In the first major fertiliser import contract for the new financial year, Indian Potash Ltd (IPL) has signed a deal with Uralkali to source eight lakh tonnes of potash at $322 a tonne.
This price is 25 per cent lower than last year’s $427 signed with the erstwhile Belarus Potash Company (BPC), the joint venture marketing arm of Russian potash majors Uralkali and Belaruskali.
The break-up of the Russian potash cartel in July-August last year after disintegration of BPC is seen helping the Indian buyers negotiate a better deal.
“We have been able to negotiate a better price and bring it down further to $322 a tonne,” said PS Gehlaut, Managing Director, IPL. The company had renegotiated the price to $369 a tonne in the aftermath of the potash cartel break-up last year.
However, a lower pricing is unlikely to benefit Indian farmers. “We expect retail prices of Muriate of Potash (MoP) to remain unchanged at ₹16,000 a tonne as rising costs and reduction in subsidy has offset the lower price,” Gehlaut said.
Besides higher diesel prices, rise in port tariffs and packaging costs have pushed up costs for fertiliser makers.
Under the nutrient based subsidy (NBS) scheme, the Government recently cut the subsidy rate on potash by 15 per cent to ₹15.50/kg of nutrient against last year’s ₹18.33. For Muriate of Potash, the proposed subsidy payable to fertiliser makers under NBS has been reduced to ₹9,300 from last year’s ₹11,300 a tonne.
ImportsIPL, Gehlaut said, was in negotiations with other potash suppliers such as Belaruskali, Canpotex and Israeli firm DSW and expects to sign contracts in about a week’s time for volumes of over 1.2 million tonnes (mt).
“We expect to import over 2.1 million tonnes this year,” he said.
Gehlaut sees a 5 to 7 per cent growth in potash imports this year over last year’s 3.3 mt. Though Indian companies such as IPL, Zuari Agro Chemicals and Coromandel International had contracted for 3.5 mt of potash last year, the actual quantity that was imported was lower at 3.3 mt on poor offtake.
He expects India’s total imports this year to be in the range of 3.6-3.7 mt.
“We hope that the contract will help stimulate potash application rates in India and support the country’s agriculture at a time of continued population growth and rising food demand. We expect that the conclusion of the Indian contract will boost the global potash market growth,” said Oleg Petrov, Uralkali’s director for sales and marketing said in a statement.
Zuari expects to import about 7-8 lakh tonnes of potash this year. “We are in talks with all major suppliers and expect to conclude the import deals soon,” said Suresh Krishnan, Managing Director, Zuari Agro Chemicals.
He further said correction in global prices has been offset by rising costs and weaker rupee as a result of which the retail prices may remain unchanged.