Uralkali Exporter to Supply 600,000 Tons of Output to China

Russian potash producer Uralkali said on Thursday its Belarusian Potash Co (BPC) export joint venture will supply 600,000 tons of output to two major Chinese buyers at $400 per ton.

Analysts at Troika Dialog said this was a 14% year-on-year increase.

BPC, the joint venture trader for Uralkali and Belaruskali, controls more than 30% of global exports, and the price hike shows that improved demand is once again allowing it to flex its muscles on the international market.

The contract, which includes cost and freight (CFR), will run from Jan 13 to June 30. Sinochem and CNAMPGC are the buyers. Spot potash prices, which soared above $1,000 per ton before the 2008 downturn, are currently at $430 per ton CFR, according to Troika.

The bank's analysts expect prices to rise further this year.

"We believe that potash producers will pursue measured price increases over 2011 from the current $430/ton CFR to around $500/ton by year end, so it makes sense for China to sign a deal and not procrastinate," they wrote.

This is the first time China has switched to semi-annual contracts.

Uralkali is in the process of merging with domestic rival Silvinit to create the world's number two producer behind Canada's Potash Corp.