India fertilizer importers rush for discounts as rupee tumbles

24 May 2012 08:31  [Source: ICIS news]

KOLKATA (ICIS)--Indian fertilizer producers are hoping to secure discounts on imports as the recent sharp depreciation of the rupee has sent prices of urea and raw materials – potash and phosphate – soaring, senior industry officials said on Thursday.

“We are in no position to pass on higher prices resulting from the weak rupee onto the farmers. Our only option was to seek discounts from our suppliers,” said an official from the Indian Farmers’ Fertiliser Co-operative Ltd (IIFCO).

The Indian currency breached Rs56 against the US dollar on Wednesday, down by 6.2% since end-April and 13% lower against the dollar since February 2012.

“Response from the suppliers has been positive who are willing to offer us discounts to tide over the currency crisis. We are hopeful of formalizing a new import price regime within the next few weeks,” he added.

The discounts offered to Indian government-owned fertiliser producers range between $25-35/tonne and once they were  formalised, it was possible that di-ammonium phosphate (DAP) could be secured at levels of around $642/tonne against $677/tonne quoted earlier, said an official at Rashtriya Chemicals and Fertiliser Ltd (RCFL).

The fertilizer producers are hoping for a higher discount of $40/tonne on potash, in view of the expected global oversupply of the product, he added.

Thirty potash-related projects are scheduled for completion by 2015, resulting in a global surplus of 15m tonnes, according to the International Fertilizer Association.

In India, domestic demand in 2012-13 is expected to rise to 61.3m tonnes from 58.7m tonnes in the previous year, based on data from the country's Ministry of Chemicals and Fertilisers. The country's demand in the current year is estimated to be 32m tonnes for urea; 13.24m tonnes for DAP; 4.69m tonnes for potash, and; 11.25 tonnes for complex nutrients.

India is fully dependent on imports to meet its requirements for phosphatic and potassic fertilizers. The country also imported 9m tonnes of urea to meet its annual demand of 30m tonnes.

According to a study of Associated Chamber of Commerce and Industry of India (ASSOCHAM), the depreciating rupee would compel fertilizer importers to bear an additional burden of $65.16/tonne, on an average.

Potash Corporation, Mosaic Company, Agrium Inc, Arab Potash and ICL Israel Chemicals are among the major exporters of potash to India; while the Office Cherifien des Phosphates (OCP) of Morocco is the principal phosphate exporter to India.

($1 = 0.80 / $1 = Rs55.96)

By: Ajoy K Das
+65 6780 4359

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