Uralkali Lowers Potash Price for India in One-Year Contract

OAO Uralkali, the world’s largest potash producer by output, agreed to supply the soil nutrient to India at a price that’s 25 percent lower than a year ago.

Indian Potash Ltd. will pay $322 a metric ton for supplies, Managing Director P.S. Gahlaut said by phone today. Uralkali will ship 800,000 tons to India by the end of March 2015, the Russian company said in a statement confirming the price.

Belarusian Potash Co., the trader that Uralkali owned jointly at the time with Belaruskali, agreed to sell 1 million tons to India on behalf of both owners at $427 a ton in February 2013. India paid at an average price of $369 a ton from September, after the Belarusian trading venture collapsed, according to Uralkali’s data.

“The deal means Uralkali won larger volumes this year compared with last season, which may diminish Belaruskali’s ability to sell into the Indian market,” Elena Sakhnova, an analyst at VTB Capital in Moscow, said by phone today. Demand in India will be slightly higher than last year, she said.

Potash prices fell after Uralkali roiled markets at the end of July last year by withdrawing from the trading venture, which controlled 40 percent of global exports. Uralkali accused its Belarusian partner of selling potash outside their marketing agreement and moved to increase its own production.

China Price

Uralkali signed a first-half supply accord with China in January for $305 a ton. Berezniki, Russia-based Uralkali charged China $400 when it was marketing potash with Belarus.

India cut a potash subsidy to 9,400 rupees ($157) a ton for the year beginning in April to lift local prices and reduce demand, Reuters said last week, citing unidentified government and industry officials. The country may import as much as 3.7 million tons of potash this agricultural season, up from 3.27 million tons a year before, according to Gahlaut.

Fertecon Ltd., a U.K. researcher, forecast the price for the Indian deal at $325 to $330 a ton. The final price of the deal seems reasonable as it has a “quite traditional” premium of 5 percent to what China pays, VTB Capital’s Sakhnova said.

Uralkali shares fell 1.8 percent to 164.69 rubles at 5:35 p.m. in Moscow, while the Micex Index advanced 0.5 percent.

Before it's here, it's on the Bloomberg Terminal.