India’s appetite for fertilizers beats expectations — Phosagro
Russia’s Phosagro (LON:PHOR), the world’s third-largest producer of phosphate fertilizers, has taken a page of U.S.-based rival Mosaic’s (NYSE:MOS) books by projecting a jump in Indian demand for crop nutrients this year, beyond initial expectations.
According to chief executive Andrei Guryev, India’s “explosive demand” for phosphate fertilizers may make of 2015 the best year for the company since at least 2008, he said in an interview with Bloomberg earlier this month.
A day earlier, Mosaic’s CEO Jim Prokopanko told investors that Indian demand was exceeding the company’s “own bullish estimates.”
Both comments proved to true shortly after as Phosagro signed Thursday a three-year supply contract with Indian Potash (IPL) to deliver 1.35 million tons of phosphoric fertilizer over the course of three years, from 2015 to 2018.
India is the world’s No.2 consumer of phosphate fertilisers and the largest importer of Diammonium phosphate (DAP), the most widely used of them. Demand, however, has been depressed in recent years, helping to trigger a slump in prices in India from a high of $660 per tonne in 2011 to around $485 this week.
Because of that drop in demand, Phosagro had sold practically no fertilizer to India over the last two years. But now the company expects to increase exports to the Asian country by more than 60% to 6.5-7 million tons.
India has already purchased more than 2.2m tonnes of DAP for delivery in the first half of this year, up from 0.9m tonnes a year earlier, according to Phosagro.
The company is not the only fertilizer producer that has recently scored a supply deal with India. On May 1, fellow Russian firm Uralkali (MCX:URKA), the world’s largest potash producer, signed a one-year agreement with IPL that will see the miner selling India 800,000 metric tonnes of potassium chloride, including optional deliveries, until March 2016.
The nation’s demand comeback follows reports of imports to Brazil and China also expected to jump in the second half of the year.