Mumbai: Indian fertilizer makers are renegotiating import deals for raw materials such as potash and phosphate following a sharp fall in the rupee that has raised production costs, three industry officials said on Thursday.
With the Indian currency losing more than 14% this year and no additional government subsidy support, fertilizer makers have come under pressure. Raising prices of the politically sensitive commodity used by farmers has also been resisted.
A few suppliers have agreed to lower prices and others are likely to follow suit in the next two weeks, the industry officials said.
A file photo of a farmer using fertiliser on his land
Indian firms usually sign imports deals for raw material in one go. They signed potash imports deals at $470 per tonne for 2011 and $530 per tonne for 2012 shipments.
“International suppliers have agreed to reduce prices of diammonium phosphate (DAP) by $35 per tonne and NPK by $25 per tonne,” U. S. Awasthi, managing director (MD), Indian Farmers Fertilizer Co-operative Ltd (IFFCO), the country’s biggest fertilizer company, told the news agency.
For shipments loading from 1 December to 31 March a few exporters will charge $642 per tonne for DAP instead of $677 agreed earlier, he said.
Two other company officials, who declined to be named, said they were also renegotiating import deals with suppliers for DAP and potash.
Rupee, the worst performing Asian currency, is expected to remain under pressure in the near term due to a rising import bill, slowing exports and dwindling inflows.
“We can’t afford to pass on price rise to farmers. So we have asked our suppliers to cut prices. This is an unprecedented situation and this situation calls for close cooperation between buyers and suppliers,” Awasthi said.
India imports nearly one third of its total fertilizer requirement, with potash and phosphate constituting the bulk of it.
“Response from potash suppliers was also positive. So far they haven’t agreed for a price cut. But we are hopeful that they will accept at least a $40 per tonne cut,” said a MD of a fertilizer maker, who declined to be named.
One other fertilizer maker and Awasthi said the price cut was also in favor of raw material suppliers as higher prices will destroy demand in one of the world’s biggest fertilizer importers.
India fulfills its entire requirement of potash through imports while it buys 90% of its phosphate from abroad.
Potash Corp, Mosaic Co, Agrium Inc, Uralkali, Arab Potash Co, ICL Israel Chemicals and K+S are among the major potash suppliers to India.
Moroccan phosphate producer, Office Cherifien des Phosphates (OCP), and PhosChem are key DAP supplier to India.