New Delhi: Fertilizer prices have been rising as domestic market supplies, including all NPK fertilizers, have been constrained for a long time now. In the face of robust agricultural demand, demand has been high over the past two quarters. Increased natural gas prices exacerbated the industrial process even further.

Fertilizer prices have surged due to higher input costs. As a result of refinery closures in many parts of the world due to COVID-19 and war repercussions, raw material costs, particularly Sulphur and Ammonia, have risen considerably. On the other side, the recent increment in the dollar's value has significantly impacted fertilizer prices.

Rising prices contribute to the growing inflation, which raises the price of fertilizer segments, putting consumers at a disadvantage. When the dollar strengthens, the entire GDP (Gross Domestic Product) is impacted and slows down.

When a trader was interviewed at JNPT, a respondent mentioned that "With the rise in the contractual price for MOP by $50/MT for the forthcoming season coupled with the currency devaluation, the retail price for MOP for the upcoming Kharif season would increase by 30% -35%,".

The Indian fertilizer sector is heavily reliant on imports, with imports accounting for almost all the raw materials used in the production of fertilizers. Over the last few quarters, international prices for feedstocks such as Ammonia, Phosphoric Acid, Potash, and Sulphur have risen significantly. The recent strong depreciation of the INR versus the US dollar has increased the cost of manufacturing nitrogenous and Phosphorus fertilizers.

As per ChemAnalyst, "The prices for fertilizers are likely to maintain the upward trajectory on the back of aforementioned reasons. Furthermore, the war repercussions are anticipated to impact the prices further. The production and manufacturing rates in the domestic market are like to be hampered in the coming weeks."

Potash and Urea prices are projected to rise significantly in the forthcoming Kharif season as the cost of imports rises in tandem with currency devaluation. It would be interesting to know how NPK fertilizers would behave as the Kharif season demand outgrows. ChemAnalyst analyses the market trend on a weekly basis. Please stay connected with us to know more about fertilizers.