India announces a 2.5 million ton urea tender, hinting that China must act before the 15th, or the spring planting schedule will be jeopardized!
The Times of India reported on April 3 that the state-owned Indian Potash Ltd (IPL) has issued a tender notice. The agency is seeking to purchase 2.5 million tons of urea in one go. This move aims to stockpile materials ahead of the upcoming sowing season.
The bidding deadline is set for April 15. The winning bidder must complete shipment by June 14. India's total fertilizer deficit stands at 5.8 million tons. New Delhi is attempting to use this tender to screen low-cost suppliers—but ironically, there are still no bidders in the market.
Indian agriculture heavily relies on imported fertilizers. Its urea production also depends on imported natural gas. Thus, both raw materials and finished products are vulnerable to external supply disruptions. After the closure of the Strait of Hormuz, India was significantly affected, as this strait handles one-third of global fertilizer maritime trade.
Seventy percent of India’s urea raw materials come from the Middle East. Following the strait’s blockade, raw material supplies plummeted sharply. Among India’s 32 urea plants, 11 have already shut down. The remaining factories operate at less than 50% capacity. Commercial inventory stands at only 2.17 million tons, while the safety stock threshold is 8 million tons—leaving a massive gap of 5.83 million tons.
India originally intended to shift its urea imports toward Russia. However, Russia itself has suspended ammonium nitrate exports due to its own spring planting needs and factory damage. When India tried to pivot temporarily, it found no viable alternative. The window for spring planting is rapidly closing. Once the June monsoon arrives, farmers must rush to plant. Missing this timing could halve crop yields. Farmers in Uttar Pradesh and Madhya Pradesh have already begun queuing to buy fertilizer. Black market urea prices have skyrocketed several times over. Food prices have been rising for five consecutive months, greatly increasing the living burden on lower-income populations.
India has started frequent communications with China. This tender specifically targets Chinese participation, given that China holds one-third of the world’s urea production capacity. China uses coal-based urea technology, which is unaffected by fluctuations in natural gas prices. China is the only country capable of quickly stepping in to relieve the crisis. Sea transport to India takes just 7 to 10 days.
However, China implements strict inspections and quota controls on fertilizer exports. This policy prioritizes ensuring sufficient urea supply for domestic spring farming among its 1.4 billion people. The price difference between domestic and international urea exceeds RMB 3,000. There is thus little incentive for China to loosen export restrictions.
As I see it, if India wants aid, it must first settle its outstanding debts. For example, a Shanghai-based enterprise has had USD 146 million in project payments withheld for over a decade. Chinese mobile phone companies have had their assets frozen in India. April 15—the tender deadline—is also the moment India subtly signals China to act. If no substantive progress occurs before then, India’s spring planting plan faces serious risks.
Original source: toutiao.com/article/1861774732648512/
Disclaimer: This article represents the personal views of the author.