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The market is poised for the forthcoming Indian Potash Limited (IPL) tender, with the inquiry set to shape trade well into September.
The state agency will close the tender on 4 August and is targeting up to 2m. tonnes of urea for shipment by 22 September. Bids should be valid up to 8 August.
The tender document states that IPL is aiming for 1m. tonnes for each coast. This tender comes shortly after the 7 July Rashtriya Chemicals and Fertilizers (RCF) tender, where just under 1.5m. tonnes were booked for shipment by 22 August.
This fresh tender follows reports of strong July sales in India and meetings at the Department of Fertilizers. Early indications suggest that domestic sales of urea so far this month have been strong, with overall sales for July expected to be in line or above recent years at 4.5-4.6m. tonnes or more.
As ever, the document notes that the quantities are subject to revision based on the final outcome of the tender.
The return to market follows on from a strong monsoon, currently 7% above the long-term average, and disappointing domestic urea production rates.
The high prices in the last tender saw significant volumes booked from traditional suppliers, but also drew notable cargoes from Nigeria, SE Asia and Algeria, as well as granular product from Russia. For most, Indian netbacks had been more favourable than levels in other markets.
The impending tender has not had a great impact to date on purchasing in other major import markets. Inquiry for non-Indian markets has been light with buyers reluctant to support prices achieved by producers and traders into India.
However, fob business has been taking place in Nigeria and Indonesia, clearing out the remaining spot tonnes for August. Nigeria’s Dangote sold several cargoes following a tender on 23 July tender. The producer placed the 14-17 August cargo in the mid to high-$460s pt fob with later laycans sold up to the mid-$470s pt fob.
In Indonesia, Pupuk Holdings placed all three cargoes under discussion following the 21 July tender, with all product placed at $482.50pt fob. At least some recent purchases are believed to be positions for India.
Based on strong sales and limited production in comparison to previous years, as well as the challenging phosphate position, Indian demand is set to be a prominent feature of global trade in the coming months. The outcome of the 4 August tender will no doubt set the tone for discussions in other markets, despite the challenges current high prices present buyers in commercial markets.
By Robert Prendergast, Market Reporter
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