Belarusian Potash Co., the trading arm of Belaruskali and Russia’s OAO Uralkali, will cut prices for Sinofert Holding Ltd. (297) by $70 a metric ton after agreeing on contracts with the Chinese importer, an industry group said.
BPC, as the trader is known, agreed to a first-half price of $400 a ton, Wei Chengguang, president of China Potassium Salts Industrial Association, said today by telephone from Shanghai, citing Sinofert. Canada-based potash exporter Canpotex Ltd. signed a similar deal with the Chinese company last month.
Sinofert’s media office in Beijing couldn’t immediately comment. Filipp Gritskov, a BPC spokesman, and Uralkali’s press service declined to comment.
China and India, the two largest potash buyers, put off purchases of the crop nutrient last year as stockpiles grew. China’s $470-a-ton contract expired in June, while India’s $490- a-ton supply deal ended at the end of the first quarter of 2012. Uralkali had expected to sign a new agreement with China by last May, Chief Executive Officer Vladislav Baumgertner said Dec. 20, conceding that both countries sought a “small discount.”
Canpotex, which trades potash produced by Potash Corp. of Saskatchewan Inc., Mosaic Co. (MOS) and Agrium Inc. (AGU), said Dec. 31 it agreed to sell 1 million tons to Sinofert at $400 a ton for the first half, also representing a $70 discount to a March accord.
That deal, which fixed an “unexpectedly low price” for greater volumes than last year, gave Uralkali less room for maneuver in talks, Konstantin Yuminov, a Moscow-based analyst at Raiffesen Bank, said by phone. “This may potentially lead to the change of the power balance on the potash market,” he said.
Five companies account for about two-thirds of the world’s exports of potash, a potassium-based compound that strengthens plant roots and protects against drought. In October, Wei urged China, which imports about a fifth of global shipments, to seek lower prices, citing weaker demand and a buildup of stocks. Uralkali said Dec. 20 it didn’t see prices falling below $400.
Uralkali dropped as much as 1.4 percent in Moscow today, the biggest intraday decline since Dec. 21, and traded down 1 percent at 233.41 rubles as of 6:26 p.m. local time.
Contracts with China may affect talks with India because Indian buyers “will clearly seek a price close to what the Chinese received,” Mikhail Stiskin, an analyst at Sberbank Investment Research in Moscow, said in a note.
Separately, Uralkali said today it had signed accords to supply about 10 million tons of potash to Russian fertilizer producers, including OAO Acron, OAO Uralchem and OAO PhosAgro, through 2017.