INTERVIEW - India deals dent potash producers' tough stance

By Euan Rocha

TORONTO (Reuters) - Three international companies have agreed to supply Indian buyers with potash at $460 a tonne, well below the current spot market price of around $700 a tonne, the head of India's IFFCO said on Monday.

U.S. Awasthi, managing director of the Indian Farmers Fertiliser Co-operative Limited (IFFCO), named the three as Belarussian Potash Co (BPC), a major supplier of potash to world markets, and its smaller rivals Israel Chemicals (ICL) and Arab Potash Co.

"Whether the price is right or wrong will only be known by consumption patterns. If world potash consumption starts increasing, that means that people were unnecessarily trying to keep high prices," Awasthi told Reuters in an interview.

"BPC, ICL and Arab Potash Co have already given their confirmation (of a lower priced deal). I believe contracts at that price have already been signed."

But a spokeswoman for Israel Chemicals said the company has not yet signed a contract with India.

The price of potash -- a key crop nutrient -- has remained stubbornly high even as demand has collapsed, as a small group of companies, which account for roughly 75 percent of global supply, cut production drastically to try to maintain pricing.

But concern that the producers' hard line was softening hit potash company stocks last week, after trade publications said India had agreed to buy potash from Russia's Silvinit at a below-market price.

IFFCO is one of India's largest fertilizer manufacturers and it owns a 34 percent equity stake in Indian Potash Ltd (IPL), the country's largest potash importer. India imports about 5 million tonnes of potash a year, and IPL accounts for about 70 percent of these imports.