India locks in 1.3-1.5Mt DAP for Kharif at $930-935pt cfr

Indian Potash Limited (IPL) has reportedly awarded 1.3-1.5Mt DAP at the $930pt cfr west coast and $935pt cfr east coast L1s from its 7 May purchasing tender.

On 13 May, reports suggested the volume awarded was 1.36Mt rather than 1.48Mt after the DAP from Agri Commodities ex-Saudi Arabia was reduced to 435,000t from 600,000t. The decline is rumoured to be due to the buyer indicating it will only take Saudi Arabian volumes from Red Sea ports rather than the Arabian Gulf.

IPL indicated as much as 1.48Mt DAP had been secured on 11 May. IPL was seeking 1.2Mt DAP on behalf of multiple P&K fertilizer companies in India. The tender calls for shipments to India from load ports by 15 August.

Reports suggest 765,000t DAP awarded is for west coast India and 582,000t is for the east coast.

The companies listed below have been linked with acceptances, although further news and full confirmation is awaited. Initial indications suggest as much as half the tonnage is backed by Saudi Arabia, with as much as 250,000t DAP from Russia, 120,000t DAP from the US, and limited volumes from Morocco, Egypt, Jordan and South Korea. 

Although yet to be fully verified, awarded volumes as of 14 May are reported as follows:

• Indagro - 30,000t WCI (Egypt) and 40,000t ECI (USA)
• Ameropa - 50,000t WCI (Morocco) and 15,000t ECI (South Korea)
• Samsung - 50,000t ECI (Open origin)
• Agrifields - 45,000t WCI (Jordan)
• VB Venture - 40,000t WCI (Saudi Arabia)
• Sun International - 40,000t WCI (USA) and 40,000t ECI (USA)
• Maaden - 110,000t WCI (Saudi Arabia) and 60,000t ECI (Saudi Arabia)
• Hexagon - 50,000t ECI (Open origin)
• Quest Group - 50,000t WCI (Russia)
• Fertistream - 50,000t ECI (Russia)
• Agri Commodities - 190,000t WCI (Saudi Arabia) and 245,000t ECI (TBC)
• Oasis Global - 150,000t WCI (Russia)
• Midgulf - 60,000t WCI (Open origin)
• Aditya Birla - 31,500t ECI (Egypt).

Multiple companies reportedly awarded have now confirmed deals at the $930pt cfr or $935pt cfr levels. 

The tender had received offers totalling 2.3Mt DAP with the lowest offers for both coasts coming from Indagro. Offers were valid until 13 May. 

The range of offers in the tender was at $930-1,100pt cfr. Offers at or below $955pt cfr totalled 380,000t while the lowest offers for 1.25Mt DAP in the tender were at $930-977pt cfr across seven companies. Maaden offered 60,000t DAP to east coast and 110,000t DAP to west coast India, each at $950pt cfr. OCP offered 100,000t DAP to west coast India at $990pt cfr.

Implied netbacks to the Red Sea basis the awards are around $905pt fob with latest trader purchases for May/June loading from Jordan, Saudi Arabia and Egypt are reported at $895-902pt fob. Netbacks to Russia and the US are expected at $860-865pt fob.

The IPL awards reflect a $65-70pt rise from latest Indian DAP activity roughly a month ago at $865pt cfr.

It’s worth noting that in 2022, while US, Brazil and Europe DAP/MAP prices reached highs of $1,100-1,300pt cfr, average India DAP prices did not surpass $955pt cfr.

Based on the new nutrient-based subsidy (NBS) rates and prevailing maximum retail price (MRP), the $930-935pt cfr level reflects a roughly $400pt loss to sell inland. Buyers are reliant on the government’s ‘disadvantage support’ at this point for margins.

Securing 1.48Mt largely covers India’s DAP needs for the Kharif season based on current stocks, assuming a drop in average production rates and normal consumption. Still, Indian stocks will be heavily depleted heading into the Rabi season without more purchasing in the coming months.

Reports on 13 May suggest no awards were finalised in the TSP tender.

Only five offers were reportedly received by IPL from four companies, totalling 410,000t. The lowest offers came from OCP for 150,000t TSP at $770pt cfr west coast India and another 150,000t at $775pt cfr east coast India. 

Reports suggest IPL countered as low as $710pt cfr and an agreement could not be reached on prices before validity concluded on 13 May. 

The L1 TSP price was $20pt above latest TSP offers to Brazil though $50pt above the high end of latest sales prices in Brazil. It is also $20-30pt below latest sales prices to the US and Europe.

The full list of TSP offers is shown below:

• OCP for 150,000t TSP at $770pt cfr WCI and 150,000t TSP at $775pt cfr ECI
• Midgulf for 20,000t TSP at $775pt cfr WCI
• Ameropa for 60,000t TSP at $820pt cfr WCI
• Indagro for 30,000t TSP at $850pt cfr WCI.