Uralkali Looks to India for Supply Deal Ahead of China

Bloomberg reported that Uralkali (MCX:URKA,LSE:URALL) may opt for a supply deal with India ahead of China for the first time since 2008, which may mean a price increase. China, being the biggest consumer of potash, usually makes the deal first, providing a benchmark price for the year and with India paying a premium.

As quoted in the market news:

China’s potash demand was 14 million metric tons last year, when the market hit a record 62 million tons, Uralkali’s press service said today, updating last-month estimates. The country last signed contracts at $305 per ton in January 2014 covering the first half of the year, later prolonging them to year-end.

Potash imports by India, the world’s second-largest producer of sugar, rice and wheat, may jump as much as 22 percent to 5 million metric tons in the year starting April 1 from a year earlier, P.S. Gahlaut, managing director of Indian Potash Ltd., said in an interview on Feb. 4. That would be the highest since 2010-11, according to Fertiliser Association of India data.

Oleg Petrov, chief of sales for Uralkali, commented:

China may have around 4.5 million tons of stockpiles now. We saw higher levels in the past but still this is far from the 2.5 million-ton level which is seen as more comfortable for the new contract. On top of this we saw Belarus shipping four cargoes in January to China. Some of those volumes went to the market, some stay in the port, but still this is delaying the opportunity for the new deal.

Click here to read the full Bloomberg report.