Fertiliser importers hunt for discounts on pricey potash

The rupee?s slide is hurting the finances of fertiliser firms as they are importing potash at higher costs. Since May, the rupee has depreciated by about 23%, making it tough for fertiliser import firms.

“We are finding it difficult to import as R2,000 per tonne has been added to (potash) import cost due to the rupee?s depreciation. We are waiting for the rupee to stabilise. We are also seeking discount and renegotiating contracts (with global potash suppliers),? US Awasthi, IFFCO chairman said.

India, the world?s fourth largest consumer of potash after China, US and Brazil, is renegotiating the contracts it has with the Belarusian Potash Company. Russia?s Uralkali, the largest producer, severed ties it had with Belaruskali, which helped reduce global prices by around 20%.

Deepika Thapliyal, analyst with ICIS, one of the largest market information providers in the petrochemical, energy and fertiliser space, said, ?The rupee?s fall has adversely affected demand from Indian importers on account of erosion seen in purchasing power. There have been no new shipments over the past month.?

Other large importers of potash in India are Indian Potash (IPL) and Zuari Industries. The high prices of potash in recent years led to demand destruction in countries like India, resulting in lower imports. From a peak of 63.57 lakh tonnes imported in 2010-11, shipments slowed down to 23.20 lakh tonnes in 2012-13.

“Though India has already signed contracts for the current fiscal ending March 2014, buyers have begun renegotiating contracts and are asking for a $67-77/tonne discount to $350-360/tonne on the current price of $427/tonne,? Deepika added.

The government has been implementing the nutrient-based subsidy (NBS) policy on P&K fertilisers since April 2010, under which it announces a fixed subsidy for 22 grades of P&K fertilisers and frees their maximum retail price (MRP).

As per the NBS policy, the MRP of potash and phosphate fertilisers has been left open to be fixed by the manufacturers or importers and the amount of subsidy is fixed by the government for each nutrient.

For 2013-14, the subsidy has been fixed at R11,30 per tonne of potash.