Potash Importers Want 10% Discounts.

Indian fertiliser companies will not import potash in the current financial year if they cannot get 10% discounts on spot prices, the head of the country's top fertiliser company and import negotiator told Reuters in an interview on Wednesday.

Firms in the country, which account for about 10% of global potash demand, are negotiating with suppliers and there could be a deal in two weeks, US Awasthi, managing director of Indian Farmers Fertiliser Co-operative Ltd (IFFCO), said.

"India is a large buyer and hence India should get around 10% discount over the spot prices because one has to differentiate between a large buyer and a small buyer," Awasthi told Reuters. IFFCO negotiates import deals on behalf of the fertiliser industry and is backed by the government.

"Current spot prices are around USD 500 (per tonne) and we expect at least USD 50 per tonne discount to make it around USD 450 per tonne," Awasthi added, speaking by telephone from New Delhi.

India is the world's second-biggest buyer of potash in the world and fulfils its entire requirement through imports. Global demand is about 50 million tonnes and India buys 5-5.5 million tonnes annually, mainly from Russia, Ukraine and Canada .

China is the world's biggest potash consumer, accounting for around 20% of global consumption.

India is also a leading importer of diammonium phosphate (DAP) and urea.

Awasthi said global DAP suppliers were providing

the product at USD 612 per tonne, about 10% below spot prices, and said potash suppliers should mirror those discounts.

"I think if a better source is found, any deal should come before the next fortnight," he said.

Although there are a number of producers, global potash sales negotiations are mainly handled by two entities, one in Canada, the other serving Former Soviet Union (FSU) producers, which set annual contracts with main buyers India and China.

Fertiliser companies generally sign annual deals but Indian buyers have held off so far this year, waiting for lower prices.

Demand for potash and other fertilisers worldwide is up as farmers rush to maximise yields with grain prices at fresh highs. But India already has overflowing grain bins from previous harvests and is on track for bumper wheat production this year.

India imported potash at USD 370 per tonne last year when prices in the international market were around USD 430, Awasthi said.

The Fertiliser Association of India earlier this month said industry would "take a holiday from import of potash" because of higher prices.

Russia's Uralkali, which aims to become the world's second-largest supplier through its merger with Silvinit, has said prices to India will be sharply higher and sees contracts signed in the next few months.

Earlier this month, German potash miner K+S said it would consider more fertiliser price increases in its main European market as farmers were not deterred by a price rise in March.

Awasthi said Indian companies could manage without the more expensive supplies.

"If they don't agree to our demand, we won't buy ... It's not like oxygen that if we don't buy it, we will die," he said.

India's major potash importers are Indian Potash Ltd, IFFCO, Coromandel International, Zuari Industries and Tata Chemicals, which together account for almost 90% of the country's imports.

Eight companies currently control more than 80% of global supply: Potash Corp of Saskatchewan, Mosaic Co, Agrium Inc, K+S, Uralkali, Silvinit, Belaruskali, and Israel Chemicals.

Source : moneycontrol.com