* 9-month deal worth $345 million
* In discussions with other Indian customers
(Adds analyst comments, background)
By Steven Scheer
JERUSALEM, July 20 Israel Chemicals (ICL)
(ICL.TA), the world's sixth-largest potash maker, said on
Monday it signed a deal to supply 750,000 tonnes of potash to
an unnamed Indian customer at $460 a tonne.
Israeli financial news web site TheMarker.com named the
customer as Indian Potash Ltd (IPL). It noted the price is more
than 26 percent below its prior contract.
The nine-month deal is worth $345 million and replaces a
previous agreement that ended in April calling for the supply
of 850,000 tonnes of potash for one-year.
"This ... should help establish $460 a tonne as a new
benchmark for potash prices," Citi analyst Sophie Jourdier
wrote in a client note.
"We expect other potash exporters -- K&S, BPC, Canpotex
and APC -- to sign contracts with IPL during the next few days.
Beyond that, second tier Indian potash buyers... are also
likely to sign contracts. We expect all Indian contracts to be
priced at $460 a tonne."
She added that all eyes will then turn to the China
"We believe a similar price level ... will be agreed in
China," Jourdier said.
ICL, a maker of fertiliser and specialty chemicals and the
second-largest company traded on the Tel Aviv Stock Exchange,
in a statement to the Tel Aviv Stock Exchange said its ICL
Fertilizers unit was in discussions with additional potash
customers in India.
Last week, ICL denied it signed a contract with an Indian
company after the head of India's IFFCO said it had agreed to a
deal at $460 a tonne.
Days earlier, Russian producer Silvinit SILV.RTS entered
a deal to supply India with 850,000 tonnes of potash -- well
below the $625 to $635 range that all other major producers had
"The volume ICL has secured with IPL is lower than last
year. This is partly due to the settlement occurring later in
the year, and partly because Silvinit has taken more than its
normal share in India through agreeing to sign first," Jourdier
The price of potash -- a key crop nutrient -- has remained
stubbornly high even as demand has collapsed, as a small group
of companies, which account for roughly 75 percent of global
supply, cut production drastically to try to maintain pricing.
But concern that the producers' hard line was softening hit
potash company stocks after the Indian-Silvinit deal.
ICL's shares ended down 0.2 percent at 38.42 shekels, off
its year high of 47.20 shekels.
Jourdier rates ICL as a "buy" with a price target of 45
"We believe there is further recovery potential in Israel
Chemical shares given the company's low-cost production,
expansion potential, strong balance sheet and generous dividend
policy," she said.
(Editing by Tim Dobbyn)