Higher phosphoric acid prices for the fourth quarter will push India to rely more heavily on DAP imports and domestic production using imported phosphate rock and sulphur to build its DAP stocks.
The Indian government said in a document issued in September that it will cover the losses incurred on imports over September 2024-March 2025, but it has not committed to covering the losses incurred on domestic production.
Domestic DAP producers using imported phosphate rock and sulphur are achieving profits, but those using imported phosphoric acid are facing negative margins.
Phosphoric acid price hike lifts cost of production
Indian fertilizer importer and producer Coromandel this week agreed to a price of $1,060/t P2O5 cfr India for phosphoric acid in the fourth quarter with Jordanian supplier JPMC, which is up by $110/t P2O5 from the third-quarter phosphoric acid contract price.
No other producer or importer has yet confirmed settling their respective phosphoric acid contract requirements for the fourth quarter.
Argus calculates that importing phosphoric acid at $1,060/t P2O5 cfr and ammonia at $460/t cfr will bring the total cost of DAP production up to $647/t. Adding variable costs brings the total to about $684/t.
This means that domestic DAP producers using imported phosphoric acid and ammonia will face negative margins of $64-65/t given the current maximum retail price (MRP) of 27,000 rupees/t ($321.12/t), nutrient-based subsidy (NBS) of Rs25,411/t — including the Rs3,500/t special additional package — and US dollar to rupee exchange.
Without the Rs3,500/t special additional subsidy — due to expire at the end of December — the loss would rise to about $106/t.
Meanwhile, with the delivered price at $635/t cfr, importers of DAP would currently face a loss of about $92/t, given the current MRP, NBS and exchange rate, and without the additional government support.
Domestic DAP producers importing 67 BPL (30.66pc P2O5) phosphate rock at $145/t cfr and sulphur also at $145/t cfr will make a profit of about $47/t in current conditions.
Firm interest in phosphate rock and disruptions to Syrian exports have supported prices for Jordanian product. Indications for 66-68 BPL (30.2-31.1pc P2O5) phosphate rock are now in the $130s/t fob Aqaba.
