China reinstates minimum price floor for urea exports to India at $500pt fob

Chinese urea producers, distributors and domestic traders were advised this morning that a minimum price floor for exports to India has been reinstated, in a move that will influence eventual commitments to India in the latest purchasing tender.

The floor for shipments to India has been set at $500pt fob for prilled urea, with the price for granular urea no lower than $510pt fob.

A statement is understood to have been issued by the China Nitrogen Fertilizer Industry Association today. Framing the move as a response to perceived "short-selling" in India, the statement notes that any violation will result in automatic disqualification from self-regulatory enterprise membership. The notice is reported to have been issued to all those that received export quotas on 26 May.

For non-Indian markets, reports suggest that no minimum price floor is in effect. Yet some local participants report that suppliers are cautiously using the minimum price floor for India as guidance.

On 6 June, all suppliers had been advised that minimum price floors had been completely removed. While a revision to minimum price floors had been anticipated, few expected a removal of the price floors just two days before bids were to be submitted in the National Fertilizers Limited (NFL) tender for shipments to India.

Offers were submitted in that tender yesterday (8 June), with several companies understood to have submitted offers well below $500pt cfr. A number of participants are understood to have received offers ahead of the tender from Chinese suppliers at levels reflecting sub-$500pt cfr.

There had been expectations late yesterday that over 700,000t could be supplied from China, although the latest news now raises doubts over Chinese participation.

While price bids are yet to be officially revealed, few are anticipating the lowest offers to be much better than the mid-$400s pt cfr in India.