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Global phosphates market likely to become tight in Q1 2015; India factor would be major determinant: PotashCorp

Dec 17: Canada’s Potash Corporation foresees tightening of the global phosphates market during the first quarter of 2015 and spurt in Indian demand for DAP in the first half of 2015.
8In its latest quarterly global market analysis report, PotashCorp says: “We believe the market will transition back to tighter balance in the first quarter of 2015 as demand re-emerges and production outages reported in fourth-quarter 2014 impact supply.”
8It says: “India’s DAP stocks at the end of 2014 are expected to be well below the previous year, which could support increased demand in first-half 2015.”
8It has identified four key factors that would influence global phosphates markets in the coming months. And the foremost factor to watch would be the “Impact of lower Indian DAP inventories on the timing and magnitude of its import demand.”
8According to the report, DAP demand was slow to emerge in India during the first half of 2014 due to uncertainty over subsidy levels and a slow start to the monsoon season. Monsoon rains and domestic phosphate demand improved in the second half but weak import margins limited buying activity. This compressed the window for securing product for the Rabi planting season and resulted in a significant drawdown of domestic DAP stocks.
8It has pointed out that the global phosphate market has gone through several ups and downs during 2014. Supply challenges and strong demand in several key importing regions during the first half resulted in a market that was tighter than anticipated. Prices softened briefly during the second quarter as buying for the spring season eased and Indian demand was slow to materialize.
8The Report says: “The market tightened again in the third quarter as Western Hemisphere demand strengthened and South Asian buying picked up as the quarter progressed. In the final quarter, demand headwinds began to emerge due to a later start to harvest in the US and uncertainty over softening crop prices. We believe the market will transition back to tighter balance in the first quarter of 2015 as demand re-emerges and production outages reported in fourth-quarter 2014 impact supply.”
8As for urea, it observes: “Import demand in India has been sporadic as major buyers have tried to time their tender offers to take advantage of seasonal price weakness. Although import volumes trail 2013, we expect large shipments in the coming months will bring India back to parity with recent years.”
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MMTC seeks bids for supply of 60,000 tonnes of urea

Dec 17: MMTC Limited has invited tenders for import of 60,000 tonnes of bagged urea
for delivery at three warehouses in Nepal as mentioned in the tender document.
8The company has specified two delivery schedules for delivery of urea in two consignments at three warehouses. The schedules are: January-March 2015 and April-June 2015.
8It says: “The fertilizer should be packed in 50kgs net in polypropylene woven bags with polyethylene inner bags. the weight of the polypropylene bag and gauge of inner polyethylene bag should not be less than 200 grams and 200 gauge respectively. the size of the bag should be 40” x 22” and fibre construction of the outer bag should not be less than 14” x 14” per square inch. The bag should be stiched with strong synthetic thread.”
8The last date for submission of bids is 19th December 2014.
8According to the tender document, “The consignment must be insured at its total for price plus 10% against all risks including TNPD, SRCC, water damages, terrorism etc. the validity of insurance policy must be at least 45 days after final date of discharge at mmtc’s buyer warehouse.”
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Centre asks States to share subsidy burden for revival of 3 naphtha-based plants

Dec 16: The Centre has contrived an ad hoc mechanism for computation of subsidy for currently closed three naphtha-based urea plants under which the concerned States would have forgo taxes on the feedstock.
8The transient subsidy mechanism for 100-day period was disclosed by the Minister for Chemicals and Fertilisers Ananth Kumar in Lok Sabha on Tuesday.
8Answering a question on stoppage of subsidy to naphtha-based urea plants in Lok Sabha, Mr. Kumar said, the Cabinet Committee on Economic Affairs (CCEA) approved the new subsidy proposal on 10th December 2014 on the basis of a note submitted by The Department of Fertilizers (DOF).
Explaining the new mechanism, he said: “The concession rate for these plants will be determined notionally on the basis of weighted average delivered cost of spot RLNG to recently converted plants after deducting state taxes (VAT, Entry tax) on Naphtha/FO or the cost of production of urea from Naphtha/FO after deducting state taxes (VAT, Entry tax) on Naphtha/FO, whichever is lower.”
8He continued: “The above decision will be operationalzed after concerned State Governments agree to waive the local taxes (VAT, Entry Tax) on Naphtha/FO used as feedstock for urea production.”
Mr. Kumar added: “CCEA has approved that the operation of the plants be allowed on only for a period of 100 days from the date of notifications. The Committee further directed that a proposal for alternative arrangements be finalised for its consideration, before the expiry of the aforesaid period.”
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OMIFCO yields Rs 14,700-cr saving; DOF finalizes sops for additional urea prod

