The Trading Corp. of Pakistan called a tender Wednesday, April 29, for 50,000 mt of urea that closes May 29. Delivery must be no later than June 23.
The tender comes as Chinese urea producers are digging in their heels on pricing, causing grief for Indian buyers and their trading partners. Arab producers are also talking about higher prices.
One saving note for the Pakistani treasury is that unlike past tenders, the basic tender documents do not exclude Iranian material. Shipping for Iranian product is easier than for any other source and the material is often sold at a discount because of the complications of the embargo on Iran.
The Pakistan government authorized the importation of 310,000 mt late last month. This tender may represent the first in a rapid series of tenders to reach that amount.
The rules governing TCP tenders do not allow the buyer to negotiate with the second or third lowest offering companies, as Indian buyers are allowed. The buyer can only take the offered tonnage from the lowest qualified offer. If that offer does not fulfill the needs of the tender, TCP is forced to call another tender for the balance.
This created a situation where a number of tenders had to be called in rapid succession because few companies were willing to offer 300,000 mt in one shot.
Also under TCP rules – unless the government issues a special exemption – the time between calling the tender and its closing is 30 days. When TCP was forced to call follow-up tenders, it either had to ask for an exemption to reduce the time from announcement to closing or stretch out the purchasing schedule for months.
Recently, however, TCP has taken to calling tenders for smaller amounts of 50-60,000 mt one day after another. For example, the current tender closes May 29. If TCP follows its recent patterns, another tender will be called April 30 with a closing of May 30, April 31 to close June 1 and so on until the full 310,000 mt is covered.
Watch Green Markets for updates on the situation.