Metals and Minerals Trading Corporation of India (MMTC) has said that it may not be able to obtain letters of credit (L/Cs) for purchases of urea from sellers.

India's topmost foreign exchange earner and largest state-owned trading body has also announced stricter trading terms that could delay payments to sellers.

Under pressure

MMTC is under pressure from a collapse in urea prices and falling demand due to the adverse economic and commercial impacts of the coronavirus pandemic.

Urea prices vary regionally. Arab Gulf prices have fallen to as little as US$220 per tonne, the lowest level in more than two years.

L/C caution

The state-owned company said it would try to open L/Cs but cautioned that this may not be possible.

If it is unable to obtain L/Cs, MMTC says it will seek payment on cash on document terms, which would be bad news for suppliers because payments can be delayed by over a month.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.