LONDON (ICIS)--The Indian Department of Fertilizers (DOF) is likely to approve an import tender for urea next week, according to sources on Wednesday.
However, a section of the market believes stock levels at ports would have to come down further before the DOF decides to tender.
As of 24 June, total urea stocks were over 780,000 tonnes with port congestion yet to ease because of high stocks of phosphates and potash as well.
Phosphate stocks were over 760,000 tonnes and potash above 460,000 tonnes.
"It all depends on port cargo movement," said an Indian trader.
The general expectation is that port stock movements should improve in the next few weeks, with total port and inland stock of urea estimated at around 1.4-1.5m tonnes in early July and then dropping to around 500,000 tonnes by early August, according to sources.
"If all goes well [with Iran payment negotiations], tender should come next wee," said another trader.
The DOF has met Indian Potash Limited (IPL) and MMTC Limited, as well as several banks, this week to discuss the Iran payments issue, according to sources.
An informal agreement has been reached for payments under the upcoming tender, although the strategy for payments after November is not clear.
India and Iran have old business ties and have continued to trade despite previous sanctions.
However, this time around the US Administration has been more serious about a crackdown on Iran, arguing it would apply "unprecedented financial pressure" on the country through sanctions.
On Tuesday, the US warned countries around the world to stop buying Iranian oil before 4 November or face a renewed round of US economic sanctions.
"Bottom line is neither Iran nor India can stay away from each other. India is also considering that urea prices are so high," said a Middle Eastern supplier.
India is expected to buy 600,000-700,000 tonnes for late August shipment in its next tender.
Iran typically supplies 300,000-400,000 tonnes under each Indian tender depending on its availability.
Global urea prices have shot up by as much as 30% since mid-May in some regions, including North Africa.
Iran is expected to sell at a discount to other markets since only India and some European markets are accepting Iranian product after the US withdrew from the nuclear deal on 8 May.
India imported 1.6m tonnes of urea from Iran in calendar year 2017.
Focus article by Deepika Thapliyal