January 17, 2012
Urea price hike unlikely in India
India has no plans to raise prices of urea, the most widely used soil nutrient in the country, after media reports said prices may rise by 40%, sources said.
"Urea prices were revised in the year 2010 and after that, there is no proposal of that sort," according to a senior ministry source.
Two newspapers reported on Monday (Jan 16) that the government planned to increase prices of urea to reduce a mounting subsidy burden.
Shares in fertiliser makers Chambal Fertilisers, Tata Chemicals, Rashtriya Chemicals and Fertilizers , Coromandel International and National Fertilizers rose 1-8% after the reports, but later eased off.
If approved, the price increase will reduce companies'' dependency on subsidy, and will be positive for the stocks, analysts said.
However, any price hike was unlikely ahead of elections scheduled till end-March in five states - namely, Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa, experts added.
Urea consumption is heavily skewed in Uttar Pradesh and Punjab and pricing of the soil nutrient is a key political issue.
Urea accounts for about half of the total 52 million tonnes of fertilisers consumed by Indian farms every year and the country imports about seven million tonnes of the nitrogenous soil nutrient.
Urea prices were last hiked to INR5,310 (US$100) per tonne at factory-gate level from INR4,830 (US$94) earlier, a media report said.