Recently, DAP (Diammonium Phosphate) prices increased significantly in March, amidst stable to low demand from the agriculture sector as this is Rabi’s harvesting season in India. As per ChemAnalyst data, Diammonium Phosphate prices on CRF basis in March is INR 68.2/kg. Factors influencing price fluctuations are less import volume, increased supply in the regional market and strong buying activities in the region amidst stockpiling activities ahead of anticipated demand during the spring season.

Prices of upstream Natural gas continue to rise on the back of Russia – Ukraine conflict. Consequently, feedstock Ammonia prices are also increasing owing to high demand from the downstream sector coupled with soaring input costs. The price of Natural Gas surges to 2% i.e., INR 330720 per thousand MMBtu, in the Indian market, whereas the Ammonia feed prices increases by 4% in March. Feedstock Phosphoric acid in India is witnessing an upward trend and prices are increasing continuously. There has been an increment of 7.63% in the prices of Phosphoric Acid in the Indian market. Also, China has limited its export of Phosphoric acid and Diammonium Phosphate to India due to the rise in Crude and their own demand for DAP in the coming agriculture season.

On the other hand, the government is reducing subsidies on purchase of fertilizers, making it costly affairs for farmers to buy fertilizers in the coming agriculture season. India is slowly shifting to organic farming or chemical-free farming resulting in slightly less demand for chemical fertilizer than the previous year and a reduction in budget. India’s budget for fertilizers has gone down to INR 1.05 trillion ($14 billion) for this financial year, which was INR 1.4 trillion in the last financial year.

As per ChemAnalyst, India’s Diammonium Phosphate prices are expected to rise as the prices of upstream Phosphoric Acid, Crude and Ammonia are increasing due to inflation and supply shortage, without any reasonable increment in demand for the forthcoming quarter.