In the first half of 2013, the import price of potash fertilizer dropped significantly, with Potash Corp. of Canada announcing a deal to supply 1 million tons of potash at $400 per ton to Sinofert Macau Offshore Business Services Co., Ltd., a subsidiary of Sinochem Fertilizer Holdings. This marked a 15% decrease compared to the contract price in March 2012, which stood at $470 per ton. The agreement, signed for the period from January to June 2013, surprised many in the industry, even though it was expected that negotiations would conclude before the Spring Festival.
Despite the drop, the final price remained within the expectations of most market participants, and industry insiders believe this could be the lowest point for the year. Looking back at previous years, China's import prices for potash were higher: in 2010, BPC, a major Russian potash exporter, negotiated a contract at $350 per ton; in 2011, the CIF price reached $400 per ton; and in March 2012, China signed a deal with Canpotex at $470 per ton. This year’s $400 per ton reflects a slight decline but still shows a relatively stable trend.
During the negotiations, China aimed for a lower price of $350 per ton, while foreign suppliers pushed for $450. The final agreement represented a compromise between both sides. Wang Tao, Manager of the Potash Fertilizer Department at China National Agriculture Group Holdings Co., Ltd., noted that domestic potash prices had fallen by RMB 400 per ton in 2012, dropping from RMB 3,050 to RMB 2,650. He also highlighted that the import price fell by 70% compared to the March 2012 level, indicating China’s growing influence in the global potash trade.
Wang Tao believes that as China’s domestic potash production capacity increases, it will gain more leverage in international markets. He also expects the price of potash fertilizer to stabilize in the coming months. With the import price now set, the market has a clearer picture of where the bottom lies, and industry observers anticipate a gradual increase in supply starting in late February, peaking in April.
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