India’s fertilizer industry is on hold as China bans urea exports

India’s fertilizer industry is on hold after China  banned urea exports and is  in no rush to secure fertilizer supplies. This could help prevent a global price hike, as Indian demand  is one of the main drivers of interest rates due to its dependence on imports. “Unlike in the past, this government shields domestic companies from contract negotiations with international suppliers and met the burden of price increases with subsidies, except for potash”, an official of the  industry explained why there is no rush.He said that whatever has been imported and prepared can meet the demand for urea till mid-December and the demand for other fertilizers like DAP and MOP till December. The main sowing window of the rabi season is  in October-December, but in some crops it lasts until January. Farmers stocked up with fertilizers for the raging season in August-September. 

 Can promote the growth of other fertilizers  

 An industry official said that since urea is fully under government control, the industry is not worried. However, some fertilizer producers fear that China’s decision could contribute to higher prices of  DAP, Muriate of Potash (MOP), as during the 2021 ban. More clarity is expected next week, when some countries, such as the UK, demand against the -Russian resolution at the ongoing G20 meeting in New Delhi, the sources said. Russian President Vladimir Putin recently forced Russia to withdraw from an earlier agreement that allowed Ukraine to export grain through the Black Sea during the war. Putin  said it would not be returned until world leaders agreed to allow Russian  food and fertilizer exports. Unlike 2021, when there was a real problem with the supply  of fertilizers due to the Covid pandemic, this time  China and Russia want to continue exporting and that is a big difference, said a leading fertilizer producer. 

 Current CFR costs 

 In 2022, FOB import prices rose to around $1,000 per tonne from $280-300 per tonne, which in turn increased the government subsidy  in FY23 from ₹1.54 million in FY22. Compared to total sales of urea, DAP, MOP and complex (NPKS) of 58.54 million tonnes (mt) in FY23, imports were almost a third at 18.8 million tonnes. Currently, the CFR (cost and freight) price of imported urea is around $400 per tonne, the DAP is around $560 and the MOP is around $319 (negotiated price). According to a Bloomberg report, China has asked some fertilizer producers to stop exporting urea, prompting some major Chinese companies to stop signing new export contracts this month. But South Korea’s finance ministry issued a statement on Friday confirming that China had not implemented a formal ban on urea shipments, but also said that a Chinese  fertilizer company had announced plans to reduce its exports.

Leave a Reply

Your email address will not be published. Required fields are marked *