Fertiliser firms resisting potash price hike

Indian farmers may have to shell out more for potash price this year following pressure from global sellers. This could add to their worries as they already face prospects of a below normal monsoon

Indian fertiliser companies are resisting attempts to hike prices of potash by major global suppliers, saying that any such move will hit the demand for the soil nutrient.

After securing a price increase of $10 per tonne (or around 3 per cent) from Chinese customers this year, exporters from Canada and Russia are insisting that Indian buyers take a similar price increase. Companies such as Indian Potash Ltd and Zuari Industries are the large importers of potash.

Sources said Indian companies are negotiating with global suppliers such as Uralkali and Potash Corp to maintain a status quo on prices, citing a weak currency and their inability to pass on the hike to farmers as the Government had ruled out any hike in subsidy.

Last year, Indian companies had bought the nutrient at $322 a tonne on a cost and freight basis.

“Suppliers are asking $332 a tonne, while we want prices to remain unchanged. We are trying impress upon them that any increase in prices would have to be passed on the farmers and that could impact the demand,” sources said.

Also the rupee has weakened against the dollar by about 5 per cent since early April last year till date.

India totally relies on imports to meet its potash requirement. The country had imported around 4 million tonnes of potash last year.

In the current financial year, imports could increase to around 4.5 million tonnes, provided prices remain unchanged, sources said. A price increase of $10 a tonne would inflate the potash import bill by around $40 million (₹250 crore).

Though the Indian Metrological Department, in its outlook on Wednesday, forecast a below normal monsoon for this year, the fertiliser industry is hopeful of better sales this year.

“Though below normal monsoon has a bearing on the fertiliser off-take, we are optimistic of a better rainfall in the year ahead,” fertiliser industry sources said. For the Kharif season, the Government has assessed the requirement of muriate of potash (MoP) at 18.31 lakh tonnes (lt) against total sales of 14.11 lt in kharif 2014.

Similarly, urea requirement is assessed at 15.79 million tonnes (mt) for kharif 2015 against sales of 13.99 mt in the previous season. The requirement of di-ammonium phosphate (DAP) has been assessed at 5.09 mt for kharif against sales of 3.64 mt in the previous season.

Except for urea, the imports of potash and phosphatic fertilisers are under Open General Licence and companies import them depending on their commercial judgement.

In the 2014-15 fiscal, urea imports grew 23 per cent at 8.74 mt against 7.08 mt the year before.

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