Following the break-up of the Belarusian Potash Company (BPC), the world’s biggest potash cartel, potash prices have started softening globally to around $400/tonne from the highs of $427 in July.
Potash is a raw material which is used for manufacturing murate of potash and complex fertilisers comprising various combinations of nitrogen, phosphorus and potash (commonly called NPK).
Chambal, Rashtriya Chemicals and Fertilisers (RCF), Coromandel, Gujarat State Fertilisers Corporation and Indian Potash are some of the Indian companies involved in potash import and trade within the country.
But they may not benefit much from lower potash prices as contracts to meet domestic requirements were sewn up much earlier, analysts said.
An analyst with a domestic bank said Indian companies are rushing to the negotiation table now as out of the total requirement of 4 million tonne, companies have already tied up 3 million tonne for this fiscal.
Yet, fertiliser companies are optimistic they would benefit in some way from the global softening in potash prices; but they are not sure about the extent of any such gains.
According to the fertilisers ministry, in the absence of any commercially exploitable potash sources in the country, the entire demand of potassic fertilisers for direct application as well as for production of complex fertilisers is met through imports.
On July 30, Russian potash giant Uralkali withdrew from the world’s biggest potash sales and marketing oligopoly with Belarusian state-owned company Belaruskali, thereby breaking a decades old potash cartel, the BPC.
BPC controlled almost two-thirds of the world’s potash market which currently stands at $22 billion.
But with the cartel now in a shambles and both companies free to decide their prices, potash prices are sure to fall, said analysts.
R G Rajan, CMD of RCF, India’s biggest public sector fertiliser company, said he expects the price for Indian imports to come down to $300 per tonne or so. “Last year, it was $490 per tonne and this fiscal beginning, it hovered around $427 per tonne and we expect the price to come down by almost 20-25% in the current year itself.”
Rajan’s expectation reinforces what Uralkali had predicted about the potash prices after it broke the cartel. But this year’s kharif season (June-September), marked by south-west monsoon rains that feed crops such as paddy, cotton and sugarcane, is already nearing its end. Whatever little volumes of potash Indian fertiliser firms still require would be mainly for the rabi season (November-February) which depends on reservoir water to support the wheat crop.
Given India’s limited residual requirement for this fiscal, potash exporters the world over may not be willing to offer lower prices, in spite of the global downtrend, analysts said.
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