India’s Potash Demand Languishes as World Reels From High Prices

India, one of the world’s largest potash importers, is facing demand destruction due to high prices and the loss of critical supplies from Belarus and Russia.

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(Bloomberg) — India, one of the world’s biggest potash importers, is facing demand destruction due to high prices and the loss of critical supplies from Belarus and Russia.

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Potash consumption is likely to fall to 3 million tonnes in the year to March 2023 from 5 million a year earlier, according to PS Gahlaut, managing director of Indian Potash Ltd., the country’s top importer of the nutrient of cultivation Farmers have used less of it to grow crops such as rice, wheat and sugar.

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Potash is a fertilizer that helps plants withstand drought and disease. Prices soared earlier this year after the invasion of Ukraine, with many shippers, banks and insurers avoiding trade with Russia, although fertilizer is not directly targeted by the sanctions. The industry is also struggling with U.S. and European Union sanctions on potash sales from Belarus, as well as China’s decision to restrict exports to protect its domestic market.

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Indian Potash has agreed to buy the crop nutrient from Israel, Canada, Jordan and Germany this year at $590 a tonne including freight charges, up from about $445 last year. Supplies from Russia and Belarus, two of the three biggest exporters, have been halted because of payment problems, Gahlaut said.

“Our potash availability is comfortable,” Gahlaut said in an interview last week. “The sad part is that demand for potash is down because of high prices.”

Indian Potash will initiate annual price talks with suppliers including Russia’s Uralkali PJSC, ICL Group Ltd. of Israel, Arab Potash Co. in Jordan and Canpotex Ltd. from Canada in November, he added. “People pay us visits, but we are in no rush to finalize the price.”

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Gahlaut expects global fertilizer prices to decline by 10% to 12% next year due to high inventories. Prices will fall further in 2024 as supplies improve, he said.

In India, some farmers have skipped the application of potash, but this does not have a major impact on crop yields, at least for now, as there is a supply available in the soil. It can begin to affect agricultural production if potash use is omitted continuously for two or three growing seasons, Gahlaut said.

India’s potash consumption fell 50% in the five months to August from a year earlier, while demand for NPK fertilizers, the three main nutrients in commercial fertilizers representing nitrogen, phosphorus and potassium , has been reduced by 20% during the same period, he estimates. .

Demand will likely remain flat this winter planting season unless the government increases subsidies to fertilizer companies, Gahlaut said. The authorities have said that they will not allow these companies to increase their prices. India will announce subsidies soon for the winter season.

“We hope the government will increase the subsidy. It should be available at an affordable price to increase consumption,” Gahlaut said.



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