Russia's Uralkali sees flat H1 potash supply to China

23.09.2014
Polina Devitt and Andrey Kuzmin / Reuters (USA)

Russia’s Uralkali (URKA.MM), the world’s largest potash producer, expects volumes to China to remain flat or rise slightly in the first half of 2015, the company’s head of sales told Reuters.

The company hopes to increase the price in the new contract by 10 percent from the $305 per ton on a cost-and-freight (CFR) basis of the previous contracts, Oleg Petrov said in an interview at the Reuters Russia Investment Summit.

China is the world’s largest consumer of the crop nutrient, and its contracts are seen as a benchmark by most participants in the market. Potash prices are gradually recovering after Uralkali broke a powerful trading alliance with Belarus in 2013.

“The pace of market recovery has exceeded our expectations,” Petrov said. Negotiations over the new contract with China for the first half of 2015 are expected to start in October and to end by January.

“We expect a price rise on contract markets — in China and India; spot market reaction will depend on many factors,” Petrov said at the summit, held at the Reuters office in Moscow.

Uralkali’s contract with India lasts until February.

Uralkali quit the trading alliance with Belarus in July last year to focus on maximizing sales volumes, triggering a slump in global potash prices. Before the collapse of the alliance Uralkali was supplying potash to China at $400 per ton.

Since it started trading on its own, the company has regained its export market share of 23 percent and refocused its strategy on maximizing revenue.

Asked whether the company would want to cooperate with privately-held Russian fertilizer maker Eurochem, which starts its own potash production in Russia in 2017, he said that he sees “potential for cooperation in terms of trading”. Petrov did not elaborate.

Global potash deliveries are expected to rise by 1-2 million tonnes from this year’s 59 million tonnes, Petrov added. The company sees its own output flat in 2015. In 2014, it plans to produce between 11.5 million and 12 million tonnes.

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