Uralkali to decide benchmark prices of international potash on the basis of Indian market instead of China

MOSCOW: Uralkali, one of the world's largest potash producers, today said that it would decide benchmark prices of international potash on the basis of the Indian market instead of China.

" India consumes a lot of potash and it does not have domestic production and this makes sense for us to have Indian market as benchmark for potash prices," Uralkali CEO Vladislav Baumgertner told reporters, here.

Traditionally, China has established the 'floor price' for export contracts, he said.

"But now, the importance of the Chinese market for potash producers in general has been diminishing. So it does not make sense for us to have China's benchmark, with relatively small amount of potash imported via sea route," he noted.

Normally, contracted deliveries of potash fertiliser via the sea route are viewed as the benchmark for rest of the world.

India, which is dependent entirely on imports to meet the current demand of around six million tonnes, has contracted around five million tonnes of potash at USD 490/tonne and USD 530/tonne rates, while China has contracted supplies of the fertiliser at USD 470/tonne.

Stressing that India continues to be the most active market for global potash suppliers, Baumgertner said demand for potash in India is seen growing above the global growth rate of 3-3.5 per cent per annum.

"There is huge scope for demand growth in India, as its potash consumption is lower than the developed countries. It is still below the level recommended by agricultural science," he said.

On the contrary, Baumgertner said that China's dependence on global supply of potash is expected to decline, with a likely increase in its local production to up to 8 million tonnes in the couple of years, he said.

On potash exports to China this year, the CEO said, "China imports 5 million tonnes of potash annually. This year, Uralkali would be able to deliver 2 million tonnes via the rail route and the remaining 3 million tonnes through sea."

China is the world's leading consumer of potash, with annual demand of around 11 million tonnes. Of this, local production accounts for around six million tonnes.

Uralkali exports potash through its trading arm, Belarusian Potash Company (BPC). The company aims to produce 10.8 million tonnes of potash this year and is targeting total sales of 11 million tonnes, out of which 9.2 million tonnes would be exported to overseas markets.