The IPL tender closed on Sept. 25 with more bad news for the Indian treasury. The lowest offer in the tender came from Transagri at $285/mt CFR for only 10,000 mt into the port of Kandla on the West Coast. The next lowest West Coast offer was Koch with 42,000 mt at $286/mt CFR. The lowest East Coast offer came from Aries at 284.66/mt CFR for 120,000 mt. The bulk of the offers were in the $290s/mt CFR, with a few at $300-$330/mt CFR.
The prices leapt more than $40/mt CFR from the IPL tender that closed earlier in September, when final prices fell in the $241-$245/mt CFR range. In the run up to the latest tender, industry watchers expected higher prices, including a few predictions of $300/mt CFR. Many, however, argued that the price jump would be smaller, and were surprised at the strength of the final offers.
The buying house will now review the offers and make counter bids. The most likely outcome will be East Coast prices at $285-$288/mt CFR and West Coast prices at $285-$290/mt CFR.
The higher prices have been attributed to the absence of Chinese urea in the global market and Iran finding more markets, breaking them of their dependence on India. In addition, some Arab producers are taking routine maintenance shutdowns, limiting the amount of urea available on the spot market.
India needs about 1.5 million tons to close out the current season. After IPL makes its awards, another tender is expected to help fill out the balance.