After selling India potash at $370 a tonne last year, a Russian company is bargaining hard to get $500 a tonne from Indian Potash, the largest Indian importer of mineral fertilizers.
Indian Potash had bought 900,000 tonne of Muriate of Potash (MoP) for deliveries in 2010-11 at $370 from Belarusian Potash Company (BPC), a leading global potash exporter.
BPC on Wednesday signed a contract with Chinese company Sinochem and CNAMPGC for delivery of MoP at $470 a tonne. Taking this as the benchmark, BPC was now looking at the Chinese price as a benchmark for export of the product to India. “The fact that we have signed the (Chinese) contract means that we are satisfied with the price. As far as the Indian contract is concerned, we plan to conclude a contract with Indian partners till the end of third quarter of 2011. The supposed price can exceed $500 a tonne,” BPC spokesman Filipp Gritskov told Business Standard in an e-mail response.
Indian Potash Managing Director P S Gahlaut was recently quoted in media reports as saying they would not be paying more than China. BPC, a joint venture trader of Uralkali and Belaruskali, will deliver 5 lakh tonne of MoP between July 1 and December 31 to China with a potential for exporting another 2 lakh tonne.”
The $470 price has been fixed on a cost and freight (CFR) basis. Indian importers had been negotiating with global potash suppliers to tie up contracts. Since India consumes more than 5 million tonne of potash for use as fertiliser input, it had been seeking a 10 per cent discount over the prevailing international rates. The government has fixed $420 as the benchmark price for potash import for the purpose of calculating subsidy. The price is higher than $370 that the Indian importers paid last year.
India consumes more than 30 per cent of global potash production. Russian company Uralkali more than doubled contract prices to India in 2008-09 but in the following year, India managed to bargain hard to bring down the price.
Correction
This article had mentioned that billionaire Dmitry Rybolovlev controls Uralkali, but the company has clarified that it is not controlled by Rybolovlev for a year now. The error is regretted.