Dec 16: Oman India Fertilizer Company (OMIFCO) has proved to be a mega urea subsidy-saver for India.
8Answering a question on fertilizer joint ventures in Lok Sabha, the Minister of State Chemicals and Fertilisers Hansraj Gangaram Ahir, said: “There has been substantial saving on foreign exchange through these JV projects. The total foreign exchange saving in the last 10 years by importing Urea from OMIFCO, a JV between Oman Oil Co. & IFFCO/KRIBHCO is around Rs. 14,700 Crores.”
8He pointed out that the country’s dependence on import at present is to the extent of 25% in Urea, 90% in phosphates and 100% in Potash.
8He stated: “Hence, Government has been encouraging Indian companies to establish Joint Ventures in countries which are rich in fertilizer resources such as gas, rock phosphate and potash.”
8Replying to another question, Mr. Ahir said: “The Government has drawn action plan for incentivizing the additional production of urea beyond reassessed capacity by existing indigenous urea units by amending the existing provisions of New Investment Policy – 2008 and Modified New Pricing Scheme-III.”
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RCF pitches for prospective application of gas pipeline tariff

Dec 15: Rashtriya Chemicals and Fertilisers Limited (RCF) has urged Petroleum and Natural Gas Regulatory Board (PNGRB) to fix gas pipeline tariff prospectively and waive off retrospective recovery in the tariff order itself.
8In its comments on PNGRB’s consultation paper on structure of pipeline tariff, RCF says: “It is observed that the regulator determines levelized tariff for pending cases after lapse of considerable period of time. This new tariff is made applicable retrospectively.”
8Citing the case inordinate delay in determination of provisional tariff for Uran-Trombay pipeline and its retrospective application, RCF adds: “the gas consumer has no recourse to realize such increased burden from his customers with retrospective effect. In the case of fertilizers, even the MRP of product is controlled. Hence it is not possible to recover such extra burden by future pricing. Moreover, the consumer has already frozen his accounts after due audit procedures and paid taxes and dividends based on such audited accounts.”
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RSSML gears up for disinvestment & stock market listing

Dec 15: Rajasthan Government is planning to divest 10-25% equity stake in the country’s dominant rock phosphate producer Rajasthan State Mines & Minerals Limited (RSMML) as a part of the company’s stock market listing move.
8The company has invited expression of interest from consultancy firms that would provide it with entire range of services right from determining the size of initial public offer (IPO) to listing of shares on the bourses.
8Rajasthan Government holds 99.99% stake in RSMML, which mines rock phosphate, gypsum, lignite, lime and other minerals. The company also has notable presence in renewable energy sector.
8RSMML says: “The ‘Consultant is required to assist the company for proposed disinvestment of equity of Government of Rajasthan in Rajasthan State Mines & Minerals Limited through Initial Public Offering (IPO) and the scope of work would cover to assist the company in entire process of disinvestment including
assisting in appointment of the Book Running Lead Managers & other consultant/agencies and also to undertake other related activities in respect
of “Initial Public Offer.”
8In mid-2010, RSMML had toyed with the IPO idea but implement it.
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MFL seeks offers for supply of Ammonium Sulphate

