* India to buy potash at $322/T on CFR vs $427 last year
* Suppliers such as Canpotex likely to match Uralkali's
* Indian demand to remain subdued on subsidy reduction
* The price is $17 above the price for China
(Changes source, adds Uralkali comment, details on IPL)
By Rajendra Jadhav and Polina Devitt
MUMBAI/MOSCOW, April 1 India has agreed to buy
potash from Russia's Uralkali at the lowest price in
seven years and about 25 percent less than last year's level,
Russian company said on Tuesday.
The bargaining power of buyers has increased since Uralkali,
the world's largest potash producer, broke away in July from a
sales alliance with Belarus - Belarusian Potash Company - with
global potash prices falling more than 20 percent.
"We hope that the contract will help stimulate potash
application rates in India, and support the country's
agriculture at a time of continued population growth and rising
food demand," Oleg Petrov, Uralkali head of sales, said in a
One of India's biggest fertiliser importers - Indian Potash
Limited (IPL) - has agreed to buy 800,000 tonnes of potash at
$322 per tonne on a cost and freight (CFR) basis in the year
starting April 1.
A year ago India had agreed to pay $427 per tonne but
subsequently persuaded the supplier to cut prices to $375 a
tonne after a slump in the Indian rupee and the drop in global
spot potash prices.
"We have agreed on the price (for 2014/15). Now we are
negotiating volume," one of the Indian buyers told Reuters
earlier on Tuesday.
A team of Uralkali sales officials is in India to finalise
deals for more than 1 million tonnes with several customers, a
senior fertiliser industry official has said.
Uralkali declined to comment on when other deals with Indian
customers, which agree on the same price every year, were
expected to be signed.
Uralkali's contract price is likely to emerge as the
benchmark for other suppliers to India, such as the powerful
North American trading group Canpotex Ltd, owned by Potash Corp
of Saskatchewan , Mosaic Co and Agrium
Other potash producers that supply India include Germany's
K+S AG, Jordan's Arab Potash Co and Israel
"Uralkali is keen to sell as much as it can to Indian
buyers. There is competition among suppliers to corner Indian
share," a senior official at a Mumbai-based fertiliser company
"Since Uralkali has set a price, I think Canpotex will also
seal deals this month," the official said.
Uralkali said it had expected that the conclusion of the
Indian contract would boost the global potash market growth.
DEMAND IN INDIA
Despite the drop in global prices, Indian potash imports are
likely to remain subdued this year as local prices will remain
elevated due to the government's decision to cut potash
subsidies by nearly a fifth.
India, which relies on overseas supplies to meet its entire
potash demand, has cut potash subsidies for the year that
started on April 1 in an effort to contain a ballooning fiscal
The country has accounted for about a tenth of global
shipments over the past five years, but its share has been
slipping as local prices rise due to subsidy cuts and a weaker
India's potash imports should remain largely steady around
3.5 million tonnes in 2014/15 due to the subsidy cut, P.S.
Gahlaut, managing director of Indian Potash Ltd, the country's
biggest importer, said last month.
In January, Uralkali slashed prices for China, the world's
largest potash consumer, by 24 percent to $305 per tonne, hoping
to set a new floor for global prices.
India usually pays a slightly higher price for potash than
China due to additional freight and as it seeks shipments in
(Reporting by Rajendra Jadhav in Mumbai and Polina Devitt in
Moscow; editing by Dale Hudson and Keiron Henderson)