Major potash producers last week inked new trades with India, putting to rest the question of when the country would make a commitment. Belarusian Potash Co. (BPC), which markets product for Uralkali and Belaruskali, started the week by finalizing a deal with Indian Potash Ltd. for 1 million mt for Feb. 2012-Jan. 2014 at $427/mt CFR.
The last done business to India during the 2011-2012 timeframe was at $490/mt CFR; however, recent trades to China were $400/mt CFR, down from $470/mt CFR.
Canpotex Ltd. said Feb. 7 that it had reached agreement with its government and private sector customers in India to supply approximately 1.1 million mt of potash for shipment up to January 2014 at a price of $427/mt.
Steven Dechka, Canpotex’s president and CEO, said the agreement demonstrates the continued importance Canpotex places on the Indian market and on supporting its loyal and long-term customer base in that market. "We are very pleased to sign supply contracts with our long-term Indian customers, and to continue our history of being a leading supplier to this important market,” he said. “We look forward to meeting India’s future growing potash needs in collaboration with our Indian partners.”
Word from India was that the country will likely take 3.5 million mt in 2013, with the other suppliers – K+S Ag, Israel Chemical Ltd. (ICL), and Arab Potash Company (APC) – lining up for the remainder.
The news came sooner than some had expected, as some North American producers had been expecting it to come as late as March, while propaganda from India was that the country could hold out as late as June.
One industry observer last week commented that the news was good in that it meant closure. The industry no longer had the big international contracts hanging over their head.
Others were fearful producers might soon try to boost North American warehouse prices back to their December/January price ideas of $470/st. Those prices had drifted down to the $460-$465/st FOB range. Likewise, NOLA barge prices have eroded down to $425-$430/st FOB in recent weeks.
Another source was not concerned, saying that domestic potash does not have any legs. For now, the North American industry appears to be more focused on nitrogen.
In the meantime, Israeli analysts are looking for price stability for the first half, with a possible slight rise in the second half. However, one analyst said buyers in Brazil and Southeast Asia are resisting current levels and looking for prices to decline. This at the same time that BPC is trying to increase prices in Brazil.
Analysts see an average FOB potash price for ICL’s Dead Sea Works (DSW) of $423/mt, down from 2012’s $458/mt. They noted that the recent $427/mt price to India represents a slight premium over the recent $20/mt differential between China and India. The two countries are critical to DSW as it sells a much higher percentage of its total volume in those markets than do other major producers.