Fertilizer Sector was the Star Performer of the Day

In today’s trading session, the leading fertilizer companies of the country like GSFC, Deepak Fertilizers, Chambal Fertilizers etc, saw a high surge in price.

On Wednesday 8th December 2016, the government approved the proposal of half-yearly review of the nutrient-based subsidy (NBS) rates for phosphatic and potassic (P&K) fertilizers for the period 2016-17 against the present practice of annual review. According to a certain official, in the interest of farmers, it has been decided to roll over the existing subsidy rates for another six months till the end of the financial year 2016-17.

The government further added that it has been decided to ensure that any drop in the international prices should be reflected by the fertilizer companies with subsequent reduction in their maximum retail prices.

With a dip in the international prices, the MRP of P&K fertilizers was reduced in the month of July 2016. Fertilizer firms reduced the 50 kilograms bag prices of muriate of potash (MOP) by Rs 250, di-ammonium phosphate (DAP) by Rs 125 and the complex fertilizers by Rs 50.

These moves are expected to result in increase in consumption of P&K fertilizers which will result in balanced fertilization.

India in the International Fertilizer Market

The fertilizer outlook of the country is changing at a rapid pace in the international arena. The fertilizers sector of the country is in dire need to catch up with the growth in terms of technology as well as fertilizers productions. The fate of the fertilizer industry is highly dependent on factors like population growth, government policies including incentives along with subsidies to lower the cost of fertilizers to the farmers. The consumption of fertilizer in India has generally exceeded the domestic production in both nitrogenous and Phosphatic fertilizers, except for few years.

The Indian Government subsidizes the fertilizers to ensure that it is easily available to farmers and the country remains self-sufficient in agriculture as well as food grain production. The same has been achieved largely by controlling the price of fertilizer and the amount of production.

Demonetization and Fertilizers

According to news, on 1st December 2016, Ananth Kumar, Ministry of Chemicals and Fertilizers applauded the bold demonetization move by the government of India. Kumar hopes that the benefit of demonetization will also trickle to the fertilizers sector. The Minister said this during the inauguration the annual seminar of Fertilizer Association of India (FAI) in Delhi yesterday.

GSFC share price closed at Rs 95.60 apiece on NSE, up by a massive 9.55 per cent. Deepak Fertilizers share price closed at Rs 212.25, up by 3.62 per cent and Chambal Fertilizers share price at Rs 70.55, up by 3.12 per cent.

Whether the rise in the fertilizer sector was a result of the demonetization or the nutrient-based subsidy (NBS) rates for phosphatic and potassic (P&K) fertilizers for the period 2016-17 only time will tell. For now one can see that fertilizer sector was one of the top performers in today’s (19th December 2016) market.

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