In the first half of the year, the import price of potash dropped by 15%, according to recent reports. Potash Corp. of Canada recently announced an agreement with Sinofert Macau Offshore Business Services Co., Ltd., a subsidiary of Sinochem Fertilizer Holdings Co., Ltd., to supply 1 million tons of potash fertilizer at $400 per ton from January to June 2013. This is a significant decrease compared to the $470 per ton contract signed in March 2012, marking a 15% reduction.
Although industry experts had anticipated that the contract negotiations would conclude before the Spring Festival, the final result on New Year’s Day still surprised many. However, the price was not as low as expected and fell within the range of most market predictions. Many in the industry believe this could be the lowest price seen for some time.
Comparing this deal to previous years, in 2010, China and Russian potash exporter BPC agreed on a contract price of $350 per ton for 1 million tons of potash. In 2011, the CIF price was set at $400 per ton, and in March 2012, China signed a deal with Canpotex at $470 per ton. This year's agreement shows a slight decline, settling at $400 per ton.
During the negotiations, China aimed for a contract price of $350 per ton, while foreign suppliers pushed for $450 per ton. The final outcome reflects a compromise between both sides.
Wang Tao, manager of the Potash Fertilizer Department at China National Agriculture Group Holdings Co., Ltd., noted that the domestic price of potash fertilizer fell by RMB 400 per ton in 2012, dropping from RMB 3,050 to RMB 2,650. The import contract price also saw a sharp decline, falling by 70% compared to the March 2012 rate. Wang believes this demonstrates China’s growing influence in the global potash trade.
He also expects that as China increases its own potash production capacity, it will gain more leverage in international markets. Additionally, Wang anticipates that potash prices will stabilize in the coming months.
With the import price of potash now finalized, the market has a clearer outlook. Industry sources predict that the 2013 contracted supplies of potassium chloride will begin to flow in late February, reaching a monthly peak in April.
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