International urea prices have fallen below the levels prevailing before the Iran-US war began. In India’s latest urea import tender, the lowest bid was $390.25 per tonne, while prices in the global market were above $400 per tonne before the war.
The tender was issued by state-run Rashtriya Chemicals and Fertilizers (RCF) for the import of 1.7 million tonnes of urea. Of this, 700,000 tonnes is meant for India’s East Coast and 1 million tonnes for the West Coast. The shipments are required by September 24.
According to industry sources, Ameropa submitted the lowest bid. It quoted $390.25 per tonne on a cost-and-freight (CFR) basis for supplying 165,000 tonnes to the East Coast. For 226,000 tonnes to the West Coast, it quoted $393.65 per tonne.
Besides Ameropa, Agro Fertilizer International, Agrifields, Continental, IndAgro, Koch Fertilizer, Midgulf, Saftco and Sun International also quoted below $400 per tonne for supplies to the East Coast.
In terms of volume, the Aditya Birla Group submitted the largest bid, offering to supply 300,000 tonnes to the East Coast at $404.30 per tonne and 400,000 tonnes to the West Coast at $411.50 per tonne.
Midgulf submitted the second-largest offer, quoting $393.10 per tonne for 250,000 tonnes to the East Coast and $396.45 per tonne for another 250,000 tonnes to the West Coast.
The highest bid came from Chasemax, which offered to supply 50,000 tonnes exclusively to the West Coast at $431 per tonne. RCF received offers from a total of 30 suppliers.
In comparison, prices in tender issued in June ranged between $444 and $605 per tonne. Following the outbreak of the Iran war, India purchased urea at $959 per tonne in its first tender.
The sharp decline in international urea prices could provide relief to the government on the fertiliser subsidy front. Following the war, there were concerns that the fertiliser subsidy bill could exceed the budget estimate of Rs 1.77 lakh crore and cross Rs 3 lakh crore during the current year.
However, demand weakened as prices surged, subsequently putting downward pressure on global urea prices. With further imports now likely to be made at significantly lower prices, estimates suggest that the fertiliser subsidy bill could remain well below Rs 3 lakh crore. India is the world’s largest urea importer, making international price movements particularly important for the country’s fertiliser subsidy burden.