Indian Potash receives offers $200/tonne lower than RCF for urea import tender.
Due to a drop in global urea prices this month, overseas sellers are keeping an eye on India’s demand, which could boost their sentiments as it did in May when Rashtriya Chemicals and Fertilizers (RCF) put out a bid to import 18 lakh tonnes (lt). Indian Potash’s (IPL) latest offer in response to an inquiry is about $200/tonne less than what RCF imported.
RCF is one of the few companies that can import urea on behalf of the government. In May, they signed a contract to bring in 16.5 lt of urea by July 5. Swiss Singapore Overseas Enterprises was the L1 bidder for the Paradip port on the east coast, with a price of $727.80/tonne (c&f). Samsung C&T Corporation was the L1 bidder for the Pipavav port, with a price of $716.50/tonne.
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War and Chinese restrictions raise prices
Sources say that IPL has received offers for east and west-coast delivery at $517–520/tonne (c&f), which is $196.50–204.30/tonne less than what RCF has agreed to pay. The Fertilizer Ministry asked IPL, which is also a channeling agency, on July 13 to look into importing 5 lt of urea.
The average price of urea around the world in June was $691/tonne (free-on-board). This was 67% higher than the same time last year but lower than the $722/tonne price in May. In December, the price of urea skyrocketed to $990/tonne. After that, it went down every month until it hit $596/tonne in March. But in April, it went up to $631 per tonne.
According to an expert on fertilizer, ‘Global prices started to change after the war between Russia and Ukraine, but the trend of prices going up started when China put limits on exports last year. As an agreement was reached on the limited opening of the Odessa port in Ukraine, it led to rumours that fertilizer supplies from Belarus and other places would start up again. This made commodity prices drop overall. But after the agreement, there were reports that Russian missiles hit infrastructure in Odessa. This makes the drop in prices seem temporary.’
Sending a strong message
Gavilon Fertilizer LLC won the IPL tender as the L1 bidder. Sources say that the company’s bid for the RCF was $767 for delivery to Mundra and Kandla and $763 for delivery to Kakinada and Karaikal. Also Read | Fertilizer Ministry approved import of 1.6 Mt of urea at ₹11,500 Cr.
A former STC (The Trading Corporation of India Limited) employee who handled urea imports said that the government needs to plan its imports in small chunks without saying how much it plans to buy. This will keep the global market from getting too excited. Everyone knows that India will have to import because of the deficit, he said, adding that a small cut will send a big message.
The country imported 14.03 lt of urea from April to June, which is slightly less than the 14.15 lt it brought in the same time last year.