India Agrees Potash Imports, Ending Fraught Talks
Fraught and protracted negotiations between Indian potash buyers and North American producers have ended in a six-month deal which will, unusually, see the first supplies shipped at the same price that China is paying.
Canpotex, the North American potash marketing consortium, has agreed to resume shipments to India in the October-to-December, following often ill-tempered talks over price stretching back to the start of the year.
The deal was announced by Mike Wilson, chief executive of Agrium, one of the Canpotex members, who said he was "pleased to announce that overnight Canpotex settled with its contract customers in India".
"We are pleased that this negotiation has come to a conclusion and [that we] are now in a position to supply our key contract customers."
Price mechanism
Mr Wilson declined to reveal volumes covered by the deal, but said that they were split evenly between the last quarter of 2011 and the first quarter of 2012.
But he said the price had been set at $470 a tonne, including freight, for the first period, "similar" to the price that China settled for in a June deal.
Typically India, as the second-ranked potash importer, pays some $20-a-tonne more.
However, India will pay $530 a tonne in the second period. In February, it had been holding out for a price of $390 a tonne.
Mr Wilson added that "the fact that India has settled should significantly tighten this [potash] market up", at a time when producers are already struggling to meet demand.
'Extraordinarily frustrating'
The deal comes amid reports that farmers in India, which had been expected to import some 6m tonnes of potash this year, were running extremely short of the nutrient as buyers such as Indian Potash held out for a better deal.
Even so, a deal had not been seen as imminent given the status of talks which Bill Doyle, the chief executive of PotashCorp, described last week as "extraordinarily frustrating for everyone involved", adding that he did not expect a resumption of negotiations until September.
"It's been a little like a dog chasing its tail this year. They [Indian buyers] never quite caught up with their tail because they always wanted the price that was four months ago, but the market keeps changing," Mr Doyle told investors.
PotashCorp is, with Mosaic, also a member of Canpotex.
Source: agrimoney.com
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