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Russian Fertilizer Vendors End Discounts to India Over Supply Constraints

Russian companies have stopped providing fertilizers like di-ammonium phosphate (DAP) at discounted rates to India due to the tightening of global supplies, following their role as India's top suppliers last year, reported Reuters. 

The Russian companies' decision to change the price of fertilizers to market price may lead to a potential rise in India's import expenses and subsidy obligations. The move comes at a time when global prices are on the rise, and China, a major exporter, is taking steps to limit its international sales.

A senior industry official involved in the negotiations with overseas suppliers told Reuters, "Russian companies are offering fertilisers at the market prices." 

DAP fertilizer is a widely utilized plant nutrient enhancer in India. According to Tractor Junction, DAP is rich in essential nutrients, particularly Nitrogen (N) and Phosphorus (P). Nitrogen promotes plant growth, while phosphorus enhances plant colour. Consequently, DAP fertilizer is a top pick for farmers aiming to enhance crop yield and health sustainably.

In the financial year 2022-23, India's fertilizer imports from Russia rose 246%, reaching a record 4.35 million metric tons by the end of March 31. This significant increase was primarily due to suppliers offering discounts on DAP, urea, and NPK fertilizers.

Russia's aggressive pricing strategy in the previous year had a notable impact, eroding the market share of other fertilizer exporters in India, including China, Egypt, Jordan, and the United Arab Emirates.

Another Indian company official told Reuters that, Russian companies used to provide substantial discounts on DAP, sometimes as high as $80 per ton. However, their current discounts have dwindled to as low as $5 per ton, he added.

According to a Russian industry official, the current cost and freight (CFR) price of Russian DAP for Indian buyers stands at approximately $570 per ton, which is consistent with the pricing offered to other Asian buyers.

Over the past two months, global fertilizer prices have been experiencing a significant surge. This surge has posed challenges for Indian companies in terms of accumulating stocks for the upcoming winter season, during which there is increased demand for DAP for the wheat crop, as noted by an official from a Mumbai-based fertilizer company.

The official further pointed out that in July, urea was being offered at around $300 per ton on a CFR basis globally, but now the price has escalated to $400 per ton. Additionally, DAP prices in July were approximately $440 per ton.

Given these rising global fertilizer prices, the official from the Mumbai-based company emphasized, "The global fertilizer prices are rising just before crucial state elections in India. The government has no choice but to increase subsidies to protect farmers."

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