MINSK (Reuters) - Belarusian Potash Company (BPC), the world’s largest potash exporter, will propose raising the price of its new contract with China to $290 per tonne, the level of its recently signed deal with India, Chief Executive Elena Kudryavets said.
China is the world’s largest consumer of potash, a crop nutrient, and a contract with the country usually establishes a global price floor.
However, this year BPC, which controls 20 percent of the global potash market, signed the annual contract with India before its talks with China were finished.
“If the contract (with China) comes soon, the price of the contract, from our point of view, should be no less than the Indian price,” Kudryavets told Reuters on Tuesday.
The company will propose raising the price to $290 per tonne from $230 per tonne in the previous contract, she said. The proposed price is the one which BPC and India agreed in their new contract on Saturday.
The price will go higher if the signing of the contract with China is delayed, Kudryavets added.
While the price of China’s potash contracts is usually $10 to $15 lower than Indian contracts, it is time to change that because “the situation is very favourable for suppliers,” according to BPC.
BPC is the trading division of state-owned miner Belaruskali and is one of the key sources of the country’s dollar revenue.
“Spot prices are rising for a long time ... and this growth will continue,” Kudryavets said. “We are sure the market will be growing in general. It is also important for us to maintain the demand for potash.”
Russian potash producer Uralkali said this week it was “assessing expediency” of a new contract with India amid limited product availability.
Uralkali also said, from its point of view, the price of the Belarusian contract with India was at the market level.
In 2013, Uralkali quit a trading alliance with Belaruskali, sparking strong competition between suppliers in the global market. In addition, potash producers have been suffering from new capacity coming from several firms, including Russia-focused Eurochem.
“In our view, great pricing momentum this year will be capped next year with new capacities from Eurochem already in place and expanding,” analysts at VTB Capital said this week.
Reporting by Andrei Makhovsky, writing by Andrey Kuzmin and Polina Devitt; editing by David Evans