The drop in price was on account of a general slack season internationally and surplus of ammonia in the global markets created due to added capacities.

According to an official of the Fertiliser Association of India western region, Dr Madhukar Majmudar the price of ammonia is likely to increase by $20-$25 per tonne by June 1998. Ammonia is consumed by various industries in the manufacture of fertilisers like urea and diammonium phosphate (DAP), and other commodities like caprolactum and synthetic fibres.

The total consumption of ammonia in India is 10 million tonnes perannum. Of this, the agricultural sector consumes 75 per cent and the balance 25 per cent is consumed by the non-agricultural sector.

Urea in the agricultural sector accounts for the maximum consumption of ammonia at close to 6 million tonnes per annum. This is because one tonne of ammonia produces 1.6 tonne of urea. The total production of urea in the country is around nine million tonnes per annum.

Thus, when the price of ammonia is on the upswing, urea prices too rise and vice-versa. Another fertiliser, DAP, consumes around one million tonnes while the balance goes into the manufacture of other non-agricultural commodities like caprolactum and synthetic fibres.

A major part of ammonia is captively produced and consumed in India, mostly by urea manufacturers who sell the surplus in the domestic market. A small portion is being imported by those users who have their plant facilities close to the ports. There are two prices of ammonia in India, one is subsidised for agricultural consumption and the otheris market-related which is around Rs 9,000 per tonne.y