(Bloomberg) -- Russia's Uralkali PJSC became the first global potash miner to sign supply agreements with India for next year, at a price that may be encouraging for fertilizer makers.
Uralkali marked the start of the contracting season by agreeing to deliver the nutrient to Indian Potash Ltd. between this October and March 31, the Russian company said Friday. The price was set at $280 a ton, said two people familiar with the matter, who asked not to be identified as the information isn't public.
The price that major users India and China agree with one producer is then typically used in contracts with other suppliers. While the rate is $10 below this year's level that was set for India and China by Belarusian Potash Co., it's beneficial for producers, said BCS Global Markets analyst Oleg Petropavlovskiy. That's because it's a smaller drop than seen in spot markets.
Uralkali didn't disclose the price, saying only that it was set at market levels. The accord “gives a fair reflection of current conditions in the global potash market,” Alexander Terletskiy, head of Uralkali's trading unit, said in a statement.
Potash prices in countries with spot markets, like Brazil, fell roughly 13% this year to about $310 a ton. Uralkali didn't have contracts with India and China for this year, the first time that happened in at least decade, because of low prices.
New deals should provide a floor for the market until the Chinese contract settles, which is likely to be at the end of the fourth quarter, Alexis Maxwell, research director for Bloomberg Green Markets, said on Oct. 24, when speculation about new rates emerged.
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--With assistance from Aoyon Ashraf.
To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Liezel Hill
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