IFFCO slashes domestic DAP and NPK fertilizer prices in India

Sylvia Traganida

25-May-2016

LONDON (ICIS)–Indian Farmers Fertiliser Cooperative Limited (IFFCO) said on Wednesday it has cut diammonium phosphate (DAP) and nitrogen, phosphorous and potassium (NPK) fertilizers prices by Rs 1,000/tonne ($14.78/tonne) with immediate effect.

It is understood that the reduction will bring down the price of these fertilizers by Rs 50/bag across the country.

Speaking at the company’s AGM at Delhi the group’s managing director U Awasthi said, “If someone bought fertilizers in the last few days [before the price cut], they will be reimbursed the difference.”

The company said that this is a ‘gift and service’ to the farmers of the country.

A trader commented, “This cut is not going to be good for the CFR (cost and freight) price. If the maximum retail price (MRP) goes down, then the income of the importers goes down and that is $15 less in importers’ pockets. The margin is shrinking for importers and the only way to get it back is to convince sellers to reduce prices.”

DAP imports in 2016 have been subdued so far due to high stocks in the country which are estimated around 2m-3m tonnes. In April 2015-March 2016 India imported 6.6m tonnes of DAP and there are expectations of similar levels on predictions of an above average.

At the same time, a settlement for phosphoric acid prices for Q2 deliveries has not been reached yet between Moroccan producer OCP and its Indian customers. The price of phosphoric acid determines whether it is to cheaper to produce DAP locally using it as raw material or import it. In December 2015, OCP settled first-quarter phosphoric acid prices for 2016 with its joint venture partners in India at $715/tonne CFR (cost and freight) with 30 days credit. 

In February, the Indian government reduced the subsidy allocation for phosphate and potash fertilizers by over 13% for the next fiscal year to Rs 190bn ($2.8bn) from the revised Rs219.38bn this year.

($1 = Rs67.67)

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