India imports all its requirements of potash fertilisers at over six million tonnes, but companies are — this time as well — overshot their ideal time in signing contracts with foreign suppliers. This may lead them to bear more expenses. Reason: companies have sufficient stocks for the kharif season.
However, the domestic players say that they will bargain tough for potash imports.
The international potash players recently reduced the output citing maintenance reasons, while analysts termed it as a step to raise demand at high prices. Also, Japan’s signing of a contract for Muriate of Potash (MOP) with Canadian Potash manufacturer Canpotex at $550 per tonne was being termed as the start of buying season for 2012.
However, the Indian industry will not be accepting the price given to Japan as a benchmark to sign contracts. Japanese potash imports are much lower at around 1 million tonnes than that of India and China at over 6 million tonnes each.
Indian Potash Limited managing director P S Gahlaut said the country’s industry, as of now, was in no hurry to sign any contracts. “We will not consider the price given to Japan as a benchmark,” he noted. “What happens with China would be of interest to us.”
At the same time, the Indian industry is also trying to spread awareness among the farmers that using potash, even at the present price, would be useful and remunerative, he said.
Fertiliser Association of India director-general Satish Chander said India already had stocks of potash fertilisers that would be sufficient for the kharif crop, and a decision will be taken when need arises.
Voicing similar concern, a senior government official said one could not always surrender to any arbitrary rise in prices. “Also, we have sufficient quantities in stock to support the kharif crop,” he added. “The scene is clear: the consumption has seen a decline due to a rise in price last year. The farmers are unable to buy the fertilisers due to high prices. If the suppliers continue to raise prices, their product will not be consumed.”
The farm gate prices of potassic fertilisers have seen a steep rise, since non-urea fertilisers were decontrolled in April 2010. While MOP was at Rs 4,455 per tonne prior to April 2010, currently it is being sold at Rs 11,300 per tonne.
Global suppliers are looking at a recent Japan contract as “a signal to the contract customers in China and India”. Also, leading global potash player Mosaic Company of the US had recently said India needed to sign contracts at “proper time if it wishes for” favourable prices against others. “India being a major market (consuming 20 per cent of Mosaic’s potash product) is given discounts on potash prices,” James T Prokopanko, the Plymouth-based firm’s CEO, told Business Standard.
Last year, India had to pay for potash at $490 per tonne, as the contracts were signed in August while China got MOP at $470 by signing the contracts in January. Also, industry officials informed that China is currently negotiating a contract for the current year at $530 per tonne.
Sunidhi Securities’s Tarun Surana, who closely tracks the fertiliser sector, also felt that Japan’s potash imports should be “much less” than that of China and India. Hence, prices for Japan cannot be a benchmark for India.
“Due to high prices,” he pointed out, “even China has not signed any contract even though they usually do that in January.”
