* Subsidy cut to keep local prices elevated, demand dampened
* India likely to sign import deals by March-end
* Imports seen at 3.5 mln tonnes in 2014/15-industry
By Rajendra Jadhav
MUMBAI, March 12 India's potash imports in
2014/15 are likely to remain squeezed despite a 20 percent drop
in global prices as the government's plan to cut subsidy will
keep local retail prices elevated, a senior industry official
told Reuters in an interview.
The south Asian country fulfils its entire potash
requirement through imports and global suppliers were banking on
recovery in its demand to counter the slump in prices.
"Since the government is cutting subsidy, I think India can
buy around 3.5 million tonnes in 2014/15," said P.S. Gahlaut,
managing director, Indian Potash Limited, the country's biggest
importer. Indian financial year runs from April to March.
India will cut potash subsidies by nearly a fifth for
2014/15 as the government tries to contain a ballooning fiscal
deficit, two government sources and an industry official told
Reuters last month.
Higher retail prices have already seen a drop in India's
annual potash imports to around 3.3 million tonnes in 2013/14
from 6.3 million tonnes in 2010/11, Gahlaut said.
Retail potash prices have doubled since 2011 to 17,000
rupees a tonne as India cut subsidies over the last two years,
including a 21.5 percent reduction in 2013/14, and due to a weak
Global potash prices were thrown into a tailspin after
Russia's Uralkali broke away from its trading venture
Belarusian Potash Company (BPC) in July, sparking competition
between producers who had previously maintained a high
discipline on pricing.
Global potash miners like Potash Corp, Mosaic Co
, Agrium Inc, Germany's K+S AG, Arab
Potash Co and Israel Chemicals were hoping
strong demand from price-sensitive Indian market in 2014.
Negotiations with global potash suppliers are likely to
start from next week and import deals can be signed by the end
of March, said Gahlaut, a key Indian negotiator with overseas
He said India is likely to secure potash at the same price
China bought from global suppliers earlier this year.
"We will pay the same price for potash as China has paid.
Because of freight and smaller shipments, usually India pays a
slightly higher CFR price than China, but FOB price would remain
the same for potash suppliers," he said.
Uralkali, the world's top potash producer, has agreed to
sell 700,000 tonnes of potash to China at a price of $305 per
tonne on a cost and freight (CFR) basis in the first half of
In the first half of 2013/14 India bought potash at $427 per
tonne, but after the break-up of BPC it secured discounts for
existing deals to $375.