Coromandel Fertilisers Ltd, a Murugappa group company, is planning to import substantial quantity of raw materials as well as finished goods from China as opening stocks for next season, sources aware of the development told FE here.
The Chinese government is said to have brought down the export duty on fertilisers/raw materials from 11% to 10% due to glut in the global market coupled with a sharp drop in the prices of key fertilisers. It is believed that China has relaxed the export duty only for the months of January, February, July and August, which are lean period, sources added.
In order to make good use of the current situation and maintain its growth without any problem in the future due to the government?s new urea policy which calls for subsidy reimbursement based on the prevailing global prices, CFL has proposed to import raw materials as well as finished goods such as rock phosphate, phosphoric acid, sulphur, ammonia, urea and DAP from the Chinese market, which is estimated to be worth around Rs 6,000 crore, sources pointed out.
CFL, which currently imports some of the raw materials from its South African partner – Foskor, felt that imports from China would be more attractive and realistic given the current situation and hence proposed to go ahead with its plan. ?The company is in talks with at least three to four players for sourcing products,? sources said. The company is likely to import rock phosphate to the tune of 8,000 tonne, 4,50,000 tonne phosphoric acid, 4,50,000 tonne sulphur, 3,00,000 tonne urea and 2,00,000 tonne DAP.
According to sources, due to overall recession and poor offtake in the global markets, the prices have dipped sharply in the last two months. While the price of phosphoric acid has come down from $2,200 a tonne to $1,000 a tonne, the price of sulphur dropped from a high of $850 a tonne to $500 a tonne. Similarly, the prices of ammonia declined from $850 to $250 a tonne, urea ($750 a tonne to $200 tonne) and DAP fell from $1,300 a tonne to $600 a tonne.
The industry feels that the current policy is only meant for the stable market. However, the situation in the global market is volatile and prices are not expected to stabilise in the near future, which will not augur well for the industry.
Meanwhile, as part of its strategy to tap the huge potential in the global market, CFL has decided to enter the Latin American market for pesticides business.
The company will set up a subsidiary in Brazil, the world?s largest market for agrochemical with a potential of $5 billion. The company is currently exporting generic pesticides such as endosulfan, profenetos, malathion, pemichos to the Brazilian market from its Indian operations in a small way and CFL will be looking at business to consumers (B2C) market there.
