India's fertiliser use unbalanced, potash level far below standard

Vikas Srivastav / Financial Chronicle (India)

Interview | Vladislav Baumgertner, CEO, Urakali, Moscow

Falling rupee, drop in government subsidies and the unutilised stocks from last year are expected to keep the sales to India for the current year subdued compared with last year. Vladislav Baumgertner, CEO of Urakali, a Moscow based potash miner and distributor, in an exclusive chat with Vikas Srivastav says the full year sales to India will not be more than 4 million tonnes compared with 6.5 mt last year. However the company is hopeful that India would be one of the strategic geographies that would continue to drive part of their growth. Excerpts:

- In the backdrop of current global slowdown especially in Europe, would Uralkali look at shifting its focus to developing countries including India?

- Yes, the main growth in potash consumption is coming from Brazil, China, India and South East Asian countries. There is huge potential in developing countries for more potash consumption. In major markets (such as India) there is an unbalanced fertiliser use with potash application below the level recommended by scientists. This situation will improve with the expanding agriculture knowledge stimulating growing demand for potash.

- Do we see some joint venture or any kind of partnership with India in terms of finding newer locations for mining, marketing and sales in India or abroad?

- In India we work with big customers, such as Indian Potash (IPL) and our buyers carry out the distribution. I doubt that we will be able to have our own distribution.

- What are the long term and short term contract rates at which you sell to India and what is the route through which the trade takes place? What is the average spot price for potash?

- Our trader BPC has currently annual contracts with Indian customers (both state and private). So our strategy is to have annual or semiannual contracts with India. We don’t think that the subsidy system existing for fertilisers in India can allow shorter contracts.

- Who are the major buyers in India and what is total trade outlook for India? In comparison with other major nations like China, US, Australia and Canada, where does India stand in terms of trade with Uralkali?

- In 2010 Indian potash import amounted to 6-6.5 million tonnes. We don’t believe that with the subsidies cut and rupee devaluation India will be able to reach that amount in the next couple of years. This year it won’t be more than four million tonnes. Last year Uralkali’s sales to India were 16 per cent of our total sales while sales to China were 22 per cent of total and that to US were 10 per cent.

- How has the trade been last year? What is the outlook for this year and next year?

- Last year saw record demand of 57 million tonnes of potassium chloride (KCl) with most potash producers working at 100 per cent utilisation rate. Robust demand and healthy farmers’ economy drove potash prices by 30 per cent during the year. Prices on the spot market reached almost $600 per tonne. By winter because of macroeconomic instability customers began to feel cautious in accumulating inventories. That is why we believe that the consumption will not exceed 57 million tonnes in 2012-2013.

- Do you plan to diversify into other fertilisers?

- No. We are not looking into diversification into other business. The fundamentals of the potash industry are stronger and totally different from the fundamentals from other types of fertilisers. That is why we will stick to our pure-potash strategy.

Годовой отчет 2019 и ESG-отчет 2019
Меры противодействия COVID-19
Uralkali Trading SIA

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Кардинальные правила

Запрещается курить в шахте.
Запрещаются работы на высоте без использования страховочной привязи.
Запрещаются работы в электроустановках, находящихся под напряжением.
Запрещаются работы и нахождение в зоне призабойного пространства во время работы комбайна.
Запрещаются погрузочно-разгрузочные работы при нахождении людей в опасной зоне.
Запрещаются работы в выработках с незакрепленной и/или необoбранной кровлей.
Запрещается производить ремонт и обслуживание конвейеров без отключения от источников энергии, использовать конвейеры для перемещения людей и грузов (материалов и/или оборудования), запрещен переход людей над/под работающими конвейерами.
Запрещается проводить сварочные и газопламенные работы в подземных выработках шахт и надшахтных зданиях без выполнения необходимых мер безопасности, препятствующих возникновению возгорания.