India’s DAP stocks draw down further

India's DAP fertilizer stocks fell by another 300,000t in July, Fertilizer Association of India (FAI) data show, as imports kept lagging those in 2023 owing to a subsidy that makes them unviable.

This was the second month in a row that stocks have fallen during the kharif season (April-September), with June seeing inventories down by 430,000t.

India made 373,300t of DAP in July, imported 348,000t and sold just over 1mn t. The stockdraw/build — production plus imports minus offtake — was thus minus 296,300t. Argus estimated stocks at a modest 2mn t as of the end of July, with indications that they have since dropped to 1.5mn t as of mid-August.

The catalyst has been a lack of imports. With Chinese DAP export supply thin, fob values from that origin have risen well above $600/t fob. Latest DAP import sales were made in a $618-625/t cfr range, whereas the subsidy makes any deal above $545/t cfr unviable for importers. This has restricted buyers to government-backed companies and the very largest DAP importers.

Cumulative imports for the fertilizer this year to date — since April — reached 1.47mn t, compared with just over 2.7mn t in the same period of 2023, the FAI data show.

DAP production has also lagged slightly, at 1.37mn t in April-July, compared with 1.62mn t in the same period last year, as raw material shipments were affected by the Houthi attacks on Red Sea shipping, affecting supply of phosphoric acid, a key raw material for DAP production in India.

Stocks would have been lower still had it not been for lower offtake overall, at 2.94mn t in April-July, compared with 3.43mn t in the same period last year. Lower offtake is partly the result of less supply and buyers switching to NPK products for which stocks are higher.

By Mike Nash