Synopsis: Shares of a number of fertiliser companies, including FACT, Madras Fertilisers Limited and 2 more, recorded a jump of as much as 11 per cent after reports indicated that the country is looking for additional urea from China due to a gas supply crunch caused by geopolitical tensions in the Middle East. This move is seen as a positive sign for the sector as investors are now more optimistic due to the expected supply tightness as well as favourable demand conditions for the sector.
Shares of fertiliser companies saw a sharp rise in today’s trading session after reports of potential supply disruptions and increased import efforts by India lifted sentiment in the sector. Investors turned optimistic about fertiliser stocks amid expectations of tighter global supply and strong domestic demand ahead of the upcoming agricultural season.
The table below shows stocks which jumped from today’s low and the high that they made
| Stock | Day’s High | % Jump from low |
|---|---|---|
| FACT | Rs 916 | 11% |
| NFL | Rs 76.84 | 7% |
| RCF | Rs 127.35 | 8% |
| Madras Fertiliser Ltd | Rs 67.82 | 6% |
Gas disruption raises concerns over domestic fertilizer production
The rally in fertiliser stocks is seen after reports that India has sought China’s permission to sell some of its urea cargoes amid concerns over gas supply disruptions that are impacting domestic fertiliser production. This is because natural gas is a primary input required for manufacturing urea, and disruptions in global supplies of natural gas, led by the Middle East conflict, are impacting domestic fertiliser production.
Recently, Qatar, which is one of the world’s biggest exporters of liquefied natural gas and a major supplier of fuel to India, cut its fuel supplies amid escalating hostilities in the Middle East. Currently, Indian fertiliser manufacturers are receiving only 70 per cent of their required gas supply, leading them to cut back on production levels.
Import Expectations and Demand from Farmers Boost Sentiment
The decision by India to source urea imports from China has also contributed to a positive sentiment for fertiliser companies. This is because China is the largest producer of urea in the world. Exports from China are controlled by a quota system. Exports for 2026 have not yet been allocated. This means that if there is a relaxation in export controls for urea from China, India will be able to source additional quantities to meet demand.
India is the largest importer of urea in the world. It is also a major agricultural country that grows a number of crops, including rice, wheat, sugar, and cotton. Farmers are preparing for the key season that starts in June when the monsoon rains arrive. This means that demand for fertilisers is expected to remain robust for fertiliser companies.
In the current fiscal year that is ending in March, India has imported 9.8 million tonnes of urea. In addition, another 1.7 million tonnes is expected over the next three months. The government is also planning to issue a tender for urea imports by the end of March or early April.
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