Belarusian Potash, China agree 1m-tonne MOP contract at $350/t

Author: Carl Roache

2009/12/23

LONDON (ICIS news)--Belarusian Potash Co (BPC) has agreed to supply Chinese importers with potassium chloride (MOP) at $350/tonne (€245/tonne), a source with the potash fertilizer exporter said on Wednesday.

The agreement is understood to reflect a price decline of around $270/tonne from Belarusian Potash’s 2008 contract with the Chinese buyers.

The contract covers the shipment of 1m tonnes firm, plus an optional 200,000 tonnes during 2010. It is the first contract agreed by the Chinese importers on a cost and freight (CFR) basis.

At current freight rates, the deal would equate to around $290/tonne FOB (free on board) Baltic, although Belarusian Potash said it would seek to secure a freight contract that would bring the number to $300/tonne FOB.

In 2008, Belarusian Potash agreed to supply the Chinese importers 1m tonnes of MOP at a price understood to reflect around $570/tonne FOB Baltic.

The global potash market has been awaiting the key benchmark Chinese agreement to be settled all year.

Its absence has created great uncertainty in the market. Along with low demand, this has led to continued pressure on MOP prices in all regions.

In July, the major Indian contract was agreed at $460/tonne CFR, including 180 days’ credit.

However, MOP prices continued to fall after this agreement as buyers questioned the producers’ claim this was a floor price.

Buyers in several regions, including Europe, said they now expect lower MOP prices to be set.

Belarusian Potash exports MOP on behalf of Russian potash supplier Uralkali and Belarusian producer Belaruskali.

Traditionally, Chinese potash import agreements are led by Sinofert and China National Agricultural Means of Production Group Corp (CNAMPGC), on behalf of the Chinese government.

($1 = €0.70)

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