India to cut potash subsidy by almost a fifth, hitting demand-sources

Thu Feb 27, 2014 7:20am EST
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* Subsidy to be cut to 9,300 rupees/T for 2014/15 from 11,300 rupees

* Cuts may be approved in a week

* Rising Indian potash prices to curb demand

By Rajendra Jadhav

MUMBAI, Feb 27 (Reuters) - India will cut potash subsidies by nearly a fifth for the year starting in April as the government tries to contain a ballooning fiscal deficit, two government sources and an industry official told Reuters.

A smaller subsidy would push up costs in India, dashing any hopes for a recovery in demand in one of the world's top of importers of the fertiliser that global potash miners are banking on to counter a slump in prices.

Russia's Uralkali broke away from trading venture Belarusian Potash Company (BPC) in July, sending potash prices down more than 20 percent since then to around $310 a tonne.

India relies on imports to meet its entire potash demand, which in the current year is 4 million tonnes. Over the past five years it has accounted for about a tenth of global shipments, although its share has been slipping as local prices rise on previous subsidy cuts and on a weaker rupee.

Major suppliers to India include Potash Corp, Mosaic Co , Agrium Inc, Uralkali, Arab Potash Co , Israel Chemicals and Germany's K+S AG .   Continued...