Dec 12: Madras Fertilizers Limited (MFL) has invited tenders for supply of 18,000 tonnes of ammonium sulphate for shipment to Chennai port during December 2014-January2015.
8The company has asked for submission of offers for either steel or caprolactum grade ammonium sulphate while indicating its preference for the former grade.
MFL says: “It is expressly agreed by Seller that, during the same period, if the price of the ammonium sulphate contracted by any of the supplier to Indian Market, becomes lower than the price agreed upon in the final purchase order/contract against this tender, that lower price shall be applicable for this shipment.”
8The last date for submission of offers is 24th December 2014. The tendering competition is open to foreign suppliers.
8The tender document says: “Payment by letter of credit / Comfort letter with 30 days Free Credit from B/L date. For additional 90/180 days credit period from the date of B/L, if required by MFL, interest rate @ LIBOR +300 basis points (mutually agreed rates) per annum shall apply.”
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New urea capacity under NIP 2012 to come up in 2017-18

Dec 12: The Department of Fertilizers (DOF) expects new urea capacity to go on stream during 2017-18 and in subsequent years under the recently amended New Investment Policy (NIP) 2012.
8Answering a question on consumption and production of urea in Rajya Sabha on Friday, the Minister of State Chemicals and Fertilisers Hansraj Gangaram Ahir, said: “Investment Policy (NIP)-2012 on 2nd January, 2013 and its amendment thereof on 7th October, 2014 to make India self sufficient in the Urea sector. In response to amendment to NIP-2012, this Department has received 12 proposals for investment for urea plants, which is expected to increase the domestic production of urea. The new capacity is expected to start materializing in 2017-18.”
8Replying to another question on savings by gas-based production of fertilizer, Mr. Ahir disclosed the provisional cost of production of urea plants for 2013-14.
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NMDC-led consortium signs MOU with Russia's ACRON for potash JV

Dec 11: The reliability in Indian potash imports would improve over the long run following signing of a MOU for promotion of an Indo-Russian potash joint venture.
8The MoU between Russia's ACRON and NMDC-led Indian consortium to implement an understanding reaached to acquire equtiy stake in a upcoming potash mine in Russia was signed during the two-day India-Russia summit that concluded in New Delhi on 11th December.
8According to an official release, the MOU “envisages acquisition of stakes by a consortium of Indian companies in a US$ two billion project of ACRON, a Russian fertilizer company.”
Earlier, in a disclosure to the BSE, Mumbai on 28th November, National Fertilizers Limited (NFL ) stated: “We have to inform you that ACRON Group, a leading Russian and global mineral fertilizer producer has offered 30% stake in the Fertilizer Project being undertaken by its subsidiary M/s. Verkhnakamsk Potash Company (VPC) to develop the Talitsky Potassium – Magnesium deposit in Perm Krai, Russia. Department of Fertilizers (DOF) has constituted a Consortium consisting of NMDC, RCF, KRIBHCO, FACT and NFL. NMDC would act as lead partner with 50% of the Indian stake in the project and the remaining 50% shall be shared by RCF, KRIBHCO, FACT and NFL in proportion of 3:3:2:2 respectively. The overall investment in Project would be around USD 2 billon.”
8NFL Board in their meeting held on November 13, 2014 accorded in principle approval for participating in consortium for due diligence.
8NFL added: “completion of due diligence, based on feasibility study and ways and means position of the Company, participation in the project as a equity partner in the consortium shall be worked out.”
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Govt. allocates additional subsidy for indigenous urea

Dec 11: The Finance Ministry has made an additional provision of Rs 5000 crore for subsidizing indigenous urea in the first supplementary demands for grants (SDFG) for 2014-15 presented to Parliament on Thursday.
8
SDFG says: “The supplementary grant is required for: Rs 5000 crore to provide for Indigenous Urea. Taking into account the savings available in the same section of the Grant, a token supplementary is sought.”
8
The Department of Industrial Policy and Promotion (DIPP) has sought an additional expenditure of Rs 0.25 crore under “Investment Subsidy (Old) for recoupment of the advance sanctioned from Contingency Fund of India for payment to M/s Swastik Fertilizers & Chemicals Pvt. Ltd. As this will be matched by savings in the voted section of the Grant, a technical supplementary is sought.”
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Fert subsidies help farmers in subsidizing countries but hurt them in other countries: OECD study

