Impact of China's Export Restrictions on Fertiliser Supply and Pricing
China's export restrictions have significantly impacted the supply and pricing of fertilisers, with widespread implications for global markets, particularly India.
Di-Ammonia Phosphate (DAP) Pricing and Supply
- DAP Prices: Prices soared to nearly $800 per tonne in June, marking the highest in several months.
- Impact on India: High DAP prices could affect India's subsidy calculations for FY26 and reduce margins for importing companies.
- Import Statistics: In FY25, India imported approximately 4.6 million tonnes of DAP, with 0.85 million tonnes sourced from China. This marks a significant reduction from FY24, where China contributed 2.2 million tonnes of the 5.6 million tonnes imported.
- Dependency: DAP is the second-most consumed fertiliser in India after urea, with annual usage of 10-11 million tonnes, half of which are imported.
Factors Influencing DAP Prices
- Raw Material Costs: A $10 per tonne increase in imported phosphorus and a $30 increase in ammonia prices lead to $5 and $12 per tonne rises in DAP rates, respectively.
- Shifting Supply Sources: With reduced imports from China, India turned to Saudi Arabia and other West Asian countries, experiencing supply vulnerabilities due to geopolitical tensions like the Iran-Israel conflict.
- Price Dynamics: DAP's cost rose from approximately $633 per tonne in January to about $780 per tonne in June, with a nearly $100 increase since April.
Water Soluble Fertilisers (WSFs)
- China's Export Controls: Since 2021, China has enacted stringent export controls on WSFs, primarily through CIQ clearance delays.
- Indian Import Statistics: India imports around 0.6 million tonnes of WSFs annually, with 80% dependent on China, while domestic production and imports from other countries cover the rest.
- Usage and Costs: WSFs are used with drip irrigation and sprinklers, enhancing yield but are expensive, costing Rs 80-100 per kg compared to Rs 5-6 for conventional fertilisers.
- Impact on Agriculture: Chinese restrictions threaten farm yield and the profitability of horticultural and high-value cash crops, highlighting the need for investment in local specialty fertiliser technologies.
