Russian fertilizer companies have halted their practice of offering fertilizers, such as di-ammonium phosphate (DAP), to India at discounted rates due to a tightening of global supplies. This shift in strategy comes after Russia became India's largest fertilizer supplier last year. Three industry sources shared this information with Reuters.
In August, Russian companies opted to offer fertilizers at prevailing market prices. This move may result in increased import costs for India and a higher subsidy burden, especially considering the recent surge in global fertilizer prices. Additionally, China, a leading exporter, has been limiting its overseas fertilizer sales.
According to a senior industry official based in New Delhi involved in negotiations with international suppliers, there are currently no discounts being offered. This official, who preferred to remain anonymous due to the sensitivity of the matter, stated that Russian companies are now pricing their fertilizers in line with market rates.
In the 2022/23 financial year ending on March 31, India's fertilizer imports from Russia witnessed a remarkable 246% increase, reaching a record 4.35 million metric tons. This surge was fueled by discounts provided by suppliers on diammonium phosphate (DAP), urea, and NPK fertilizers compared to global market prices.
Russia's aggressive pricing strategy in the previous year eroded the market share of other fertilizer exporters, including China, Egypt, Jordan, and the United Arab Emirates. According to another Indian company official, Russian companies were offering DAP at discounts of up to $80 per ton, but now they are not offering discounts of even $5.
Currently, Russian DAP is priced at approximately $570 per ton on a cost and freight (CFR) basis for Indian buyers, a rate consistent with that offered to other Asian buyers, according to a Russian industry official.
Global fertilizer prices have been on the rise for the past two months, creating challenges for Indian companies looking to build up stocks for the upcoming winter season when demand for DAP typically increases, especially for wheat crops, as noted by an official from a Mumbai-based fertilizer company. In July, urea was being offered at roughly $300 per ton on a CFR basis globally, but prices have since increased to $400 per ton, the official added. DAP prices were approximately $440 per ton in July.
These price increases in global fertilizer markets are occurring just ahead of critical state elections in India. Consequently, the government may have no choice but to raise subsidies to support farmers, as suggested by the official from the Mumbai-based company.
Â
