation attending International Fertilizer Industry Association (IFA) conference has withdrawn from the annual event amid controversy over phosphoric acid and diammonium phosphate (DAP) prices, sources said over the weekend.

Talks on second quarter phosphoric acid contracts have stalled through most of April and May, as Indian buyers negotiate a $45/tonne (€35/tonne) discount over first quarter prices in a firming phosphates market.

There were expectations Q2 contracts will be agreed at IFA, but Moroccan fertilizer producer Office Cherifien des Phosphates (OCP) confirmed negotiations with Indian joint venture partners Paradeep Phosphates Limited (PPL), Zuari, Tata Chemicals Limited (TCL) were off.

OCP, which supplies almost half India’s annual phosphoric acid requirement and settled at $905/tonne CFR (cost and freight) for Q1 contracts, is holding out for a similar Q2 price that equates to a DAP parity price of $550/tonne CFR.

The Fertilizer Association of India claimed suppliers were engaged in unfair practices after US and South Africa phosphoric acid producers agreed contracts at $860/tonne CFR.

The move to withdraw from the global fertilizer industry’s annual conference was taken to underline Indian importers’ stance against offers of phosphoric acid and DAP.

Failure to agree a price, settled at $905/tonne CFR for Q1 contracts has delayed settlement on DAP contracts between the US suppliers and Indian importers, which should have been agreed last month.

Domestic DAP production has slowed due to the lack of imported phosphoric acid.

India, which imports almost 50% of globally traded DAP, enjoys a discount on contract prices, but the spot market is firming and suppliers view current buying ideas at $520/tonne CFR as out of kilter with the international market.

Almost 7m tonnes of DAP were imported during 2012 and a spot cargo of Saudi DAP was sold $560/tonne CFR to Indian buyer Zuari last week, marking a $10/tonne increase over last business.

Benchmark US Gulf export prices have gained traction after a $80/tonne slump at the end of 2011 and DAP prices are set to move up off the back of tightening supply after healthy offtake for the domestic spring application.

North African export prices are likely to increase, given DAP production at the Groupe Chimique Tunisien plant in Gabes has largely halted due to continue civil unrest, tightening supply from the region.

The impasse is expected to be resolved early June.

High levels of inventory will cover immediate requirements for the July kharif planting season (summer or monsoon season), but DAP and phosphoric imports will be needed to replenish depleted stocks.

The IFA conference runs from 20-23 May.

For more information on phosphates and other fertilizers, please visit icis pricing fertilizers
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($1 = €0.78)

By: Karen Thomas
+44 208 652 3214

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