Belarus Fertilizer Firm Surprises on India Potash Price Hike
(Bloomberg) -- Belarusian Potash Co. said India’s largest potash importer agreed to a surprising new contract price of $280 per metric ton, 13% above a level agreed to in late January.
The new price for Indian Potash Ltd. was set as of Monday, the Belarusian exporter known as BPC said on its website, noting “this settlement was made possible thanks to the weighted approach to business and common aspiration towards balanced and sensible development of the potash market demonstrated by the parties to this agreement.”
ICL Group Ltd., a Tel Aviv-based minerals and chemicals company, also agreed to sell 600,000 tons of the fertilizer to Indian Potash for the same price -- $50 above its previous contract.
Other major suppliers are expected to settle contracts at $280 per ton with all major Indian buyers, BMO Capital Markets analyst Joel Jackson said Monday in a report.
Shares of potash producers rallied after the rare mid-season price hike. ICL surged 6% in Tel Aviv to its highest since February 2019, while Nutrien Ltd., the biggest fertilizer producer, was up 0.9% at 4 p.m. in Toronto trading. U.S. producer Mosaic Co. fell 0.6% in New York after earlier climbing as high as 3.8%.
“We expect potash stocks to rally near term,” Scotia Capital analyst Ben Isaacson said in a note, adding “it sets a new reference for those that have not signed with China, suggesting the new Chinese contract price could be in the $270 to $280 range.”
Potash prices have rebounded from last year’s lows after a global rally in food prices boosted demand. Farmers’ incomes have also increased in the past year, boosted by surging crop prices on the back of strong demand from China and pandemic-related government stimulus.
BPC agreed in January to ship 800,000 tons of potash to India at $247 a ton, sparkling criticism from global rivals that said they wouldn’t sell at that price. BPC signed a one-year supply deal with China in February that matched the India pricing.
“The new contract confirms that the price announced at the end of January was in no way reflective of the market-based pricing in the current key offshore potash markets,” Nutrien Chief Executive Officer Chuck Magro said in an emailed statement. “Today’s price increase is a clear indicator of a tightening global potash market.”
READ: Belarusian Potash Sale to India Raises Price-Cap Concerns
“This is a unique situation as India had never previously changed the price of its deals with potash producers before,” Elena Sakhnova, an analyst at VTB Capital, said in a phone interview. “The decision is wise as it allowed BPC to be the only one to sell to India for two months and now they have a higher price.”
Sakhnova said it’s quite possible BPC will review its price with China as well.
BPC declined to comment on whether it’s seeking to revise prices for China. An IPL spokesperson didn’t respond to phone calls seeking comment.
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