India unable to import Iranian urea because of US sanctions - MMTC

04 October 2018 12:27 Source:ICIS News

LONDON (ICIS)--MMTC Limited will not buy urea from Iran in its import tender closing on 5 October because of US sanctions, the Indian state-run fertilizers major said on Thursday.

MMTC said in a tender addendum that it would not be able to import from countries which have been subject to sanctions.

This is the first time ever that India has said it will not buy Iranian urea fertilizer.

India has been buying Iranian urea despite the US issuing sanctions on Iran in early August.

The final and more stringent set of US sanctions is due to come into effect from 5 November.

Iran has been a key urea supplier to India over several years, fulfilling almost 30% of the country’s annual import requirement for the crop nutrient.

India imported 1.6m tonnes of urea from Iran in 2017, out of a total of 5.5m tonnes imported during the year.

"Trump has done us in. One day it had to happen. But it [India not accepting urea] will go soon. It’s temporary," said an Iranian supplier.

MMTC has specified that the origin of the product is to be stated in the offer and any offers from sanctioned countries would not be opened.

The addendum comes after the buyer said last week it cannot guarantee payments in respect of goods offered from sanctioned countries.

All other terms and conditions of the tender remain unchanged.

MMTC is closing an import tender for an unspecified quantity of prilled or granular urea on 5 October and for shipment by 19 November. Offers are to remain valid until 12 October.

Meanwhile earlier on Thursday, the Indian rupee hit a record low of 73.81 per dollar, which would make purchases more expensive for importers.

Urea prices, which have been on a bull run over the last few months, are expected to firm further on the news, according to market sources.

With Iran out of the picture, prices offered under the Indian tender are now expected to be higher, with expectations at around $345-355/tonne CFR (cost and freight) for now.

China and the Arab Gulf suppliers are now expected to take the lead in the Indian tender.

The US list of sanctioned petrochemical products from Iran includes any aromatic, olefin, and synthesis gas, and any of their derivatives, including ethylene, propylene, butadiene, benzene, toluene, xylene, ammonia, methanol, and urea.

Pictured: An Indian farmer in Bhubaneswar
Source: REX/Shutterstock

By Deepika Thapliyal