Belarusian Potash Co., which trades the crop nutrient for OAO Uralkali and Belaruskali, agreed to supply as much as 1 million metric tons to India at a lower-than-expected discount to last year’s shipments.
Belarusian Potash, also known as BPC, will charge $427 a ton for shipments to Indian Potash Ltd. until January 2014, according to statements today from Uralkali and BPC. That is $63 less than the previous price, which was set in 2011.
India and China, the two largest potash buyers, put off purchases of the fertilizer ingredient last year as stockpiles grew. BPC signed an accord last month with China for first-half shipments, agreeing to a $70-a-ton discount to the previous price of $470 after North American trader Canpotex reached a similar deal.
The accord will have a positive effect on the global potash market and will help keep India’s market stable, BPC’s Chief Executive Officer Valery Ivanov said in the statement.
The new price for India is higher than the $420 a ton estimated by Sberbank Investment Research and VTB Capital. The previous supply agreement expired at the end of the first quarter of 2012, but shipments continued until August.
“The price is a bit higher that we expected, but how positive it is for Uralkali will be clear only when we understand the total volume of the Indian market this year,” Elena Sakhnova, an analyst at VTB Capital, said by phone.
India’s market plunged from a 2008 pre-crisis level of 6.5 million tons to 3.5 million tons, according to Uralkali. Belorussian Potash Co., a trading joint venture of Uralkali and Belaruskali, traditionally accounts for a half of Indian imports. Indian Potash, which signed the contract with BPC, accounts for 60 percent of potash supply in India.
Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, is “optimistic” of signing a deal with India in the first quarter, CEO Bill Doyle said on a Jan. 31 conference call.
Uralkali is the world’s largest potash producer by output. Its stock rose as much as 1.1 percent in London today, before reversing gains to trade unchanged at $39.35 by 10:53 a.m.