INDIA- Russian fertilizer suppliers have halted their practice of offering discounted prices on products like di-ammonium phosphate (DAP) to India due to tightening global supplies.
This change comes after they emerged as India’s primary suppliers last year, according to three sources in the industry who spoke with Reuters.
In August, these Russian companies shifted their strategy to pricing fertilizers at market rates, potentially leading to increased import costs and subsidy burdens for India amidst a global price surge. Moreover, this change comes as China, a prominent exporter, seeks to restrict its overseas sales.
According to a senior industry official based in New Delhi involved in negotiations with foreign suppliers, “There are no discounts,” with Russian companies now presenting fertilizers at market prices. The official, who chose to remain anonymous due to the matter’s sensitivity, confirmed this development.
In the fiscal year 2022/23, India witnessed a 246% surge in fertilizer imports from Russia, reaching a record 4.35 million metric tons. This surge was fueled by discounts relative to global market prices for DAP, urea, and NPK fertilizers.
Another Indian company official noted, “Russian companies were offering DAP at discounts of as high as US$80 per ton. However, now they are not offering discounts of even US$5.”
According to a Russian industry official, the current price of Russian DAP stands at approximately US$570 per ton on a cost and freight (CFR) basis for Indian buyers, consistent with rates offered to other Asian buyers.
Over the past two months, global fertilizer prices have surged, posing challenges for Indian companies in stockpiling supplies for the upcoming winter season when demand for DAP typically rises for wheat crops, according to an official from a Mumbai-based fertilizer company.
In July, global suppliers were quoting urea at approximately US$300 per ton on a CFR basis, but this has now escalated to US$400 per ton. Similarly, DAP prices, which were around US$440 per ton in July, have also climbed.
As these price hikes coincide with crucial state elections in India, an official from the Mumbai-based company commented, “The global fertilizer prices are rising just before crucial state elections in India. The government has no choice but to increase subsidies to protect farmers.”