DAP producers look for cheaper phosphoric acid imports

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New Delhi: Indian producers of diamonium phosphate (DAP) fertilisers are interested to import phosphoric acid from the global market with a view to bridge the likely shortfall of this essential nutrient in the near future in the country.

The last of the negotiations for ammonia import took a back seat at the sidelines of the annual seminar of the Fertiliser Association of India (FAI). Indian DAP producers discussed import prices of phosphoric acid with the suppliers. Global suppliers were quoting the same price for 2008 Q4 imports at $1,920 a tonne, while the Indian industry was demanding a cut by $700 per tonne. It is more likely that the Indian industry may be able to settle the DAP import price for the first quarter of 2009 at $1,200 a tonne on CFR basis.

Indian DAP producers ceased to import phosphoric acid in the fourth quarter of 2008 but continued to import ammonia, as the producers still had enough phosphoric acid stock. According to the recent FMB weekly fertiliser report, with imported DAP prices of around $440 a tonne available to the Indian market at present, the incentive to produce DAP locally remains fairly limited, although subsidy levels are also a factor taken into consideration by the domestic producers.

Meanwhile, Indo-Jordan Chemcials Co Ltd (IJCC) has shut down production at its phosphoric and sulphuric acid units for December 2008 and January 2009 due to prevailing market conditions. The closure may extend to February unless market conditions improve, said the FMB report.

IJCC operates a 224,000 TPA phosphoric acid and 660,000 TPA sulphuric acid plant in Jordan and exports all its phosphoric acid to its joint venture partner, SPIC and other buyers in India. IJCC has three stakeholders - JPMC (34.8%), SPIC (58.22%) and Arab Investment Co, Saudi Arabia (13%).

The cessation of phosphoric acid shipments since November 2008 from north Africa, US and Jordan, coupled with the temporary closure of IJCC’s phosphoric acid and sulphuric acid unit, will further impact Indian DAP production and could prompt an early return to the global market for DAP, as buyers look to take advantage of the Chinese export window.