KOLKATA (ICIS)--Indian importers of potash are expecting contracts with Russia's Uralkali at around $325/tonne, for shipments during the first half of 2014, 24% lower than the peak import price in the previous year, an official in department of fertilizers said on Friday.
Indian potash importers are buoyant after Uralkali has signed a potash supply contract to China in January at a lower price year on year, the official said.
Citing reports received, he said that Uralkali concluded an agreement for shipment of 700,000 tonnes of potash to China at around $305/tonne during first six months of 2014, compared with the price of $400/tonne in the previous year.
Normally, Indian potash import price is benchmarked at $10-15/tonne higher than shipments to China. Hence, Indian importers are expecting to conclude shipments at $320-325/tonne for consignments during the first half of 2014, the official said.
According to estimates for 2014-15, Indian potash imports are expected to be around 3.5m tonnes, the same as in the previous year, he added.
Between April 2013 and January 2014, Indian potash imports were at about 3.1m tonnes, of which 2.5m tonnes were imported at $427/tonne, while the balance had been contracted at $369/tonne, the official said.
He said that the government is closely tracking potash imports by private fertilizer producers since contracts at lower price would enable the government to take opportunity to cut government subsidies for potassic fertilizers.
Even factoring in that the Indian rupee has depreciated by around 14% over the last one year, the lower potash import price is expected to benefit fertilizer producers in real terms.
The government incurred about $642m in paying a subsidy of around $176/tonne for muriate of potash (MOP) but it would take some time to reduce the subsidy bill based on lower potash import price.
The quantum of savings on subsidy would depend on the average contract price for the full year and how soon producers pruned retail prices, the official said.