Potash Corp. of Saskatchewan Inc. and The Mosaic Co. said April 16 that Canpotex Ltd., the export association of Saskatchewan potash producers, has reached a potash supply agreement with Sinofert in China for the remainder of calendar 2008. The new contract calls for shipment of 1 million mt of potash at $576/mt FOB Vancouver, representing a $400/mt increase over the price in 2007.
As previously reported, Canpotex has prorated China’s 2008 volumes and, as a result of the timing of this settlement and unprecedented demand in other markets, has only 1 million mt that it can commit to Sinofert through the remainder of this year. The Canpotex/Sinofert agreement is pursuant to the 2007-2009 memorandum of understanding that exists between the two companies. Canpotex ships primarily red standard grade potash to China, but also supplies certain amounts of white standard grade and granular product.
“Significantly higher potash prices and extraordinarily tight supply have become much more firmly entrenched since China’s previous contract was signed 14 months ago,” said PotashCorp President and CEO Bill Doyle. “With the intense pressure on global food production and continued growth in potash demand, this is the reality for our industry for the foreseeable future. This settlement highlights the importance of securing supply in an increasingly tight market. As the world’s largest potash company, we are committed to raising our capability to meet long-term growth in demand and we intend to capture the benefits for our shareholders as we do so.”
“We are pleased that Canpotex has finalized negotiations with our Chinese customers and we look forward to resuming shipments to them soon,” stated Jim Prokopanko, Mosaic’s President and CEO.
Canpotex members include a subsidiary of PotashCorp, Mosaic, and Agrium Inc.
In addition to the Canpotex deal, Belorussian Potash Co. (BPC), Uralkali’s export trader and a 50 percent joint venture with Belaruskali, has also agreed to a $400/mt increase to China. The price will be for sales to Sinochem and CNAMPGC. The new price has been established for shipments from June/July 2008 until December 2008. BPC agreed to ship around 1 million mt by the end of 2008.