Rise in input costs hits fertil

Rise in input costs hits fertilizer units

Sharp increase in sulphuric, phosphoric acid prices forces units to go for imports, may impact output

A steep escalation in the prices of sulphuric and phosphoric acids has put the fertilizer industry in a tight spot. The price of sulphuric acid is now hovering around over ₹9,000 a metric tonne. It was ruling around ₹4,000 a metric tonne early this year. From $678 per metric tonne in mid-January, the prices of phosphoric acid have shot up to about $770.

Raw material

“This rise in prices of the raw material is now reflecting itself through a rise in prices of fertilizers and consumer durables that require it for production purposes,” sources said.

With the domestic availability of sulphuric and phosphoric acids in short supply, fertilizers units are reportedly forced to import them. The rising input cost as a consequence, according to these sources, may trigger adverse implications for farm production in the country.

The current problem of the fertilizer industry, according to some industry sources, is to a large extent the result of the closure of the copper smelter factory of Sterlite, a Vedanta Group company, in Thoothukodi.

Mired in a pollution related controversy, the Sterlite unit is entangled in legal knots. The fertilizer industry is hoping for an early end to the legal logjam facing Sterlite. “The first consumer section to really feel the brunt of the closure is the farmers who prefer using DAP for their fertilizer needs,” an industry source said.

Sterlite Copper, it is gleaned, is servicing 9% of the country’s sulphuric acid needs and 6.4% of the phosphoric acid requirements. Both these are primary raw materials in the production of fertilizers.

A few downstream units in the vicinity of Thoothukudi such as Greenstar Fertilizer and Amritha Chemicals are finding the going tough in the wake of the closure of Sterlite Copper.

Greenstar Fertilizers had been procuring close to 0.12 mt phosphoric acid and 0.1 mt of sulphuric acid from Sterlite Copper for the production of fertilizers. Their production programme is reported to have been seriously hit, forcing them to resort to import of additional quantities of fertilizer to cater to the Indian market and cut down on workforce.

“With India being the second largest consumer of fertilizers in the world, the impact of the closure on the downstream industries with price rises in acid raw materials will not bode well for the economy,” an industry source said. India is also the biggest importer of raw materials required for production of fertilizers, especially for those containing phosphate and potassium.

“The availability of these raw materials in the international market is limited and a surge in domestic demand will only push the prices up,” it added.