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. Last Updated: 07/27/2016

Potash Trader May Sign Benchmark China Deal

Belarusian Potash Co., a trader representing Russian and Belarussian potash producers, may sign a benchmark contract to supply the crop nutrient to China by the end of the year, sales chief Oleg Petrov said.

The contract for 2010 “will be important for the consumer sentiment and may give a boost to the market,” Petrov said in an interview Tuesday. He declined to forecast a price. BPC, as the trader is also called, may move to spot sales in China in 2011 as the biggest potash market becomes less dependent on imports because of growing local output, he said.

BPC’s Chinese contract may be set at a price lower than spot prices in Brazil, Petrov said. German and Israeli potash suppliers cut Brazilian spot prices to $400 to $405 a metric ton, inclusive of transport costs, Fertecon, an adviser on fertilizers, said in a report Dec. 15.

Potash rose to a record of more than $1,000 a ton in some parts of the world in 2008 before collapsing as farmers cut purchases because of slumping grain prices.

Chinese spot prices are $360 to $370 a ton, including freight, Troika Dialog analyst Mikhail Stiskin said in a report Dec. 14. Most market participants expect China to settle contracts at $300 to $350, excluding freight, Stiskin wrote.

“We should take into account domestic price in China as a serious factor in contract talks,” Petrov said. Chinese contracts are usually signed on a free-on-board basis, which excludes freight costs.  

Jim Prokopanko, chief executive officer of Mosaic, North America’s second-largest fertilizer maker, said Dec. 8 that the Chinese contract price may be as low as $325 to $355 a ton, excluding freight.

BPC is owned equally by Uralkali and Belarus’ state-owned Belaruskali. Its sales may rise 50 percent in 2010, from as much as 4.9 million tons this year, Petrov said. Global exports may rise to 45 million tons next year from 25 million tons in 2009, he said.

China will use 8 million to 9 million tons of potash next year, of which 4 million to 5 million tons will be produced domestically, Petrov said. China accounted for 22 percent of global potash consumption last year, according to Fertecon.

Chinese stockpiles may be 3 million tons, Petrov said. Domestic supply will be limited until March as local production slows, he said.

Potash producers, who buy 5.3 million tons of potash a year, will start talks with Indian buyers early in 2010, and volumes will be similar to this year, he said.