Thursday 23 August 2012

India likely to extend potash import holiday

By: Ajoy K Das
23rd August 2012
KOLKATA (Mining Weekly)
- India was likely to extend its ‘potash import holiday’ beyond September this year, against a 23% fall in potassic fertilizer consumption of and persistent high prices.

The falling demand for potassic fertiliser resulted in 40% decline in the import of potash from 4.5-million tons in 2010/11 to 2.7-million tons in 2011/12, leading to an increased replacement of potassic fertiliser with urea because of a high price differential, data from Chemicals and Fertiliser Minister, Srikant Jena, revealed.

While the domestic price of Muriate of Potash (MoP) was pegged at $217/t, government controlled price of urea ranged at $96/t. India was one of the largest importers of MoP and the entire demand for the crop nutrient was met through imports.

“There has been an average 30% increase in international price of MoP over the last one year. With India, among the largest importers out of the international markets, global potash miners were preferring to close down mines rather than lower prices,” an official in Chemicals and Fertiliser Ministry said.

“With the falling demand of potassic fertiliser, import of raw material potash or finished product of potassic fertiliser would be postponed beyond September, unless there was a downward correction in international prices by either potash miners or finished product producers,” the official said.

Since April 2012, India has not contracted for any import shipment of potash since domestic buyers failed to agree on prices in negotiations with global suppliers. The government subsequently declared that no import contracts would be concluded until September 2012.

However, there have been reports that Indian buyers were negotiating for aggregate import of two-million tons of MoP with prices quoted at $470/t for December deliveries and $520/t for January-March deliveries, the official said.

“Such import prices were unviable in the domestic market since the average import price during 2011/12 was $468/t leading to drastic fall in consumption. Unless low demand for potash in global markets were reflected in prices, contracts for substantial shipments were unlikely to be finalised,” he added.

India Farmers’ Fertiliser Co-operative Limited (IIFCO), one of the largest importers of potash in the country, had no immediate plans to resume import of potash, a company official said.

In the last quarter of 2011/12, IIFCO contracted imports at $570/t which was too high and had no plans to seek contracts unless prices cooled off to levels of around $400/t, which was unlikely in the months ahead, he added.

The Indian potash market was partially deregulated in which importers (domestic suppliers) have limited pricing freedom and the government cushions the price volatility with modest subsidies.

Under the circumstances, the government could intervene to halt imports at higher than acceptable price since India was firm in weakening the cartel of potash suppliers, the Ministry official said.

Reports of mining giants BHP Billiton and Vale shelving development of two large potash mines in Saskatchewan, Canada ostensibly on weak global demand and the closure of the Lanigan mine by Potash Corporation, were encouraging signals that correction in the commodity had set in and India could bide time for it to gain momentum before entering the market, the official added.

India sourced potash and potassic soil nutrients from Canada, Belarus, Lithunia, Russia, Jordan, Germany and Chile.

Edited by: Esmarie Swanepoel

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