Fertilizer importers seek Delhi intervention on prices

Indian fertilizer buyers have petitioned the government to intervene through diplomatic channels in a bid to ensure "reasonable prices" and regular supply, as phosphates levels hit their highest since 2013.

The buyers urged the government for assistance with the smooth supply of product during a meeting on 12 April. Importers face DAP import prices at near eight-year highs, domestic pressure to hold retail prices low and a rollover in the subsidy for phosphates and potash, squeezing import margins and driving the need for escalation to governmental channels.

The meeting, between fertilizers secretary DV Sadananda Gowda, ministry officials and industry representatives, resulted in assurances that the government would take all necessary steps to support the availability of fertilizers. One of those steps includes the use of diplomatic channels to ensure the supply of product, according to an official government statement on the meeting released today.

The industry leaders had asked the government to convince fertilizer suppliers to keep prices reasonable, but there was no further indication in the statement that ministers would interfere with pricing. DAP import prices in India hit the mid-$560s/t cfr at the end of last week, marking the highest level since May 2013.

Importers to join forces?

Industry leaders also assured ministers that they intend to negotiate "hard" with international suppliers on pricing. Key to this is importers' intention to negotiate as one, embarking on a "united strategy" in a bid to receive the "best deal" for phosphates and potash-based products, according to the official statement.

The industry representatives have committed to holding DAP prices for existing inventories at lower retail prices, following the swift reversal on pricing last week by the country's largest supplier Iffco.

Iffco had intended to raise the domestic DAP price to 38,000 rupees/t ($506/t), before deeming the move "tentative" and agreeing to offer existing stocks at the prevailing price of Rs24,000/t. Officials advised the representatives during the 12 April meeting that the fertilizers ministry should be consulted prior to any change in the domestic price of phosphates and potash-based products.

Indian DAP importers have seen their import margins squeezed in recent weeks, with the government deciding to roll over the subsidy levels for DAP this fertilizer year, running from April to March. Pressure from the government to hold retail prices at previous fertilizer year levels, despite a 78pc jump in cfr prices in the past year, further compounded by a weaker rupee, have added to importers' woes.

By Harry Minihan

Daily DAP price cfr India, INR vs USD