Russian companies have terminated their practice of offering discounted fertilizers, including di-ammonium phosphate (DAP), to India due to tightening global supplies. This shift, following Russia’s status as India’s largest fertilizer supplier last year, may raise India’s import expenses and subsidy obligations amidst soaring global fertilizer prices. The withdrawal of discounts comes as top exporter China seeks to limit its overseas fertilizer sales.
According to a senior industry official involved in overseas supply negotiations, “There are no discounts being offered by Russian companies anymore. They are providing fertilizers at market prices.”
India experienced a substantial 246% surge in fertilizer imports from Russia in the financial year 2022/23, reaching a record 4.35 million metric tons, thanks to discounts provided on di-ammonium phosphate (DAP), urea, and NPK fertilizers. Russia’s aggressive pricing strategies had previously diminished the market share of other fertilizer exporters, including China, Egypt, Jordan, and the United Arab Emirates.
However, a different Indian company official noted that Russian companies were previously offering DAP with discounts as high as $80 per ton, but they have now discontinued such discounts entirely. Russian DAP is currently priced at approximately $570 per ton on a cost and freight (CFR) basis for Indian buyers, matching prices offered to other Asian buyers.
Global fertilizer prices have been on the rise for the past two months, complicating efforts by Indian firms to stockpile fertilizers for the upcoming winter season when demand for DAP surges for wheat cultivation. Additionally, urea prices have climbed from approximately $300 per ton on a CFR basis in July to $400 per ton. In response, an official from a Mumbai-based fertilizer company mentioned, “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.”
This change in pricing dynamics in the fertilizer market is expected to have ripple effects on India’s agricultural sector and government policies.
Source Reuters
