The latest tender by state purchasing agency MMTC has resulted in over 1.7m. tonnes of urea being booked, the largest volumes secured by India in a tender since November 2019, when just over 1.75m tonnes was purchased.
This is the first time during this campaign that over 1m. tonnes has been booked. With urea prices now at levels high enough to encourage Chinese producers to export, significant volumes have been supplied from the country and given India the quantities it greatly needed. Local reports inform that 15-18 cargoes have been lined up from China under this latest inquiry, totalling some 750-900,000t. Though some reports suggest this volume could reach 1m. tonnes.
Indeed, Indian purchasing tenders have become a regular fixture in the urea market of late, with a surge in demand resulting in four inquiries being announced in the past two months. However, with China not actively exporting previously, under 800,000t had been secured in each of the first two tenders.
The world’s largest importer has been unable to keep up with the rising demand for urea owing to a good monsoon in the country this year. This has been further exacerbated with extra land being cultivated as city labourers have returned to their villages en masse owing to the COVID-19 pandemic.
A total of 6.8m. tonnes have been imported or booked for April-October arrival this year, 2.7m. tonnes of which have been booked in the two August tenders. This compares with just 4.7m. tonnes in April-October last year.
While the latest purchases may offer some breathing space, India still needs to buy over 1m. tonnes plus per month for November-February sales, if peak rabi season demand is to match the levels seen in 2019/20. Participation from China therefore, remains the key to satisfying future Indian purchasing requirements.
By Neha Popat, Nitrogen Market Reporter