NEW DELHI: India has managed to clinch almost three million of its annual average of five million tonne potash imports at a record low price of $ 460 per tonne after busting a global potash cartel’s stranglehold on pricing.
This could mean a neat saving of Rs 5,000 crore from the fertiliser subsidy bill of Rs 55,000 crore (BE 09-10) since the benchmark delivered price, clinched by Indian Potash Ltd (IPL), is now applicable to all Indian potash buys.
Thus far, a small group of companies that control roughly 75% of global supply had cartelised to cut production drastically in order to keep the prices high. With this, India has established itself firmly in the A list of global fertiliser buyers with clout to dictate the price of the commodity, a crucial plant nutrient as well as an industrial input.
Analysts surmised that the same price level woudl be offered to China. However, the best part of the deal is that India will get the cheapest potash in the world and should China, who is the world’s biggest buyer, manage to swing a lower price, the same would apply to all the Indian potash buys as well. IPL, is the country’s biggest buyer of potash and imports around 3.5 million tonnes annually. “Nobody else is going to swing a lower price for potash by wielding the gun from our shoulders,” Iffco MD U S Awasthi told ET. Iffco, the country’s largest fertiliser cooperative, owns 34% stake in IPL.
But on July 13, when it sewed up the first deal on potash supplies to the tune of 8.5 lakh tonnes at a literally jaw-dropper price of $460/tonne with IPC, UK (Silvinit’s marketing arm), it was dismissed by sectoral analysts worldwide as a fluke deal with a “desperate” company.
The offer price by a powerful cartel of global potash majors including Canpotex, which is owned by Potash Corp, Mosaic Co and Agrium Inc was $625-635/tonne. Potash prices had soared in June to $700/tonne despite low demand thanks to the grip of the same cartel on prices. Canpotex sells Canadian potash to Brazil, China, India, and other Asian markets,
The real breakthrough that reinforced the benchmark price, though, only happened this Monday, when the world’s sixth largest potash maker and the second largest listed company on the Tel Aviv stock exchange, Israel Chemicals (ICL), took a beating on its shares overnight and caved in.
Source : Economic Times 23/07/09