BREAKING -Russia’s Phosagro fertiliser firm signs big India deal

India is many things to many people. To Russia’s Phosagro, it is a fertile source of phosphate sales.

Phosagro, the world’s third-largest producer of phosphate fertilisers, has signed a three-year supply contract with India in a move that signals growing confidence in one of the world’s largest fertiliser consumers 

The Russian company has agreed to supply state-owned Indian Potash Ltd with 1.35m tonnes of phosphates over three years, Phosagro told the FT.

“What we see right now in India is a booming economy. We have huge demand from this country,” said Andrei Guryev, Phosagro chief executive.

India is the world’s second-largest consumer of phosphate fertilisers and the largest importer of diammonium phosphate (DAP), a key form. But demand has been depressed in recent years, helping to trigger a slump in prices from a high of $660 per tonne in 2011 to around $460 last year.

Mr Guryev said that Indian demand had recovered dramatically in recent months. He predicted that the country’s imports of DAP could rise by more than 60 per cent to 6.5m-7m tonnes. The country has already purchased more than 2.2m tonnes of DAP for delivery in the first half of this year, up from 0.9m tonnes a year earlier, according to Phosagro.

He predicted that prices, which have already recovered to about $485 a tonne, would rally further.

The new deal marks a dramatic return to the Indian market for Phosagro, which sold almost nothing to the country in the past two years due to weak demand and low prices. Since the start of this year it has won contracts to supply about 0.5m tonnes in addition to the new three-year contract.

“Today we see that the market in India is booming,” Mr Guryev said. “We want to participate.”

The recovery in Indian demand has been driven by growing economic confidence in the country, combined with increased subsidies for fertiliser purchases and very low stocks, Mr Guryev said. Phosagro estimates that the country’s reserves of DAP fell to less than 100,000 tonnes at the end of the 2014-15 season.