Agri Business

Fertiliser industry pins hopes on pick-up in rabi offtake

| Updated on: Oct 26, 2012
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Fertiliser makers such as Tata Chemicals and IFFCO see a pick-up in rabi offtake, as the late revival of monsoon is seen aiding winter crops.

The industry had seen a slump in kharif demand, as delayed monsoon had hurt consumption mainly of complexes fertilsers such as DAP and NP/NPK (nitrogen, phosphorus, potassium).

This led to a build-up in stocks of DAP and NPK, forcing the industry to freeze raw material imports. “We expect rabi demand to be better than kharif,” said R. Mukundan, Managing Director, Tata Chemicals Ltd.

The placement of fertiliser stocks with dealers and traders for the rabi season is almost over and the demand is seen as good, he said.

Urea sales were down 2.76 per cent during the April-Sept period, while DAP offtake was lower by 18 per cent. The NP/NPK sales were the worst affected, with the demand declining by almost 30 per cent.

IFFCO Managing Director and CEO U.S. Awasthi recently said the rabi fertiliser demand would be on a par with last year. Last rabi season, urea sales stood at 153.89 lakh tonne, while DAP and NPK were 63 lakh tonne and 57.36 lakh tonne, respectively.

Fertiliser makers are hoping that a robust rabi demand would help them trim the stocks of DAP and NPK. The existing stocks are expected to last till December. Fertiliser makers are expected to go for new raw material contracts early next year.

However, not all players are bullish on the rabi prospects. “The delay in kharif sowing could have a spill-over effect and may delay rabi planting, thereby, affecting fertiliser sales. The downward trend in commodity prices and high input costs present a not-so-cheerful situation,” a senior official of a major North Indian producer said.

Further, the prices of DAP and NPK are still high and may continue to hurt the offtake of these complexes, as farmers, like in kharif, may prefer to apply more of urea. Though global prices of complex fertilisers have softened a bit, the farmers are unlikely to reap an advantage during rabi, as a large portion of imports were made when the rupee had touched a low against dollar.

Prices of urea, controlled by the Government, stood at Rs 5,360 a tonne, the prices of DAP still hover around Rs 24,000 a tonne, up from Rs 18,000 a tonne in the previous year. NPK prices are at around Rs 22,000 a tonne.

>Vishwanath.kulkarni@thehindu.co.in

Published on October 26, 2012

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