India is bracing for a hike in fertiliser rates as Beijing plans to tighten export controls on specialty fertiliser from October, said a senior industry official on Saturday.
While China had only recently resumed exports of fertilisers, such as urea, to numerous countries including India, the relief was short-term.
“It’s a temporary fix because China is closing the export window from October. They will be closing it for the entire world market, not only for India,” said Rajiv Chakraborty, President of the Soluble Fertilizer Industry Association (SFIA).
The restrictions, said Chakraborty, are not direct, but through increased inspections and consignment delays. "Once they stop the supplies or they start restricting the supplies, they don't stop it completely. They restrict it by imposing inspections and delaying the consignments. So that process will start again from October," he said.
With India’s Prime Minister Narendra Modi currently in China for the SCO summit, ties between the two countries appear to be improving. However, China’s restriction pattern is expected to resume.
India is heavily dependent on Chinese specialty fertiliser imports, sourcing nearly 95 per cent of specialty fertilisers from China. Imports from the Red Dragon have grown dramatically since 2005, when European suppliers began sourcing from China to serve Indian markets.
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Today, India imports 80 per cent of its specialty fertilisers directly from China, while the remaining 20 per cent is indirectly traded through Chinese sources. Only 5 per cent of NPK formulations are produced domestically.
Meanwhile, Indian specialty fertiliser companies are scrambling to secure adequate supplies during the current one-month window, with global sourcing firms working overtime to fulfil their entire seasonal requirements before the restrictions kick in.
"We have very good global sourcing players in the market who will be sourcing their entire consignments and requirements in this one month. Many of them are SFIA members also," Chakraborty said.
While the industry expects indigenous supplies to become available by mid-season and help offset some supply constraints, price increase appears inevitable.
Chakraborty says the hike will directly impact farmers.
The recent halt in Chinese specialty fertiliser exports triggered a 40 per cent price surge, besides creating supply shortages in the specialty segment. However, the timing helped limit immediate disruption to farming operations.
"The impact was not so visible this time because the actual season for usage of specialty fertiliser starts from September, wherein various cash crops, horticultural crops like grapes, banana, farmers start using drip irrigation and then they use soluble fertilizer and specialty fertiliser extensively," he said.
The peak demand period coincides with cash crop and horticultural farming seasons, when growers rely heavily on soluble and specialty fertilisers for drip irrigation systems.
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