One of the world’s largest potash producers — Uralkali may refuse a long-term contract with China because of too low price for the market asked Belarus. National trader BPC agreed on the supply of potassium in 2020, with a fall in the value of almost a third. This price cannot provide investment manufacturers, according to the Russian company.”Uralkali” declared that the commercial conditions in which the Belarusian potash company (BPC, the trader of “Belaruskali”) has signed an agreement with China for the supply of potassium do not reflect the real market situation at the moment and in the future. The contract price for 2020 was $220 per ton $70 per ton (31.8 per cent) below the level of the previous contract. The volume of shipments is not disclosed. According to BPC, the cost of a new Chinese contract “creates a strong Foundation for stabilization, recovery and subsequent progressive development of the global potash market.”At the same time, Uralkali, who for many years traditionally, the first signed contracts with China and India leading the trend all over the market, are going to think, if he would be there to sign the agreement to supply the Chinese importers BPC at a certain price.The Russian company noted the instability of the market and referred to as “difficult” position of all parties in view of the current volatility and adverse forecasts for the recovery of the potash industry. In the company explain that its own goal is to build business processes at a high level, which in turn requires certain indicators. “In this regard, the company will have to decide whether it is ready to make contracts at this price”,— stated in the message.A similar situation has evolved in 2018. Then CCL has agreed to supply potash to China for $290 per tonne, Uralkali was considered too low, as almost immediately thereafter the raw material on the spot market rose. The company said that the cost of the contracts with China and India must not be below $300 per tonne, and has contracted in volume several times less than traditional.”Manufacturers of potassium are high investment costs associated with maintaining existing production capacity and develop new fields. This is necessary to meet the growing global demand for fertilizer. The conclusion of contracts at prices similar to the agreed CCL, in the long term would reduce investment expenditure and eventually to the deficit of potassium chloride in the market,”— noted in the Russian manufacturer.On long-term contracts in the potash market (traditionally subscribe to only the largest consumers — China and India) affect our policies.IALA pandemic coronavirus. Because of her consumption in China fell, while stocks in the country remained high (about 3.5 million tons). In turn, in India, the contract with which Uralkali ended March 31, the government reduced subsidies for the purchase of fertilizers, which according to analysts, will affect the volume of purchases. According to experts “VTB-Capital”, Indian importers can agree on the procurement of potassium in the second half of 2020 at a price of $10-15 / tonne higher than the level of Chinese contract.Olga Matushenko
