India has received overwhelming supply offers for imported urea, far exceeding the tendered quantity, but at significantly higher prices—raising concerns across the global fertiliser market. Indian Potash Limited, one of the three canalising agencies responsible for urea imports on behalf of the government, has received bids totalling nearly 6 million tonnes (mt). This is more than double the 2.5 mt sought in the April 4 tender.
However, the high prices have become a major point of concern. Suppliers have quoted CFR rates of $935 per tonne for the west coast and $959 per tonne for the east coast, levels that have sent shock waves through global markets. The government is expected to decide on procurement volumes and pricing by April 23.
Prices Surge Sharply Compared to Previous Tender
The current price trend marks a steep increase compared to the previous tender floated by Rashtriya Chemicals and Fertilizers Limited (RCF) in mid-February. At that time, offers for 1 mt of urea stood at $508 per tonne (west coast) and $512 per tonne (east coast) for delivery by March 31. Despite delays in shipments due to geopolitical tensions, the government had condoned late deliveries. Now, in just two months, prices have surged by nearly 84%, reflecting tightening global supply conditions.
Key Factors Driving the Price Spike
Market participants attribute the sharp rise to a combination of geopolitical and demand-side factors.
*Ongoing tensions in West Asia have disrupted supply chains
*India’s large-volume tender has signalled urgency to global suppliers
*The upcoming sowing season, starting in June, has increased procurement pressure
A trader involved in the bidding process noted that India’s aggressive buying strategy may have inadvertently pushed prices higher, as suppliers anticipate strong demand.
Breakdown of Bids: West Coast
For the west coast, pricing varies widely across suppliers:
*Millenium Commodity Trading offered the lowest rate of $935 per tonne for 56,000 tonnes
*Aditya Birla Global Trading quoted $941.70 per tonne for a substantial 1.35 mt against the 1.5 mt requirement
*Comet Trading submitted the highest bid of $1,136 per tonne for 100,000 tonnes
Breakdown of Bids: East Coast
Similarly, for the east coast:
*Chasemax offered the lowest price of $959 per tonne for 100,000 tonnes
*Aditya Birla Global Trading quoted $966 per tonne for up to 650,000 tonnes
*Comet Trading again placed the highest bid at $1,136 per tonne, though only for 50,000 tonnes
Market Outlook: Risk of Further Price Escalation
If the government proceeds with purchases at these elevated rates, it could further tighten global supply and push urea prices even higher. As reported by thehindubusinessline.com, the situation underscores the delicate balance between securing domestic fertiliser needs and managing international price dynamics.