Dec 10: A paper published by Organisation for Economic Co-operation and Development (OECD) has implicitly made a subtle case against fertilizer subsidies especially in India and three other countries by comparing the funding of subsidies with the policies support for biofuels globally.
8As put by the Paper, “fertiliser subsidies have comparatively strong effects on agricultural markets, domestically as well as internationally. By reducing crop production costs in countries that apply fertiliser subsidies, they disadvantage crop farmers in other countries. Biofuel policies, and in particular biofuel mandates, lift global demand for crops and are found to have comparatively strong positive effects on global farm incomes. Farm incomes are found to be increased globally by about 1% as a consequence of the combined effects of biofuel and fertiliser policies, with substantial variation across countries.”
8The Paper says: “each USD spent on biofuel support raises global farm incomes by more than USD 0.9, whereas one USD spent on fertiliser subsidies increases global agricultural incomes by just USD 0.05. While biofuel support generally benefits crop farmers in all countries, subsidies for fertilisers reduce international prices for crops and hence incomes in countries other than those providing the support.”
Captioned 'Fertiliser and Biofuel Policies in the Global Agricultural Supply Chain-Implications for Agricultural Markets and Farm Incomes', the Paper notes: “Most importantly, subsidies to the fertiliser industry aim at reducing fertiliser prices in India and Indonesia, while subsidies to fertiliser users help farmers in the Russian Federation and China. In these four countries, public support is estimated to reduce fertiliser costs to farmers by between 5% and 68% below production costs.”
8It adds: “fertiliser subsidies have comparatively strong effects on agricultural markets, domestically as well as internationally. By reducing crop production costs in countries that apply fertiliser subsidies, they disadvantage crop farmers in other countries. Biofuel policies, and in particular biofuel mandates, lift global demand for crops and are found to have comparatively strong positive effects on global farm incomes. Farm incomes are found to be increased globally by about 1% as a consequence of the combined effects of biofuel and fertiliser policies, with substantial variation across countries.”
8Based on forward-looking simulations to 2025, and using an amended version of the computable general equilibrium model MAGNET, the Paper calculated that support policies in these two sectors can have significant effects on agricultural production, prices and incomes.
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RCF plans big-ticket energy saving project at its Thal complex

Dec 10: Rashtriya Chemicals and Fertilisers Limited (RCF) has planned a Rs. 362.82-crore project to further reduce energy consumption by its ammonia and urea plants at its fertilizers-cum-chemical complex at Thal in Maharashtra.
8The project provides for installation of Gas Turbine Generator (GTH) and Heat Recovery Steam Generator (HRSG) as a replacement for some of the steam turbines.
8Apart from facilitating reduction in energy consumption, the project would result in reduction in the consumption of natural gas and water. It would also reduce air pollution.
8According to a RCF document, “The proposed project will reduce NG consumption by 10,601 Sm3/hr, leading to conservation of significant amount of natural resource. The overall water consumption will be reduced by 6643 m3/day. The reduction in air- emission is estimated to be around 22.8 %( Reduction in NG consumption from 46,444 Sm3/hr to 35,843 Sm3/hr) due to the changeover of the scheme.”
8In an application filed with the Government for seeking permission to undertake environment impact assessment study on the project, the company explains: “RCF intends to further reduce the specific energy consumption of ammonia / urea plants at Thal by way of replacing some of the steam turbine driven equipments of ammonia plants with motor driven. RCF desires to enhance efficiency of power production by installing Gas turbine/turbines of required capacity. The proposed installation will replace existing Turbo Generators.”
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Dec 9: FAI urges Govt to bridge subsidy deficit of Rs 30,000 crore   Details
Dec 9: FAI pitches for unshackling of the industry to promote food security   Details
Dec 8: NFL solicits offers for exhaustive energy audit of Vijaipur complex   Details
Dec 8: IFA foresees India's upcoming urea subsidy policy as major driver of markets   Details
Dec 5: PNGRB seeks comments on Reliance's East-West gas pipeline tariff   Details
Dec 5: DOF mulls unified sops for additional urea output under two policies   Details

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