The government is aiming to import 2.5 million tonne (MT) of urea bypassing the Strait of Hormuz over the next two months to boost supplies ahead of the kharif season, Indian Potash Managing Director P S Gahlaut said on Tuesday. Gahlaut said that the supplies, for which a tender was floated on April 4, would come from countries including Russia, Algeria, Nigeria and Oman.
Indian Potash, one of the three agencies authorised by the government for urea import along with National Fertilisers (NFL) and Rashtriya Chemicals and Fertilisers (RCF), has received supply offers for about 6 MT against the tender for 2.5 MT. The prices offered by suppliers are in the range of $935-959/tonne, far higher than that in February.
Indian Potash has made its recommendation to the government after analysing the bids, Gahlaut said, adding that the government is expected to give its approval soon. The supply challenges in urea emerged as the West Asia conflict hit six key production centres — the UAE, Kuwait, Iran, Saudi Arabia, Qatar, and Bahrain. These countries account for 30-40% of global urea trade.
“As urea consignment would not come through the Strait of Hormuz, we have found an alternative route to bring urea via the Cape of Good Hope, South Africa,” Gahlaut told FE.
With the closure of the Strait of Hormuz, LNG supplies from Qatar and the United Arab Emirates (UAE) were disrupted leading to a drop in domestic urea production in March and the first half of April. With the government approving spot purchase of LNG, the production has commenced.
“Due to supply disruption in LNG — a key feedstock — we lost around 1-1.2 MT of urea production during March and April. With the latest tender, the production gap has been bridged,” he said. Since April 6, the overall LNG allocation for the fertiliser units has been increased to around 95% of their six-month average consumption, thus boosting output prospects, he added.
It had dipped to 1.8 MT in March because of LNG supply constraints. Retail prices of urea for farmers have been notified at242 a 45-kg bag since March 2018, while DAP is supplied to farmers at `1,350/bag. Urea subsidy stood at over 90% and DAP subsidy at over 50%.
It had dipped to 1.8 MT in March because of LNG supply constraints. Retail prices of urea for farmers have been notified at242 a 45-kg bag since March 2018, while DAP is supplied to farmers at `1,350/bag. Urea subsidy stood at over 90% and DAP subsidy at over 50%.