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UPDATE 2-China pays more in new potash deal with Russia, Belarus
June 29, 2011 / 9:17 AM / 6 years ago

UPDATE 2-China pays more in new potash deal with Russia, Belarus

* Price per tonne up $70 since H1 contract

* Volumes decline with end of stockpiling season

* No contract with India since expiry of last deal in April

(Updates with BPC comment, price comparison to first-half contract, background on switch to half-yearly contracts)

By Natalya Shurmina and Andrei Makhovsky

YEKATERINBURG, Russia/MINSK, June 29 (Reuters) - Belarusian Potash Company, the agent for Uralkali and Belaruskali, has sold potash to two Chinese fertiliser importers at prices $70 a tonne higher than in the first half.

The contract, for 500,000 tonnes and an option for 200,000 tonnes, priced the deliveries at $470 on a cost-and-freight basis.

“The latest contract with Chinese importers will be a new price benchmark which will undoubtedly influence both spot prices and long-term contract prices,” BPC Chief Executive Vladimir Nikolayenko was quoted as saying in a statement.

China and India are two of the top buyers served by the trader, a joint venture between Belaruskali and Russia’s Uralkali, newly merged with larger rival Silvinit, which handles 30 percent of world potash supply.

The trade house has yet to make a new sales deal with Indian buyers, even thought the last one ran out in April.

It is expected to sign a deal to supply potash to a major Indian buyer at considerably above $500 per tonne, a source close to the talks told Reuters.

The source did not provide any details on the time frame or the volume for the deal.

BPC switched to six-month contracts with some key term buyers this year after negotiations for previous years’ sales stretched well into the calendar year.

The second half contract was priced higher than the $400 in the first half contract, though contract volumes were less in the second half of the year, when stockpiling of fertiliser is less intensive.

BPC said the contract was signed with Chinese state-owned oil and chemicals company Sinochem and CNAMPGC -- the largest Chinese importers of mineral fertilisers.

Belaruskali suffered a flood at a potash mine, it said on Wednesday without providing details. It said the mine was operating but the impact on output was unclear.

The Emergencies Ministry in Minsk said Belaruskali was handling the accident on its own.

Uralkali suffered a flood at a key mine in 2006 which cost it $218 million in costs such as the construction of a new railway.

Potash, a yield-boosting nutrient in high demand as global consumption of agricultural commodities increases with the world population, is also a major natural resource and export commodity for both Russia and Belarus.

Uralkali’s chief executive said on Tuesday that Belaruskali was an attractive acquisition target, though a deal is unlikely in the near future. (Reporting by Natalya Shurmina; writing by Melissa Akin; Editing by Hans-Juergen Peters and Anthony Barker)

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