 "Urea")
India’s urea production increased by over 12 per cent in the first nine months of the current financial year (FY24), while imports were marginally less than last year and sales remained flat, according to data from industry players.
Urea is the largest consumed fertliser in India followed by DAP.
Higher production amid flat sales could ensure adequate supplies in the coming months, they said.
“With the production (of urea) rising till December and imports also maintaining a healthy pace and sales almost flat, there could be some surplus in the remaining few months,” a senior industry player said.
Urea demand could re-emerge in a big way for the 2024 kharif season from May and June with the advent of monsoon.
The data shared by several players showed that in the first nine months of 2023-24, the imports of Muriate of Potash (MOP) jumped by almost 59 per cent in comparison to the same period last year while the sales declined which could be due to stocking by industry players.
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A sharp 46 per cent decline in the landed price of MOP, which is entirely imported from $590 per tonne to $319 per tonne in this financial year between April 2023 to December 2023, could be the reason for the spike in imports.
Industry sources said that MOP sales have been consistently declining for some time due to the high retail prices.
The retail price of MOP has been up for quite some time due to the lower subsidy for potash as compared to other nutrients under the NBS regime.
For the October to March period, the per kilogram subsidy for potash is almost 84 per cent less than the preceding April to September period, official data showed.
“While a bag of DAP costs the farmer around Rs 1350, a bag of MOP costs around Rs 1500-1600, which is why there is a fall. But imports have risen as the industry might be looking at stocking to cash on the falling prices and also due to global uncertainties,” the official explained.
MOP is largely imported from several former Soviet republics, which have been under a state of conflict over the last few years due to the Russia-Ukraine war.
Meanwhile, higher production and almost flat sales of urea, while higher sales of DAP in the first nine months has also prompted talk that actual subsidy in FY24 could be somewhere around Rs 200,000 crore as against the Budget Estimates of Rs 175,100 crore.
The Revised Estimate of FY24 as provided in the Interim Budget pegged the fertiliser subsidy at Rs 189,000 crore, almost 8 per cent more than the BE for FY23.
Industry players believe the total urea consumption in FY24 could be around the same level as the last year, at 35-36 million tonnes.
