Worried Indian buyers seek strength in numbers with huge ammonia purchasing tender

Amid the ongoing supply shock in the Middle East and spot pricing volatility across Asia Pacific, some leading Indian importers have taken the unprecedented step of joining forces for a major purchasing tender in a chase for up to 521,000t for June-August discharge at multiple ports.

Issued by Indian Potash Limited (IPL), the enquiry calls for the supply of 151,000t to west coast terminals and 370,000t to import hubs on the east coast.

The surprise tender, involving five buyers who usually procure term and spot volume directly from traders and manufacturers, has been prompted by the loss of more than 300,000t per month of Middle Eastern product, at least half of which would have gone to India.

The consortium actually comprises six companies – who between them are responsible for about 90% of offshore procurement for India each year. The group involves IFFCO, PPL, Indorama, CIL, GSFC and FAСТ. The latter holds small tenders every now and again.

Suppliers have until 11:30am local time on 18 May to submit offers for the enquiry, which will be opened that afternoon. Prices bids are requested to be valid until at least 8pm local time on 25 May, according to IPL,

“This tender is being issued on behalf of major domestic manufacturers of fertilizer as part of consortium approach to the import of fertilizer raw materials,” IPL’s official tender document states.

“Specific lay days for a particular month for each quantity/disport will be informed to the successful suppliers in consultation with the consortium buyers.”

The breakdown of the requested shipments is available here.

Ahead of that tender's deadline, spot purchases by individual buyers have taken place on both coasts, with traders and suppliers moving plenty of tonnes to India from ports in China and Southeast Asia.

Further details about those deals should emerge as the month progresses, but there has been a huge rise in Chinese export availability in recent weeks as suppliers help fill the gap created by the Iran war, with cargoes heading to countries such as India, Morocco and Australia.

New US Gulf export capacity arrives at just the right time

In a move that further underlines the strength of the supply squeeze East of Suez, at least one spot cargo from the US Gulf is currently heading to Australia from Texas.

A second cargo is likely to leave the Lone Star State this weekend for the same destination given the shutdown of Australia's largest ammonia plant for several months has further tightened the regional supply/demand balance.

This week’s settlement of the Tampa contract for May loadings at $825pt cfr, up $50pt from April’s figure, failed to act as a catalyst for fresh purchasing activity in Europe.

With some players having anticipated a larger hike due to recent spot price increases for business out of North Africa and into Europe, the figure may actually have deterred new deals as participants decided to reassess their pricing perspectives.

Recently commissioned plants in the US Gulf have added precious export capacity of up to 2.4m tonnes/year that should prompt more West to East trade develop until shipments from Saudi Arabia, Qatar and Iran return to some level of normality.