Russian potash miner Uralkali (MCX:URKA), the world’s largest producer of the fertilizer ingredient, said Tuesday it has signed a one-year sales deal with India’s largest importer, which pay $322 for a metric ton of the soil nutrient.
The price, the lowest in seven years, is also about 25% below the levels reached last year with the now defunct Belarusian Potash Co., which Uralkali owned jointly at the time with Belaruskali.
According to analysts, the contract to sell 800,000 metric tons to Indian Potash Limited between now and March 2015, signals a firming of prices and a possible end to the uncertainty in the potash market.
Potash prices had fallen more than 25% from $400 a ton last summer, after Uralkali left the trading partnership with Belarus, effectively ending an informal global pricing cartel that used to control about 43% of global exports.
Demand for potash in India has declined in the past few years as the rupee has depreciated and government subsidies have fallen.
“We hope that the contract will help stimulate potash application rates in India, and support the country’s agriculture at the time of continued population growth and rising food demand. We expect that the conclusion of the Indian contract will boost the global potash market growth,” said Oleg Petrov, Uralkali’s director for sales and marketing.
In January, Uralkali signed a first-half deal with a Chinese agro-chemical consortium to sell 700,000 metric tons at $305 per ton. China is the world’s biggest consumer of potash and contracts signed there have been viewed as setting the price for the global market.
