* 9-month deal worth $345 million
* In discussions with other Indian customers (Adds analyst comments, background)
By Steven Scheer
JERUSALEM, July 20 (Reuters) - 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 market.
"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 proposed.
"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 wrote.
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 shekels.
"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)