UPDATE 2-India to import 3.5 mln tonnes potash in 2013 at $427/T

Wed Feb 6, 2013 9:12pm IST

Stocks

   

* Indian Potash Ltd signs deal for 1 mln tns

* Other Indian firms to sign deals for 2.5 mln tns this week (Updates with analyst comment, details on Canpotex)

By Rajendra Jadhav and Kaustubh Kulkarni

MUMBAI, Feb 6 (Reuters) - Indian fertilizer companies are likely to import 3.5 million tonnes of potash in 2013 at $427 per tonne, an official at the country's largest potash importer said on Wednesday, ending a three-month-long stalemate over prices.

The South Asian country is a leading buyer of potash and has been seeking a lower price than the $490 per tonne contracts it had for potash imports in August 2011.

India's potash demand fell substantially in 2012 on weaker rains and higher retail prices, forcing the country to stay away from signing any new contracts last year. This led suppliers' inventories to rise to record high levels, hurting earnings in the second half of 2012.

"We have reached an agreement with suppliers," P.S. Gahlaut, managing director at top potash importer Indian Potash Limited (IPL), told Reuters.

The IPL has signed deal to buy 1 million tonnes of potash at $427 per tonne from Belarussian Potash Co (BPC), a joint venture between Russian miner of the soil nutrient Uralkali and a Belarussian firm, he said.

"Since we have agreed the price, there would not be any problem in signing deals. Other companies will also sign deals depending on their requirements," said Gahlaut, adding Indian companies would buy another 2.5 million tonnes in a week.

The next contracts to supply Indian buyers will likely be signed with BPC's main rival Canpotex Ltd, as well as Germany's K+S AG, Israel Chemicals Ltd and Arab Potash Co Plc.

The chief executives of Potash Corporation of Saskatchewan and Agrium Inc, the companies who own Canpotex along with Mosaic Co, said last week they expect a deal with India in the current first quarter. In a Jan. 17 Reuters poll, eight North American analysts said on average that they expected India and Canpotex to strike a deal at $416 per tonne.

The $427-per-tonne price implies that India will pay $53 per tonne less in 2013 than the previous year, compared with the greater discount of $70 that China negotiated with potash sellers, Scotiabank analyst Ben Isaacson said in a note to clients.

Even so, considering the Indian government's fluctuating potash subsidy level and a recent uptick in the rupee, the price Indian farmers pay this year is likely to be flat, keeping a lid on the country's consumption, Isaacson added.

India's premium over China's price is accounted for by factors such as greater shipping distance and lower volumes.

Shares of Potash, Agrium and Mosaic were all slightly higher in early trading on Wednesday.

Indian Farmers Fertiliser Cooperative, Coromandel International and Tata Chemicals, Zuari Global are key Indian potash buyers.

The Zuari group is expected to sign a deal for up to 1 million tonnes, according to Naveen Kapoor, president of the group's agriculture business.

Last month, BPC signed a half-year contract with Chinese buyers for up to a million tonnes at $400 per tonne, the same terms negotiated by Canpotex. (Reporting by Rajendra Jadhav and Kaustubh Kulkarni; editing by Jo Winterbottom and Miral Fahmy, desking by G Crosse)

  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Intel's Valuation

Intel's Valuation

Intel could rise 30 percent over next two years - Barron's.  Full Article 

Canonisation

Canonisation

Pope declares sainthood of two Indians, four Italians.  Full Article 

Stake Sale Strike

Stake Sale Strike

Coal India trade unions call off strike in victory for Modi.  Full Article 

Interview with Bulgari CEO

Interview: Bulgari CEO

Bulgari CEO: we shouldn’t have left India so we’re back.  Full Article 

Formula One

Formula One

Hamilton takes second F1 title in style.  Full Article 

Available For Remake

Available For Remake

Bollywood finally wants to pay the price for remakes.  Full Article 

Davis Cup

Davis Cup

Vintage Federer seals first Davis Cup for Switzerland.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage