India's Plan to Reduce Fertilizer Subsidies Has Negative Implications - Goldman
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Analyst at Goldman Sachs said India's fertilizer proposal is negative for Mosaic (NYSE: MOS), Potash Corporation (NYSE: POT) and Intrepid Potash (NYSE: IPI), while positive for CF Industries (NYSE: CF).
According to local reports, Inter-Ministerial Committee has approved a proposal to reduce the subsidy on both DAP (phosphate, P) and MOP (potash, K), but maintain the current subsidy on urea (nitrogen, N), the firm notes. This new rate will apply to 2012-13 and still has to be approved by the Union Cabinet.
Goldman would expect the large increase in retail prices to drive significant demand destruction for both P and K from Indian farmers, and would benefit N as farmers substitute into the lower cost fertilizer.
The development is negative for MOS, POT, and IPI which have the largest direct exposure to P and K.
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According to local reports, Inter-Ministerial Committee has approved a proposal to reduce the subsidy on both DAP (phosphate, P) and MOP (potash, K), but maintain the current subsidy on urea (nitrogen, N), the firm notes. This new rate will apply to 2012-13 and still has to be approved by the Union Cabinet.
Goldman would expect the large increase in retail prices to drive significant demand destruction for both P and K from Indian farmers, and would benefit N as farmers substitute into the lower cost fertilizer.
The development is negative for MOS, POT, and IPI which have the largest direct exposure to P and K.
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
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