Russian companies cease offering fertiliser such as di-ammonium phosphate to India at discounted prices

Russian companies have halted their practice of providing fertilizers, such as di-ammonium phosphate (DAP), to India at discounted rates due to tightening global supplies. These Russian firms, which had become the primary suppliers to India last year, have shifted to offering fertilizers at market prices. This adjustment, which occurred in August, could potentially lead to increased import costs and subsidy burdens for India as global fertilizer prices rally. China, a major exporter, is also trying to limit overseas sales.

According to an industry source in New Delhi involved in negotiations with foreign suppliers, “There are no discounts anymore.” They further explained that Russian companies are now offering fertilizers at market prices. India’s fertilizer imports from Russia had surged by 246 percent to a record 4.35 million metric tons in the 2022/23 financial year, primarily due to discounts on DAP, urea, and NPK fertilizers offered by Russian suppliers.

The aggressive pricing strategy by Russian companies last year had diminished the market share of other fertilizer exporters to India, including China, Egypt, Jordan, and the United Arab Emirates. Discounts on DAP from Russian companies had previously reached as high as $80 per ton, but this has now ceased.

The current price of Russian DAP for Indian buyers stands at approximately $570 per ton on a cost and freight (CFR) basis, the same price offered to other Asian buyers, as confirmed by a Russian industry official.

Global fertilizer prices have been on the rise over the past two months, posing challenges for Indian companies as they prepare for increased demand during the winter season, particularly for the wheat crop. In July, global suppliers were offering urea at approximately $300 per ton on a CFR basis, but prices have since increased to $400 per ton. Similarly, DAP prices that were around $440 per ton in July have also risen.

The escalating global fertilizer prices coincide with crucial state elections in India, prompting concerns that the government may need to increase subsidies to support farmers.