| MOSCOW, July 11
MOSCOW, July 11 Russian fertiliser company
Phosagro has no plans to renew a contract to
supply India, the world's largest phosphate consumer, because it
is offering too low a price, a senior executive said.
Analysts estimate that Phosagro, the world's No.2 producer
of phosphate fertilisers, supplied around 400,000 tonnes of
dimmonium phosphate (DAP) to India under its 2012 contract.
India, seeking to boost rice crops to feed its growing
population, traditionally sets a floor on prices of fertilisers
such as DAP.
Last year Phosagro's revenue from India amounted to around
7.5 billion roubles ($230 million), down from 12 billion roubles
The price offered by New Delhi is too low to resume
deliveries, Deputy Chief Executive Andrei Guriev said in an
interview. He cited spot fertiliser prices in India at around
$485 per tonne at the beginning of July, compared with contracts
signed not long ago for $515.
"India is a specific market where the buyers are strongly
consolidated and fertiliser producers find themselves facing a
monopsony (buyer's market)," he said in an interview.
The company plans to redirect those volumes to Russia's
domestic market, which it sees as a priority, and also to
Southeast Asia, Latin America, Africa and Europe, said Guriev,
son of Phosagro's billionaire majority owner Andrey Guriev.
In May, rival Phoschem, which exports North American
fertiliser for Mosaic Co and Potash Corp of Saskatchewan
, agreed to sell 400,000 tonnes of DAP to India, but did
not reveal the exact price.
Analysts say the contract would have been priced at below
$500 per tonne and that Phosagro could have counted on being
paid something similar. Previous contracts were at $580 per
The firm plans to increase shipments to Asia, in particular
Thailand, Vietnam and Malaysia, to 600,000 tonnes in 2013,
according to Guriev. The firm previously shipped only small
volumes to Southeast Asia.
It is also interested in the amount of foreign investment
pouring into African agriculture. Phosagro, which sold 247,400
tonnes of nitrogen, phosphorus and potassium (NPK) to Africa in
2012, plans to roughly double exports to the region this year,
Its fertiliser shipments to Europe could rise 40 percent to
600,000 tonnes, he added.
Phosphate prices have stabilised at around $465-$485 per
tonne in the Black Sea on a free-on-board (FOB) basis and could
rise in September depending on the state of global inventories
and India's monsoon season, Guriev said.
In the short term, phosphate demand should outpace overall
demand for fertilisers, while Southeast Asia, South Asia and
South America are likely to be the strongest growth markets in
2014, he said.
Russian fertiliser companies, whose profits were hit by
adverse weather conditions for crops in the first part of 2013,
expect the market to improve in general, with demand in South
America particularly strong.
According to Phosagro estimates, the global fertiliser
market is growing at around 3 percent per year, while in Russia
production could reach over 6 percent growth annually.
Shares in Phosagro, which have risen around 50 percent since
the start of 2012, were 1.4 percent up on the day.