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India Phosphatic Fertilizer Market: Reforms Good, But Ambivalent on Raw Material Prices?

India Phosphatic Fertilizer Market

Reforms have helped, but it is a question whether unusually low raw material prices can help India phosphatic fertilizer market

The latest news to hit the India Phosphatic Fertilizer Market is that Indian Potash Ltd, IFFCO, Deepak Fertilisers and Petrochemicals Corp, Rashtriya Chemicals and Fertilizers Ltd, Coromandel International Ltd, have all joined the race to acquire BHP’s stake in a Canadian potash mine.

We met with the creators of TechSci Research report “India Phosphatic Fertilizer Market, Competition Forecast and Opportunities, 2012-2026” to discuss various salient points of the India phosphatic fertilizer market. Here are a couple of the major trends at play in the industry:

Reforms Aiding India Phosphatic Fertilizer Market

 Several schemes being initiated by the government have led to growth in India Phosphatic Fertilizer market from $15 million in 2016 to $20 million by 2026. One example is the mandatory biometric examination during procurement of fertilizer.

There is a fear that rampant smuggling of fertilizer by certain elements was causing huge losses to the exchequer, given the heavily subsidized nature of fertilizer business. Now with biometrics in place, the India phosphatic fertilizer market is set to record huge gains from this exercise.

The effects of various tangential schemes are also bleeding into the India phosphatic fertilizer market size. Pradhan Mantri Gram Sadak Yojana for example, is boosting connectivity through construction of roads in rural areas. Due to lower transportation costs, India phosphatic fertilizer market products are expected to gain a competitive edge.

A variety of schemes, both related and non-related, are helping bolster the India phosphatic fertilizer market in the country. However, the long-term ramifications and implementation related problems are still to be addressed by the government.

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India Phosphatic Fertilizer Market: Falling Prices of Phosphate Inputs

 Another major factor boosting the India phosphatic fertilizer market is the falling cost of phosphatic inputs such as phosphoric acid. Several major India phosphatic acid market players have in fact refused to purchase inputs over a certain cost, given that unusually low prices will put pressure on their profit margins.

Case in point. Economic Times quoted IFFCO, the leading India phosphatic fertilizer market player as saying IFFCO said the international price of phosphoric acid, should ideally be around USD 500 a tonne at a time when DAP rates have declined to USD 340-350 a tonne. Such events have to be looked at both positively and negatively.

While the cost of fertilizers is expected to dive due to low raw material costs, given that phosphoric acid manufacturing companies are squeezing the markets in order to extract the maximum amount of money possible, India phosphatic market is taking a hit due to the hit in production.

Therefore, given the excessively high build-up of inventories amongst input manufacturing countries, one has to remain ambivalent to the nature of the phosphate inputs market because at this point India phosphatic fertilizer market players can end up both losers and winners depending on how the former will behave vis a vis the latter.

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