India could buy 1 million mt of potash from Belarus in 2022 by paying with rupees, according to a Reuters report this week, citing two unidentified Indian officials.
India has suggested that Belarus potash marketing/exporting company Belarusian Potash Co. (BPC) could open a rupee account with a state-run Indian bank for potash sales as sanctions imposed by the U.S. and European Union (E.U.) restrict Belarus’ potash trade in U.S. dollars and euros.
The deal could be sealed later this month, according to the report.
Potash shipments under BPC and India’s 2021 supply contracts – as with the BPC’s 2021 supply contracts with China – were not subject to the sanctions implemented by the E.U. on Belaruskali/BPC on June 25 last year (GM June 25, 2021).
But according to the Reuters report, citing the two Indian officials, about 150,000 mt of potash shipments from Belarus have been stuck because of payment issues. However, this could not be verified by Green Markets atpress time, or whether the shipments concerned were contract shipments.
India’s biggest potash importer, Indian Potash Ltd. (IPL), and BPC agreed to the supply of 800,000 mt of potash for delivery to India through the end of December 2021 under last year’s annual supply contract, concluded in late January 2021 (GM Jan. 29, 2021).
The deal was concluded at $247/mt CFR with 180 days’ credit, a price level considered to be “low-ball” by most of the other major potash producers, who believed the price was not reflective of prevailing market conditions (GM Feb. 5, 2021). A new contract price of $280/mt CFR with 180 days’ credit was negotiated between the two companies in early April following ICL Group’s settlement of a new annual contract with IPL at that price level (GM April 9, 2021).
India imported a total of 852,007 million mt of potash from Belarus in the 11 months to the end of November 2021, accounting for some 29 percent of India’s total potash imports of 2.97 million mt in that period, according to Trade Data Monitor. This is up on India’s imports from Belarus in the same prior-year period – some 703,014 million mt, about 15 percent of India’s total potash imports of 4.72 million mt.
Higher global prices capped India’s potash imports in 2021.
However, it is unclear how Lithuania’s decision to halt the transit of Belarusian potash on its state-owned railway Lietuvos Geležinkeliai’s (LTG) from Feb. 1 – effectively blocking the export shipment of most of Belarus’ potash (GM Jan. 14, p. 1) – will affect or delay Belarus’ potential new potash exports to India.
Most of Belarus’ potash exports – some 10.7 million mt out of a total of 11.8 million mt in 2020 – hitherto were railed via Lithuania’s LTG rail system for onward shipment from the port of Klaipėda.
The Lithuanian government’s decision last month to end the railway contract between LTG and Belaruskali was taken due to “national security concerns.”
Belarus claimed this week that it has started to re-direct its potash shipments to Russian ports for onward export, according to a Bloomberg report, citing Interfax, which in turn cited Belarus Prime Minister Roman Golovchenko.
Golovchenko provided no details on which Russian ports were being used for the Belarus potash shipments or on the volumes involved. But he said due to the longer land transit distances involved, Belarus has lost some margin given the higher transportation costs.
However, the Belarus claim has been refuted by Kremlin spokesperson Dmitry Pesov, as cited by a subsequent Interfax report on Feb. 2.
Pesov said the possible re-routing of Belarusian potash to Russian ports is “on the agenda” and is being discussed, but the re-routing of shipments has not begun just yet, as cited by Interfax.
“Though financing is likely outside the U.S. financial system, it is still unclear if Belarus has the ability to rail through Russia the volumes India demands,” said Green Markets Research Director Alexis Maxwell.
Belarus said it has “prepared all necessary logistical solutions” to re-orient all of its transit flows to sea ports of countries seen as “reliable partners.”
BPC last month was reported to have submitted a request to LTG for the rail company to transport Belaruskali OAO potash from Jan. 24, arguing it was necessary for it to meet its obligations to sell potash through the Lithuanian port of Klaipėda, according to a report by Warsaw, Poland-based Belsat TV, citing LTG’s website (GM Jan. 28, p. 28).
Lithuania’s Head of the Committee of National Security and Defense of the Seimas (unicameral parliament) Laurynas Kasčiūnas was cited by the report as saying the chances to by-pass the ban on the transit of Belarusian potash/fertilizers in Lithuania were “almost zero,” given that the commission would consider such a transit “a threat to national security.”
Separately, Belaruskali is seeking to get the Lithuanian government’s decision to terminate the contract between the company and LTG overturned, and last week filed a complaint with the Vilnius Regional Administrative Court.
In a retaliatory move, Belarus this week banned the rail transit of oil products, chemicals, and mineral fertilizers from Lithuania starting Feb. 7, according to a Bloomberg report, citing an unnamed Belarusian ministry. According to the report, the ban will affect the annual transit of some 1.5-1.6 million mt of goods worth more than $1 billion.
LTG’s press service confirmed to Bloomberg it ships fertilizers and oil products via Belarus.