Purchases in the fiscal year starting April may drop from about 5.5 million tons the year before, which accounts for almost 50 per cent of the country’s imports. In India, consumption of potash is very price sensitive. Potash is a nutrient that helps plants withstand drought and diseases. Prices have risen amid a surge in agricultural commodities to multi-year highs as this implies farmers will be planting more acres and using more fertiliser. Weaker India demand could put pressure on potash suppliers such as K+S AG, Uralkali PJSC and Canpotex Ltd. as these companies may have to lower prices for new deals. India is the fourth-biggest user of potash.
India and China recently signed potash contract deals with Belarusian Potash Co at US$247 a ton. Although that’s above 2020 prices, it caused a stir among some producers expecting even higher prices. Nutrien Ltd, the world’s biggest fertilizer company, is selling potash in the US corn belt for about US$350 a ton, while prices in Brazil rose US$50 this year. Stockpiles of Indian companies and traders still total more than 1 million tons. The proposed 11 per cent cut in subsidies for imported phosphatic fertilizers and potash will further dent demand and hurt the government’s push for balanced use of fertilizers. India’s potash consumption is already lower than what is required under the policy. The country promotes balanced fertilizer use to improve crop yields, boost profitability for farmers and reduce subsidy burden. Currently there’s an excessive use of urea given the higher financial support.