MUMBAI, Sept 14: India’s potash and phosphate demand may fall during the next quarter, Rabobank said in its quarterly Q3 FY 14 fertiliser report here today.
This would be partly due to further depreciation of the Indian rupee increasing pressure on importers’ margins and the impact of weak monsoon rains, which are on average 66 per cent behind year on year volumes, capping prices, the report said.
India is likely to be the main driver of global urea demand in the coming months. However, a disappointing monsoon may probably limit demand ahead of the kharif planting season which began in September, the report said.
As a result of the supply chain management that has been implemented by the Chinese Nitrogen Fertiliser Industry Association (CNFIA) there is a possibility that traders who committed volumes in India’s latest urea tender will default, thereby forcing India to re-enter a significant volume in September as urea stock are already very low in India.
Tight supply outside of China and managed supply in China will probably increase India’s import prices of urea, the report said.
Steadily increasing Chinese FOB urea prices are rendering significant losses for traders that come up short in India’s latest tender. Traders who committed volumes at USD 275/tonne CFR India face FOB China prices that exceed USD 280/tonne. With freight costs from China to the east coast of India estimated at USD 25/tonne, traders with sales shortfalls will have to swallow up losses of at least USD 30/tonne.
The price pattern for phosphates in India will be fragile. Demand is apparent and July DAP imports were strong, but weak monsoon rains in the first half of the year, a continued weak Indian rupee and a subsidy system that continues to cap import prices will challenge any higher prices, the report said. (PTI)
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