India is unlikely to sign any fresh contracts to import potash from foreign markets in the current financial year, as the country has sufficient stock to meet its requirements. The fact that global markets are over-heated has also influenced India?s decision.
India is the world’s second largest importer of fertiliser and its import quantities are enough to influence global prices.
?Global suppliers are not willing to supply at a comfortable rate and at present, we have sufficient stock to meet the requirements. We will not go for potash imports till the end of the financial year,? a chemicals and fertiliser ministry official said on condition of anonymity.
The move not to import more potash this year will also help contain the fertiliser subsidy bill. The move may not please global suppliers like Belarusian Potash Company (BPC), ICL Fertilisers of Israel and Canpotex that are confronting a sober market for their products due to weak global macro-economic climate and inventory pile up with buyers.
By delaying purchase deals, India may also be able to make some savings on potash subsidy, which together with that on phosphorous, account for nearly half of R61,000 crore total subsidy earmarked for the sector this fiscal.
Indian Potash, which is authorised to import potash for the country, had agreed to buy about 5.5 million tonne for $490 a unit last fiscal, but did not lift more than two-thirds of the quantity as the weakness in rupee and the delayed government subsidy receipts affected its liquidity. At present, companies sell potash at about R12,040 a tonne to farmers, meeting the remaining cost with subsidy.
According to Canada-based Potashcorp, global shipment of key fertiliser potash are expected to decline by 3.6% to 53 million tonne in the current calender year on account of reduced demand from India among other factors.
?Production is down by 25% this year compared with last year, and we have not imported anything, therefore, I see a fall in demand by around 50%. It looks like we may not import potash by the end of this year,? said Iffco managing director US Awasthi.
While Iffco imports potash for its fertiliser and urea plants, Indian Potash supplies to companies such as Coromandel International and Tata Chemicals. India partially deregulated potash in 2010 to give some pricing freedom to domestic retailers , but the government still cushions the price volatility with a fixed amount of subsidy decided at the beginning of the year.
