Ammonia cost curve: India has a big disadvantage

 For reference purposes, the website carries here a reference cost curve of  ammonia (used largely to make urea) by using either gas or coal (in China). India’s cost curve is getting flatter on lower global LNG prices, but it continues to remain much higher than those of major ammonia producers in the world.
In a cost plus subsidy driven industry, this is a sensitive subject as the government may switch to imports by shutting down domestic production if the differentials are wide.

The indicative curve shows India is well above key producers in the Gulf, Russia, US and China.
The advantage however that India seems to be  gaining is from lower cost of imported fertilizers.
Urea prices have been falling for the last five years, and netbacks have been going now proportionately.
How long this trend can continue remains a moot point and, when it ends, will prices remain flat or will we see a turnaround soon? 

There are signs that the downward slope is slowly coming to an end as volatility has tightened considerably in the past year. However, it is not clear if a quick turnaround will ensue. Another interesting trend is the falling dominance of Middle East producers in India’s urea imports and the rising dominance of the China and FSU. 

Source: Indian Petroplus