By Rod Nickel
NEW YORK May 14 Spot market prices for the crop
nutrient potash are rebounding after some of the world's biggest
fertilizer consuming countries signed contracts at deep
discounts, according to Potash Corporation of Saskatchewan
"Basically, what we've done is re-set the market price and
seen the spot markets increase since the contracts were signed,"
Chief Executive Bill Doyle said by video broadcast to the BMO
Farm to Market conference in New York.
With increases of $50 to $70 per tonne, spot markets look
set for further, modest price growth, Doyle said.
Doyle said the company was seeing prices of $470 per tonne
for potash in Southeast Asia for the third quarter, and prices
approaching $450 a tonne on a delivered basis in Brazil.
A lack of buying by China and India in the second half of
2012 weighed down prices for potash, which boosts yields of
crops like corn and rice. Chinese buyers signed a new six-month
supply contract on Dec. 31 with Canpotex Ltd - the offshore
sales agency for Potash Corp, Mosaic Co and Agrium Inc
- and Indian buyers signed a deal for the rest of 2013
in early February.
China and India typically negotiate contracts at a discount
to spot prices that buyers in other countries pay.
Potash Corp expects global potash shipments to rebound in
2013 to 55 to 57 million tonnes, up from 51 million tonnes last
year, and multiple years of further growth.
But Doyle said prices are far from the levels necessary to
justify building new mines.
Doyle said it would be a "colossal mistake" for BHP Billiton
Ltd to give the final go-ahead to its 8-million tonne
potash mine in Western Canada, because the economics don't make
A BHP spokesman declined to respond to Doyle's comments.
German rival K+S AG warned last month that its
Canadian potash project would cost more and take about six
months longer than planned to open, while U.S.-based Mosaic this
week shelved plans to expand Canadian potash production further.
Potash Corp has spent the past decade expanding its mines in
the Canadian provinces of Saskatchewan and New Brunswick.