India, the world’s top importer of urea, has booked the nitrogen-based fertilizer at sharply higher prices than in a previous tender as the Middle East conflict disrupts supplies and pushes global benchmarks higher.
Indian Potash Ltd., which imports the crop nutrient for the government, will secure 1.5 million tons for delivery on the west coast at $935 per ton, while another 1 million tons will be delivered on the east coast at $959 per ton, according to people familiar with the matter.
The offers are almost 90% higher than what India agreed to pay in a tender before the start of the conflict, said the people, who asked not to be named due to the commercial sensitivity of the information. Urea from the Middle East, a major supplier to the South Asian nation, was quoted at $490 a ton before the war began, according to Green Markets data.
A fertilizer ministry spokesperson did not immediately comment.
More than two dozen firms submitted offers last week, quoting rates between $935 and $1,136 a ton. This would be India’s first purchase since the US-Israel strikes on Iran and comes at a crucial period ahead of sowing for monsoon crops such as rice, corn and soybeans. The 2.5 million-ton tender, valid until April 23, was awarded late Wednesday, the people said.
India required that shipments avoid the Strait of Hormuz to reduce the risk of war-related disruptions to fertilizer supplies, the people said. The cargoes will be sourced from several countries, including Russia, Indonesia and Algeria, they said.
The South Asian nation’s urea production relies heavily on natural gas, much of it from the Middle East and used to make ammonia, a key feedstock for the fertilizer. Supply disruptions following the effective closure of the vital oil and gas shipping corridor forced some regional producers to idle plants last month. Indian authorities are now in talks with major producers and exporters to secure direct shipments of nitrogen-based and phosphatic fertilizers.
Global urea prices have surged since the war began, with nearly 45% of global supply moving through the Persian Gulf, according to Bloomberg Intelligence. Any prolonged disruptions could push prices even higher.
Written by: Pratik Parija and Siddhartha Singh @Bloomberg
The post “India Contracts Fertilizer at Nearly Double Pre-War Price” first appeared on Bloomberg