Deadlock between Indian buyers, global MoP sellers persists

The deadlock between Indian fertiliser firms and global suppliers of muriate of potash (MoP) over pricing of imports for this fiscal continues, with the later refusing to sell the farm nutrient at a lower price of USD 470 a tonne.

"There has been no progress between Indian buyers and potash suppliers on prices for the next round of contracts. Suppliers again this week confirmed that they will not be able to offer Indian buyers the same price as that settled in China," UK-based FMB Consultants said in a latest report.

Major potash suppliers like Canpotex and Belarusian Potash Company (BPC) say that USD 470 per tonne price that has been settled with China is "unworkable" for the Indian market as frieghts to India are significantly higher, it said.

The FMB weekly report further noted that "there is no immediate urgency for suppliers to finalise further contracts" as major suppliers like Canpotex have sold out for the whole of third quarter and also BPC is now able to sell more easily in European markets following recent lifting of anti-dumping measures on Russian and Belarusian KCI.

"Furthermore, negotiations between Indian buyers and suppliers will not be helped by recent news reports which suggest the supply from one of BPC's mine in Belarus may be significantly reduced due to flooding," he said.

Global suppliers have reported that they have received a number of enquiries from private buyers in India who have almost no stocks available, it added.

According to the FMB report, India's MoP import in May-June of this year are estimated to be lower at 1.10 lakh tonne, compared to 15.9 lakh tonnes in the year-ago.

That apart, in South East Asia, the price of USD 510-525 for standard/granular MoP has been widely accepted, as buyers believe that this price will not be available for too long, the report said.

"A USD 30-40 a tonne increase in South East Asia is imminent, according to suppliers, and is likely to be in place for Sepetember-end deliveries," it mentioned.

Indian importers like IFFCO are, however, of the opinion that they would at best, consider a price of USD 470 a tonne as the country buys 10% of global potash production.

"We do not mind buying potash at USD 470 a tonne, but the global suppliers are demanding USD 500, which we cannot accept at any cost. It is also a matter of India prestige," IFFCO Managing Director U S Awasthi had said recently.

Indian companies want to import potash at not more than USD 420 a tonne, which is the government's benchmark import parity price used to compute the subsidy on potash incorporated into various complex fertilisers.

India does not have any exploitable potash deposits and imports its entire requirements. MoP imports touched a record 6.4 million tonnes in 2010-11.