IFA ’18: Urea market questions impact of Iranian sanctions on India

BERLIN (ICIS)–The focus of urea discussions at the International Fertilizer Association (IFA) meeting in Berlin, Germany, has so far centered on India and the difficulty the largest urea importer in the world faces because of Iranian sanctions.

“All Indian banks have been told to close and not do any business with Iran,” commented a major urea trader speaking on the sidelines of the global event.

“We saw this before with Obama, but the Indian’s were not so worried about Obama, but they are about Trump,” the trader added.

India is expected to import some 4m tonnes of urea in 2018 and the international market is somewhat banking on India coming with a tender very soon.

But India may need to look elsewhere for its tonnes if it is unable to secure  them from Iran.

Meanwhile, an international fertilizer trader was not convinced that India would simply “halt” doing business with Iran.

Elaborating on its view of the Iran India situation, the trader said: “India will not tender if they know Iran can’t come to the market. The Indians are not that irresponsible”.

India and Iran have long-standing political and economic ties, with Iran being one of India’s top oil suppliers. India continued trade with Iran during previous sanctions including urea imports.

In early May this year, US President Trump withdrew the US from the Iranian nuclear deal and ordered the re-imposition of sanctions against Tehran that were suspended under the 2015 accord.

At the time, major urea importers Indian Potash Limited (IPL) and MMTC Limited were expected to continue buying Iranian urea in future tenders.

However, since then, the market has not witnessed any new tenders coming from India.

In addition to the question on Iranian tonnes hanging over the fate of the Indian urea market, stocks in the country are currently high and domestic sales have been slow.

Adding to the woes of the farmers, who have been slow moving product to field, is the monsoon which is now looking rather disappointing for the agricultural sector.

India imported 1.6m tonnes of urea from Iran in 2017. In the first quarter of 2018, India imported 525,000 tonnes of urea from Iran compared with 11,000 tonnes in the first quarter of 2017, according to GTIS.

The IFA meeting runs from 18-20 June.

Additional reporting by Deepika Thapliyal