In a first such move! Govt halts potash imports owing to drought concerns

This announcement is seen as the first such news by India- the world’s largest fertilizer consumer, on potash imports in years

By Sai Nikesh D

Concerned over decline in domestic demand driven by drought-hit scenario in the country, Government of India has reportedly taken decision to halt the imports of potash for the current year till March-end. And negotiations for imports in coming year starting in April are also not likely to happen until June.

“Potash has always been 100% import dependent. Severe drought conditions and inability to cope up with existing stocks might have enabled government take this decision to halt imports,” says sources from the Fertilizers Association of India.

This announcement is seen as the first such by India- the world’s largest fertilizer consumer, on potash imports in years and is likely to deal a minor blow to the suppliers.

Uralkali, Potash Corp of Saskatchewan, Agrium Inc, Mosaic, K+S, Arab PotashCo and Israel Chemicals, are among major potash suppliers to India.

“This wasn’t anything we were anticipating necessarily. We don’t know necessarily that there’s an impact associated with it. We’ll have to wait and see how the other factors play out as we go forward,” Denita Stann, the spokesperson of Potash Corporation of Saskatchewan, which has 5% of its potash exports market consumers in India, was quoted to have said in a Saskatchewan-based news portal.

According to Stann, ‘The Government of India has committed to import 4.5 million tonnes of potash worldwide, with an option to increase the order to 5.2 million tonne, but so far this fiscal year, they have taken only 3 million tonnes’.

However, the Government of Saskatchewan does not find it as a major concern at this point. Early settlement of new subsidy rates for farmers, decision on contract volumes already committed for import, may be some key factors of concern in this regard.

Meanwhile, the Indian industry feels that fertilizers are facing a weak demand due to drought conditions in the country, resulting in a decline in crop output, thus creating a lesser demand scope for fertilizers.

However, despite import cut, the country’s 1 million tonne of potash inventory may be needed to fill the gap, which would in fact increase the demand for existing stock and also result in price rise. According to sources, spot prices of potash stand at $230 per tonne, which is 8-year low and down by more than a quarter from a year ago.

This was published in The Dollar Business on February 18, 2016


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