Fertilizer Industry Pins Hope on Urea Price Hike

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"If prices are increased for this chemical compound, then the pricing gap between urea and non-urea fertilizers will reduce."

Live Mint, Pallavi Pengonda

Announcing the previous Union budget in March last year, the finance minister had said that the government was actively considering a proposal to extend the nutrient-based subsidy (NBS) regime to cover urea.

The proposal still appears to be under consideration and one of the expectations from the budget 2012-13 is that urea will be brought under the NBS regime. Investors would do well to also track if urea prices are increased in the coming budget. If any of these happen, it would be positive for the fertilizer sector.

Currently, there is a huge discrepancy in the pricing of urea and non-urea fertilizers. That's because prices of non-urea fertilizers have increased sharply following their decontrol in April 2010. In comparison, urea prices have not risen as much, and are still controlled by the government. If urea prices are increased, then, needless to say, the pricing gap between urea and non-urea fertilizers will reduce. The government's subsidy burden, too, will be lower. . .View Full Article

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