LONDON (ICIS)--Russian potash miner Uralkali has agreed to sell another 300,000 tonnes of Muriate of Potash (MOP) to Indian Potash Limited (IPL), taking its total volume agreed with India’s largest potash buyer, Indian Potash Ltd (IPL), to 1.1m tonnes, for the current fiscal year (April 2014-March 2015), market sources told ICIS late Thursday.
The supplier is also understood to be talking to other buyers in India for another 350,000 tonnes which could take its total volumes in India to 1.45m tonnes in the current fiscal year, the sources added.
The price for the entire volume has been fixed at $322/tonne CFR (cost & freight), Uralkali confirmed.
Earlier this week, Uralkali had confirmed that it concluded a contract with IPL for 800,000 tonnes firm of potash deliveries between April 2014 and March 2015 at $322/tonne CFR, and was working on further deals.
The agreed price is at a sharp discount (13-25%) to the previous contract price of $369-427/tonne CFR but is in line with market expectations. In January, the Chinese MOP price was settled at $305/tonne CFR, and Indian prices are typically at a $15-20/tonne premium to China.
Prices of the crop nutrient have tumbled since 31 July 2013 when Uralkali exited its partnership with Belarus’ Belaruskali. Since the split, both suppliers have focused on gaining market share, which has resulted in international potash prices sliding by around 20% in key markets.
India was also able to get a discount on MOP prices in September 2013, and agreed with suppliers to pay $369-375/tonne CFR for remaining shipments against an earlier agreed price of $427/tonne CFR.
Other suppliers including North America’s Canpotex, Minsk-based BPC, Israel Corporation Limited and Jordan’s APC are expected to hold meetings with Indian buyers over the next week and finalise contracts at around the same price.
There are expectations that Indian MOP imports will remain unchanged at around 3.5m tonnes in the current fiscal year, compared to the previous year.
The country’s import levels are not likely to increase, despite lower potash prices globally, as the government reduced its subsidy on MOP by 17% or Indian rupees (Rs) 2,000/tonne to Rs 9,300/tonne from 1 April to lower its fiscal deficit.
Earlier today, Uralkali said it produced 2.93m tonnes of KCI (potassium chloride) in the January-March 2014, up around nearly 41% from 2.08m tonnes in the corresponding period of the previous year. The number is also up 4.6% from the 2.8m tonnes of KCl that Uralkali produced in Q4 2013.