U.S. Gulf:
NOLA potash barge trades continued to be reported in the $310-$318/st FOB range.
U.S. Imports:
Potash imports for February firmed 9.3 percent, to 1.23 million st from the prior-year 1.13 million st. July-February totals stood at 8.84 million st, up 12.3 percent from the year-ago 7.87 million st.
Eastern Cornbelt:
Potash remained at $355-$375/st FOB in the Eastern Cornbelt, depending on location, with the Cincinnati market quoted in the $360-$365/st FOB range in early April.
Western Cornbelt:
The potash market remained at $355-$375/st FOB in the Western Cornbelt, with the low at St. Louis and Caruthersville and the high reported in Iowa.
California:
Sources said the California potash market had edged up to $505/st FOB for 60 percent MOP and $515/st FOB for 62 percent, up from the last reported range of $455-$465/st FOB.
Pacific Northwest:
Potash pricing firmed to $435-$445/st FOB and $440-$450/st rail-DEL in the Pacific Northwest, depending on grade and location. Potash postings from Intrepid FOB Moab and Wendover, Utah, were steady at $425/st FOB for 60 percent white standard and $430/st FOB for 60 percent white granular.
Western Canada:
Potash pricing was steady at C$530-$540/mt FOB Saskatchewan mines for Q2 truck offers.
India/China:
Belarusian Potash Co. (BPC) and Indian Potash Ltd. (IPL), India’s biggest potash importer, have agreed to a new contract price of $280/mt CFR with 180 days’ credit, a $33/mt increase, or 13 percent, from the original level in late January (GM Jan. 29, p. 17), and $50/mt above last year’s contract.
The new price was set on April 5, according to a statement on BPC’s website. “This settlement was made possible thanks to the weighted approach to business and common aspiration towards balanced and sensible development of the potash market demonstrated by the parties to this agreement,” the Belarusian supplier said.
BPC agreed in January to ship 800,000 mt to India at $247/mt CFR, prompting criticism from other major suppliers who believed the new price was not reflective of prevailing market trends (GM Feb. 5, p. 16). Both Canpotex and Nutrien said their position was not to follow the price level for potential sales into India, and K+S said it would refrain from deliveries to India until further notice.
ICL on April 5 also announced that it had settled a new annual contract with IPL to supply an aggregate 600,000 mt of potash, with mutual options for an additional 50,000 mt, at the new price of $280/mt. ICL said the tons will be supplied through December 2021, and the contract is part of the five-year supply agreements signed in December 2018 between ICL and IPL (GM Jan. 4, 2019).
Other major suppliers are now expected to settle contracts at the new price with all Indian buyers, according to Bloomberg, citing BMO Capital Markets analyst Joel Jackson.
IPL, however, has said it will say no to further potash hikes above $280/mt CFR as local demand for the nutrient is set to decline, according to a Bloomberg report on April 9. The report cited IPL Managing Director P.S. Gahlaut as saying in a phone interview that domestic potash consumption may fall 20 percent this year due to high prices. The Indian company accounts for around half of the country’s potash imports.
Gahlaut said the contract price increase agreed to with BPC followed IPL’s deal with ICL to buy 600,000 mt, according to the report. He explained that the BPC price had been revised as per a contract clause. That clause says if IPL buys at a higher price from any other supplier, it will increase the rate of earlier contracts, he said. The clause also provides for the reverse situation.
Gahlaut said no one was willing to match the Indian company’s previous purchase price with BPC of $247/mt CFR.
Shares of potash producers rallied on the unusual contract price re-negotiation. India is thought never to have previously changed the price of its annual supply deals with suppliers. Typically, the first supplier to reach a new contract price with India or China sets the price for other suppliers and buyers to follow.
Bloomberg cited Nutrien President and CEO Chuck Magro as saying the new contract confirms that the price announced in January “was in no way reflective of the market-based pricing in the current key offshore potash markets.” The new price increase is “a clear indicator of a tightening potash market,” he said.
The question now is whether BPC will review its contract price with China. Russia’s VTB Capital analyst Elena Sakhnova said, “it is quite possible,” according to a Bloomberg report.
BPC settled a new contract price at $247/mt CFR, with the Consortium of Chinese Buyers (Sinochem, CNAMPGC, CNOOC) in February for seaborne potash deliveries, marking a $27/mt increase, or 12 percent, on 2020’s contract price of $220/mt CFR (GM Feb. 12, p. 16). BPC said the new price covered a delivery period through Dec. 31, 2021.
While Uralkali was reported to have said the new price between BPC and China was “fair for this part of the year” (GM Feb. 12, p. 17), Canpotex saw the new price as “significantly below current market levels for potash in key offshore markets.”
To date, none of the other major suppliers have announced publicly if they have settled new supply contracts with their customers in China. Green Markets Research Director Alexis Maxwell believes the Chinese contract price could now rise to $270/mt CFR.
“Chinese potash port inventory has fallen from last year’s record high, and ongoing draw-down on spring demand will lessen Chinese buyers’ negotiating power,” she said.
Scotiabank analyst Ben Isaacson was cited in a Seeking Alpha report this week as saying the new India price “sets a new reference for the Chinese potash contract,” which he believes could now reach $270-$280/mt CFR.
Belarus:
Belarus exported 2.2 million mt of potash in the first two months of 2021, up from 1.3 million mt in the same period last year and up from 1.9 million mt in 2019, according to Trade Data Monitor. The higher 2021 export volume is thought to reflect the contribution of the new Petrikov operation, and possibly lower operating rates in the early months of last year.
The Petrikov plant in Belarus’ Gomel region produced its first high-quality ton of potassium chloride concentrate on Jan. 30 last year (GM Feb. 7, 2020) and was reported to have made its first shipment of potash – a consignment of 28.64 mt – last August (GM Aug. 28, 2020).
Belaruskali previously stated that Petrikov would reach its 1.5 million mt/y design capacity within three years of start-up (GM Jan. 3, 2020).
Brazil:
The potash pricing range widened on both ends at Paranagua. Sources now put the MOP market at $325-$435/mt CFR. The lower end of the range is expected to move up as demand for MOP steps up and as the impact of the price deal between India and BPC percolates through the market.
Inland buyers are said to be looking for top-off tons before the new prices begin working their way through the marketplace. Rondonopolis is pegged at $380-$345/mt FOB ex-warehouse, representing a marginal increase at the upper end of the range.
Barter rates for 1 mt of MOP remained steady at 21 bags of soy and 58 bags of corn in Rondonopolis. The barter rate at southern Goias was reported at 22.5 bags of soy and 39 bags of corn.
Imports of MOP in March 2021 at 755,000 mt were down about 11 percent from March 2020 at 844,000 mt, according to Trade Data Monitor. The March 2021 imports were also significantly down from February imports of 998,000 mt.
The first-quarter imports were up about 47 percent in 2021 at 2.5 million mt, compared to the 1.7 million mt during the same period in 2020. In the latest quarter the main suppliers were Russia at 743,000 mt, Canada at 598,000 mt, and Belarus at 550,000 mt.