Cheaper potash due to rupee appreciation and cartel break-up!

Following the breakup of a JV between Uralkali and Belaruskarli, China managed to secure potash at $305 per tonne. India too followed the suit and clinched a deal at $322 per tonne from Uralkali for 8 lakh tonnes of potash

For the first nine months of fiscal year, 2013-14, covering April to January, India imported about 2.5 million tonnes of potash at $427 per tonne and the balance requirement of 600,000 tonnes was acquired by Coromandel Fertilisers $369 per tonne. A few months ago, it may be recalled that Belarus Potash Company (BPC), a joint venture marketing arm of Russian OAO Uralkali and Belarussian Belaruskarli cartel broke up, reason and details of which are still unknown to public. Uralkali is the world's largest potash producer. In January this year, they concluded a contract to supply 700,000 tonnes of potash to China $305 a tonne for supply during the first six months of 2014 (January to June), after having bought the previous lot at $400 a tonne!


Potash, being a soil nutrient, is regularly imported by Indian Potash Ltd, and India began to negotiate for a lower rate soon after this break-up. In fact, after knowing the Chinese rate, India was hoping to secure the order in the region of $320 to $325, which would bring about considerable saving in the cost considering the level of $427 paid earlier for supplies! Indian requirements, annually, are about 3.5 million tonnes.


Press reports indicate that Indian Potash Ltd has been successful in concluding a new contract for getting 800,000 tonnes of potash $322 a tonne from Uralkali. The fact that the rupee has appreciated in the last few days makes the deal sweeter and cheaper. It may be remembered that government gives a subsidy of Rs11,300 per tonne of muriate of potash, which is a widely used fertilizer that improves root strength and disease resistance of crops. Technically, this soil nutrient is also used in different ratios with other nutrients like nitrogen, phosphate, sulphur and zinc to make suitable fertiliser for various needs.


According to PS Gahalaut, managing director of Indian Potash, the retail price of muriate of potash is likely to remain unchanged at Rs16,000 per tonne "as rising costs and reduction in subsidy has offset the lower price" obtained.


The rate of subsidy may be revised once the new government takes over at the centre!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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