Urea prices are expected to stay at the lower end in the Indian market as is seen in the recent months. The primary reason driving the prices on a negative trajectory is the observed dip in India’s consumption of conventional urea. Moreover, as per market leaders, India could witness a deduction in the consumption of conventional urea by 2.5 million tonnes in the current fiscal year. The shift observed toward nano liquid urea and various governmental scheme to alleviate chemical fertilizers are the key factors for decreasing urea demand.
The expected decline in urea consumption to around 330 lakh tonnes for the fiscal year from 357 lakh tonnes in the previous year is attributed to the growing adoption of nano liquid urea. As per the Union Minister Mansukh Mandaviya, between August 2021 and February 2024, sales of nano urea bottles reached a total of 7 crore. It was noted that in 344 districts, the consumption of conventional urea has decreased, whereas in 74 districts, the usage of nano liquid urea has increased.
Additionally, the 'PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth' (PM-PRANAM) scheme has played a role in reducing the demand for chemical fertilisers by incentivising states and Union Territories to promote alternative fertilisers and balanced chemical fertiliser use. Some states have significantly adopted this scheme. Efforts to decrease potash imports include the capacity to produce 5 lakh tonnes of potash annually from molasses, a sugarcane byproduct, which would reduce the annual import of 40 lakh tonnes of potash.
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According to Procurement Resource, urea prices in India are anticipated to remain low, following recent trends influenced by a decrease in the country's consumption of conventional urea. Market experts suggest a potential reduction of 2.5 million tonnes in conventional urea consumption during the current fiscal year, attributed to a shift towards nano liquid urea and government initiatives aimed at reducing the use of chemical fertilizers. This trend reflects an increased adoption of alternative fertilizing methods and supportive governmental policies, leading to a change in the fertilizer market dynamics.
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