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The declining price of imported phosphoric acid has come as a major relief to manufacturers of phosphatic fertilisers at a time when the industry is gearing up to meet the demand for the ensuing Rabi season.
Sources in the industry told BusinessLine that phosphoric acid prices have dropped to around $1,200 per tonne against over $1,700 three months back. However, the benefit to get the reduced raw material prices to the industry is likely to take another month, as it depends on timely shipping schedules from importing destinations.
Phosphoric acid is the main component in the production of phosphatic fertilisers and it is mainly imported from Africa, Morocco and Jordan. Domestic fertiliser manufacturing companies import phosphoric acid solutions to the tune of 2-3 lakh tonnes to meet their production requirements.
Major factors at play
The rising cost of various inputs such as ammonia has also put the domestic fertiliser industry in troubled waters. The worsening situation of war in Ukraine has further hit imports of urea, MoP and DAP from countries such as Russia and Belarus.
Likewise, the surging cost of LNG has also made things worse. However, Fertilisers And Chemicals Travancore Limited (FACT), which is using LNG as its feedstock for production, has not been impacted much because of the rising gas price, thanks to the long-term contract entered with companies through Petronet LNG Ltd for the supply of gas at competitive prices.
Because of this, FACT’s production has not been impacted in the current circumstances and is going ahead as per the scheduled plan with a good performance.
Industry expert MP Sukumaran Nair pointed out that the gap between consumption and domestic production which comes to 30 per cent of the requirement was always met by imports by way of raw materials intermediates and finished products.
Fertiliser market stats
During FY21, India imported 9.14 million tonnes of urea, 5.46 million tonnes of DAP and 2.46 million tonnes of potash.
Urea import was from China, Oman, Egypt, Ukraine, UAE and Indonesia, phosphatic fertilisers from Saudi Arabia Morocco, China, Russia and Jordan and potash from Canada, Belarus, Russia, Jordan, Lithuania and Israel. During the year urea import was reduced by 7.1 per cent whereas the import of DAP increased by 11.7 per cent.
India is the second-largest fertiliser-consuming country, the third-largest producer, and the world’s largest importer of fertiliser materials. Still, per hectare application of mineral fertiliser remains much lower than in most of the developed and emerging economies.
On average, consumption is increasing by around 4 to 5 per cent every year. In the context of imports becoming dearer on account of the war and the pandemic, he said a renewed strategy may be needed to ensure plant nutrients to the farmers.
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