24 June 2011 16:44 [Source: ICIS news]
LONDON (ICIS)--Uralkali will stop marketing a portion of its potash production through fellow Russia-based International Potash Company (IPC) and will instead sell all its exports through Belarusian Potash Company (BPC), the fertilizer giant said on Friday.
The new terms of Uralkali’s agreement with IPC mark 31 December 2011 as the last day of the exporting partnership between the two companies, a year earlier than previously agreed.
A reason for the change was not disclosed, but traders and potash buyers have expected this announcement for some time. Until this month’s Uralkali-Silvinit merger, IPC and Agrofert were the marketers for Silvinit product.
Several potash buyers expressed concern about the fate of IPC during the long lead-up to the Uralkali merger because it appeared a more cogent business strategy for Uralkali to market all potash through BPC, which is well established in handling in excess of 12m tonnes/year of product since it sells both potash and nitrogen internationally.
The Uralkali merger created a potash producing giant which will have a production capacity of 13.1m tonnes/year of potash starting in 2013. This will outpace - at least for a short while - the capacity of Canada’s Potash Corporation Saskatchewan (PCS), which has a current capacity around 11m tonnes/year.
PCS markets its export product strictly through Canpotex, along with fellow Canada-based Agrium and Mosaic. In 2010, Canpotex marketed more than 8m tonnes of potash, and the company says it has a 35% share of the international market.
The changes in the Eastern European potash market, which include expansion projects to come online in the near future in Russia, could help BPC to eventually become as significant a marketing entity as Canpotex.
What will happen to IPC remains unclear as IPC executives could not be reached for comment. IPC has been active in the foreign trade of potash for 15 years, mostly doing spot business in recent years, and it has sold into more than 80 countries worldwide.
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