New Delhi’s reported record purchases, ahead of its monsoon planting season, are expected to add to prices and a global supply crisis.
India has agreed to import urea at double the price it paid earlier this year, amid supply disruptions caused by the Middle East conflict, Reuters has reported.
New Delhi is set to order a record 2.5 million tonnes of nitrogen-based fertilizer in a single tender, a media outlet reported on Wednesday, citing government sources.
Indian Potash Ltd agreed to buy 1.5 million tons of urea at $935 per ton for delivery on the west coast, and an additional 1 million tons at $959 per ton for delivery on the east coast, according to the report.
Before the US and Israel declared war on Iran in late February, India’s Rashtriya Chemical and Fertilizer Company received a bid of $508 a tonne for west coast shipping and $512 a tonne for east coast supply, Reuters reported.
The latest imports would account for nearly a quarter of its annual imports of 10 million tonnes in 2025.
The purchase is India’s first since the crisis began and comes ahead of the planting of monsoon crops such as rice, corn and soybeans.
India is the largest importer of urea in the world, and its urea production is highly dependent on natural gas, which is mainly imported from the Middle East. The development also comes amid a shortage of liquefied natural gas, an important feedstock for urea production.
The supply disruption caused by the closure of the Strait of Hormuz has caused many domestic fertilizer facilities to be forced to stop production.
Urea prices have risen worldwide since the Middle East war began on February 28, as nearly 45% of the supply goes through the Persian Gulf.
Higher import costs are likely to increase India’s fertilizer subsidy bill, as the federal government compensates fertilizer companies for selling crop nutrients to farmers at lower prices.
Indian companies order fertilizer individually but discuss together with sellers.
As New Delhi secures supplies, other countries are also expected to scramble for fertilisers, raising prices further and disrupting global supplies.
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