In a primary, India to import giant amount of urea from the US

India is, for the primary time, going to import a considerable amount of urea from the US.

The South Korean conglomerate Samsung is about to load 47,000 tonnes of granular urea at New Orleans port within the US for cargo to New Mangalore in India’s west coast. The cargo is to be equipped at a value of $716.5 per tonne, value plus freight (CFR). With freight prices from the US estimated at about $65 along with $10-15 for loading from barges, the corresponding free-on-board or FOB origin value will work out to $635-640 per tonne.

The US has until now been solely an occasional urea exporter. Commerce Ministry information reveals its exports to India at a mere 1.47 tonnes in 2019-20, 2.19 tonnes in 2020-21 and 43.71 tonnes in 2021-22.  The 47,000 tonnes amount, for which loading is anticipated to start later this week, is in opposition to an import tender by Rashtriya Chemicals & Fertilisers Ltd. The state-owned firm’s international tender, floated on May 11, resulted in 1.65 million tonnes (mt) of urea being contracted from totally different suppliers for supply in each west and east coast ports at $716-721 per tonne CFR.

“More vessels are likely from the US in the months ahead. It will help in diversifying our import sources and sending a message to other suppliers,” an business knowledgeable informed The Indian Express.

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India, in 2021-22, imported 10.16 mt of urea valued at $6.52 billion. The imports have been primarily from China (2.79 mt), Oman (1.62 mt), United Arab Emirates (1.06 mt), Egypt and Ukraine (0.75 mt every), Qatar (0.58 mt) and Saudi Arabia (0.50 mt).

Buying extra from the US additionally is sensible within the present context. The FOB costs of granular urea (US Gulf futures) are buying and selling at $500 per tonne for June and $455 for July supply. These are a lot above the corresponding futures FOB quotes of $610 and $595 per tonne for Middle East urea.

“The freight costs are lower, at $15-20 per tonne, from the Middle East. Voyage time is also only 5-10 days, compared to 35 days or more from the US. But these can to some extent be offset by the steep FOB discounts to the international prices,” the knowledgeable identified.