June 1, 2012
Indian buyers sign high-priced, small-volume phosphate deal
Indian buyers made a deal for long-awaited purchases at an unexpectedly high price, but for a relatively small volume, thereby sending a mixed message to the phosphate fertiliser market.
Two unnamed Indian buyers agreed to purchase 500,000-700,000 tonnes of diammonium phosphate, the most common form of phosphate fertiliser, at US$580 a tonne including freight from PhosChem, the US marketing consortium.
The price, while well below 2011 levels, was higher than many observers had expected after diammonium phosphate prices fell below US$500 a tonne in the US Gulf in March, sapped by ready Chinese export supplies, and a stronger build up in production at Saudi Arabia''s Ma''aden plant than many observers had forecast.
Maxim Volkov, the chief executive of Russia-based PhosAgro, last month highlighted talk that PhosChem may achieve US$550 a tonne as a "positive" development which "may lead to an upward correction in prices".
But the volume of India''s purchase, for shipments through until February 2013, was well below levels of previous deals.
Indeed, it was part of a three-year deal, struck in 2010, to supply two million tonnes a year, at prices renegotiated every year.
Last year, the two buyers in March agreed to purchase one million tonnes, with a further one-million-tonne deal struck in September.
However, India''s farmers have since been hurt by a collapse in the rupee which has sent costs of imports, such as fertilisers, soaring while providing a relatively little compensation in terms of improved export competiveness.
The country is a significant exporter of relatively few crops, notably cotton and, this season, sugar.
The PhosChem agreement came the same day as data revealed that India''s economic growth had slowed to 5.3% in the first three months of 2012, from 6.1% the quarter before, and the worst performance since 2003.
Agriculture suffered a particularly large collapse, to a growth rate of 1.7%, from 7.5% in the first three months of 2011.
India''s agriculture, as the top phosphate importer, "is the big driver of world phosphate imports, and it is struggling", an industry executive told www.cnchemicals.com.
"Until it picks up, the phosphate trade is likely to look a little slow."
At PhosChem, which sells supplies on behalf of North American groups such as Mosaic and PotashCorp, president Gordon Mackenzie said that the deal "demonstrates our commitment to helping meet the need for phosphate fertilisers in India".
Separately, in India, Tata Chemicals warned farmers to expect higher phosphate prices "as soon as the new stock hits the market". Currently, Indian prices stand at about US$530-540 a tonne, the group said.