The ongoing lockdown of Hubei province, a key producer in China’s huge fertiliser industry, is spurring the biggest buyer of one of the crop-growing ingredients to look for other suppliers.
India is the world’s biggest buyer of diammonium phosphate (DAP) — a type of soil nutrient that China sells vast quantities of — a big chunk of which comes from Hubei, the centre of the coronavirus outbreak that’s been sealed off to quarantine its inhabitants.
India, which gets about 50 per cent of its diammonium phosphate requirements from China, will instead look to Saudi Arabia, Jordan, Morocco and the US to fill the gap in supply, according to two people familiar with the matter.
Imports of diammonium phosphate are crucial for India’s millions of farmers who use the fertiliser to boost yields on crops such as rice, wheat, sugar cane and cotton. The South Asian nation’s total fertiliser imports from China were a little over 6 million tonnes last year, according to Bloomberg calculations based on trade ministry data.
Producers in countries including Saudi Arabia, Morocco and the US can increase their production of the soil nutrient and meet shortages as most of them have been operating under-capacity in the last two to three months, one of the people said. A new plant in Egypt can also help in meeting requirements globally, the person said.
Still, India’s hunt for a new seller of the fertiliser is likely to further tighten the market, helping prices that have been steadily rallying due to China’s supply disruptions. Hubei accounts for about 60%-65% of Chinese phosphate production, and the shutdown of output is likely to be the largest for the commodity in history, Sanford C Bernstein said last month.
Chinese supplies of urea, another type of plant nutrient favoured by Indian farmers, are unlikely to be affected as most of the plants are in the north of China, which is far away from Hubei province, one of the people said. India doesn’t need imports of urea until May.