New Delhi, Feb. 21 In what is good news for the Centre's plans to decontrol prices of non-urea fertilisers from April 1, a consortium, led by Coromandel International and Tata Chemicals, has struck a deal for import of six lakh tonnes (lt) of muriate of potash (MoP) at $370 a tonne, cost and freight Indian ports.
“The contract has a 180-day credit facility. If you factor that as well, the effective price, at 4.5 per cent annual interest, would be $362-363 a tonne”, industry sources said.
The six lt imports at $370 a tonne, contracted with Canpotex International – the Canada-based world's No. 1 potash exporter – is lower than the $460 a tonne price negotiated by Indian companies last June for material supplied through July 2009-March 2010.
Even prior to that, the jointly worked out price with international suppliers for the July 2008 to March 2009 period was $625 a tonne.
Significant price difference
The latest contracted $370 a tonne rate is expected to become the benchmark for all imports to be undertaken in the ensuing fiscal.
In fact, Israel's Dead Sea Works Ltd is said to have already offered another six lt at the same price, which is about $250 a tonne below the 2008-09 rate.
The country imports MoP mainly from Canada, Israel, Russia, Belarus and Jordan.
“A $250 price difference is significant, considering that India does not produce any MoP and imports its entire requirement.
On annual imports of 44-45 lt, it translates into savings of almost $1.2 billion,” the sources noted.
But more important, the lower price would make decontrol a relatively feasible proposition.
At $370 a tonne, the landed cost of the imported material would be around Rs 17,200 a tonne.
The Centre has currently fixed a maximum retail price of Rs 4,455 a tonne for MoP.
“Fertiliser companies are now being paid a concession of Rs 19,000 a tonne for selling at this regulated price.
With the reduced landed cost, a flat Rs 13,500-14,000 subsidy can be given without risking any major price spurt even after decontrol”, they added.
phosphates
But matters could be tricky when it comes to phosphatic fertilisers, where – unlike in potash – international prices are showing an upward trend.
In October, prices of imported di-ammonium phosphate (DAP) averaged $350 a tonne, which then rose to $370 in November, $410 in December and $460 in January.
Currently, DAP is being quoted at $520-530 a tonne.
“The Centre will have to tread very carefully in the case of DAP. Decontrol without ensuring adequate stocks could lead to huge price volatility with disastrous political consequences”, the sources pointed out.
India's DAP imports this fiscal are estimated at 70-75 lt with domestic production of 40-45 lt.
Source : Business Line