January 17, 2013 / 9:05 AM / 5 years ago

UPDATE 1-Israel Chemicals signs 3-year China potash supply deals

* To supply 660,000 tonnes to China in first half of 2013

* Price in line with recent deals by other potash suppliers

TEL AVIV, Jan 17 (Reuters) - Israel Chemicals (ICL) has signed framework agreements to supply 3.3 million tonnes of potash to its customers in China over the next three years.

The selling price for each semester will be set in line with prevailing market prices in China, ICL said on Thursday.

As part of these agreements, ICL committed to deliver to China 660,000 tonnes of potash in the first half of 2013. The price will be in line with recent deals completed by other potash suppliers to the Chinese market, ICL said.

On Tuesday, Russian and Belarussian potash producers agreed to sell up to 1 million tonnes of the fertiliser to Chinese importers at $400 per tonne.

In December, three North American potash producers struck a six-month agreement to supply the crop nutrient to a subsidiary of China’s Sinofert Holdings at a discount of $70 per tonne from the last contract price. The previous contract price was believed to be $470 per tonne.

The majority of the potash that ICL sells to China is produced from Israel’s Dead Sea and exported through the Red Sea port of Eilat. This gives ICL a logistical advantage for shipping potash to southeast Asia as compared to most of its competitors, the company said.

In 2010, ICL began selling directly to fertiliser producers and distributors in China and as a result, it increased the number of its Chinese customers.

“The scope of these multi-year framework agreements with our customers in China demonstrates once again China’s need for significant quantities of potash to feed its huge and rapidly growing population,” Dani Chen, chief executive of ICL Fertilizers, said.

ICL, the world’s sixth-largest potash producer, is controlled by conglomerate Israel Corp. Canada’s Potash Corp, the world’s largest fertiliser producer, owns 13.9 percent of ICL.

Potash Corp last year began talks with Israeli officials on acquiring ICL so it can shore up its leverage with China and India, which are expected to drive much of the industry’s growth. 

ICL shares were up 0.3 percent to 47.50 shekels in morning trade, compared with slight declines in the main Tel Aviv indices.

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