India Nears Potash Supply Deal as Belarus Speaks of AllianceBy , , and
Belarusian Potash cites ‘significant progress’ in negotiations
Share prices jump as President Lukashenko comments on Uralkali
Shares of potash producers rose on speculation that the price of the fertilizer will be supported by a new Indian supply accord, and the possibility that producers in Belarus and Russia will resurrect their export partnership.
India agreed to buy 700,000 metric tons from Belarus and price negotiations are expected next week, a person familiar with the situation said, declining to be identified before an accord is signed.
“There is significant progress in talks with India, and we expect that the contract may be signed in June," state-run exporter Belarusian Potash Co. said by e-mail Thursday.
Belarus President Alexander Lukashenko said Thursday his country, one of the world’s biggest producers, isn’t against reviving a trading joint venture with Russia’s Uralkali PJSC that, until 2013, had helped control supplies and buoy prices, although analysts cast doubt on the prospect.
Top buyers India and China, which usually reach agreements to purchase potash at the start of the year, have delayed deals in 2016 because of high stockpiles. That’s a reflection of a potash market that’s been stagnant since the collapse of the Belarus-Uralkali supply venture that controlled about 40 percent of world exports, according to VTB Capital.
India is likely to sign the deal at close to the current Asian spot price of $220 to $230 a ton, down from $332 in 2015, according to Konstantin Yuminov, an analyst at Raiffeisenbank in Moscow. That also implies a Chinese supply contract would be higher than $200 per ton, despite recent speculation to the contrary, Yuminov said by phone.
Lukashenko, speaking at the All-Belarusian People’s Congress in Minsk, said his country is only ready to take part in a new venture with Uralkali on its own terms. Uralkali’s press service and a spokesman for Uralchem, one of the two main shareholders in Uralkali, declined to comment on Belarus.
Renewing the tie-up is unlikely, Elena Sakhnova, a VTB Capital analyst, said in Moscow, noting that Lukashenko has made similar comments since 2013.
“Finding common terms with Uralkali would prove too hard in the medium term; also Belarus doesn’t really need this venture anymore,” she said. “In any case, an accord with India will be very good for the market. If an agreement is signed, some market recovery will be possible.”
Restoring a venture with Belarus would be negative for Uralkali, forcing it to cut output, Oleg Petropavlovskiy, a BCS Global Markets analyst, said in a note.
Mosaic Co., the largest U.S. potash producer, rose 4.7 percent to $28 in New York Thursday. Potash Corp. of Saskatchewan Inc. gained 5.8 percent, Intrepid Potash Inc. 22 percent and Agrium Inc. 2.2 percent.
A deal with China may be signed at the end of the summer or start of autumn, Uralkali management said on Wednesday. China is likely bidding for potash below $200 a ton, RBC Capital Markets analyst Andrew Wong said June 3. In 2015, it agreed at $315 a ton. A Chinese pact is likely to be delayed to the end of the year at the earliest, Sakhnova said.
— With assistance by Megan Durisin
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