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Indian Potash Receives Bids $200/Tonne Lower than RCF

According to a former STC official who handled urea imports, the government should plan its imports in small tranches without disclosing how much it plans to buy so that expectations in the global market do not rise.

Shivam Dwivedi
Fertilizer
Fertilizer

Due to a significant fall in the global urea prices this month, overseas sellers are eyeing India's demand, which has the potential to boost sentiment, as it did in May when Rashtriya Chemicals and Fertilizers (RCF) floated a tender to import 18 lakh tonnes (lt). Indian Potash (IPLmost )'s recent offer in response to an inquiry is approximately $200/tonne less than the prices at which RCF imported.

RCF, one of the few canalizing agencies for government urea imports, had contracted in May for the import of 16.5 lt of urea for delivery by July 5. Swiss Singapore Overseas Enterprises quoted $727.80/tonne (c&f) for Paradip port on the east coast, and Samsung C&T Corporation quoted $716.50/tonne for Pipavav port.

According to sources, IPL has received offers of $517-520/tonne (c&f) for east and west coast delivery, which is $196.50-204.30/tonne less than RCF's contracted rates. On July 13, the Fertiliser Ministry requested that IPL, a canalizing agency, investigate the import of 5 litres of urea.

The average global price of urea in June was $691/tonne (free-on-board), up 67% from the previous year but down from $722/tonne in May of this year. Urea prices spiked to $990/tonne in December before falling every month until they reached $596/tonne in March. However, in April, it rose to $631/tonne.

Global price fluctuations began after the Russia-Ukraine war, though the rising trend began with Chinese export restrictions last year." As an agreement on the limited opening of Odesa port (in Ukraine) was reached, it fueled speculation about the resumption of fertilizer supply from Belarus and other destinations, causing overall commodity prices to fall. However, with reports of Russian missiles hitting infrastructure facilities in Odessa following the agreement, the price relief appears to be temporary, as per a fertilizer expert.

Gavilon Fertilizer LLC was the winning bidder in the IPL tender. According to sources, the company quoted $767 for Mundra and Kandla delivery and $763 for Kakinada and Karaikal delivery in the RCF bidding.

According to a former STC official who handled urea imports, the government should plan its imports in small tranches without disclosing how much it plans to buy so that expectations in the global market do not rise.

Everyone knows that India will have to import because of the deficit, he said, adding that even a small reduction will send a strong message. According to official data, the country imported 14.03 lt of urea during the April-June quarter, a marginal decrease from 14.15 lt the previous year.

(Inputs from Business Line)

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