Two company sources reported that Indian Potash 'Ltd received offers for urea of around $1,000 per metric tonne in its 'latest tender. This is nearly twice the price it achieved two months earlier, when supplies had been disrupted due to the U.S./Israeli conflict against Iran.

Industry officials say that Indian purchases at this level will likely increase the price of urea on spot markets, and force smaller buyers from Asia and Africa to spend more to maintain crop productivity. India, which is the world's largest urea importer, announced a tender in early April to secure 2.5 millions tons of fertiliser. This represents nearly a quarter of India's annual imports, estimated at 10 million tons, by 2025.

Sources said that the lowest price for urea was $935 per ton on a cost and freight basis. The lowest price on the east coast, however, was $959.

Most bids are around $1,000

Indian Potash Limited received bids to supply 5.6 millions tons of urea. Only a small part was priced at $935 per ton. The majority were priced between $1,000 and $1136.

Sources said that the bids for the previous urea contract issued by India’s Rashtriya Chemicals and Fertilizers were $512 for east coast deliveries and $508 for west coast deliveries.

IPL's latest tender sought to ship 1.5 million tons along the west coast of the country, and the remaining 1,000,000 tons will be transported via the east coast. It said that the shipments are expected to leave from loading ports by June 14.

A company official, who spoke on condition of anonymity as he wasn't authorised to talk to the media, said IPL will ask all bidders to?match the lowest price offered and make a final decision based on the sellers' response.

The official stated that there is a "need" for urea but this does not mean India would allow exporters of the product to charge exorbitant prices.

India, where agriculture is the mainstay of the economy, imports urea and liquefied gas as feedstocks for the production of?fertiliser from Oman. Qatar, the United Arab Emirates (UAE), Russia, and China. India's urea output fell by 7% last month as a result of limited gas supply following the start?of?the Middle East Conflict. Some shipments were delayed due to shipping disruptions.

Mumbai-based official of the industry, who asked to remain anonymous, stated that purchases exceeding 1 million tons would be sufficient to inflate global markets.

The subsidised urea would have an impact on India's subsidies bill, as the farmers' urea is subsidised. Reporting by Rajendra Jadhav, Editing by Kirby Donovan and Barbara Lewis

(source: Reuters)