Israel Chemicals sells potash to India at decade-low price -sources (updated)

Chambal Fertilisers and Chemicals

11/07/2016 12:44

(Adds ICL confirmation deal signed, analyst comment, share 
reaction) 
    By Rajendra Jadhav and Tova Cohen 
    MUMBAI/TEL AVIV, July 11 (Reuters) - Israel Chemicals (ICL) 
 ICL.TA  will ship potash to India at the same decade-low price 
agreed by another big seller last month, two industry sources 
said, at a time when global supply of the crop nutrient is 
exceeding demand. 
    ICL's decision could pressure other key producers such as 
Russia's Uralkali  URKA.MM  and North American trading group 
Canpotex Ltd, owned by Potash Corp of Saskatchewan  POT.TO  
 POT.N , Mosaic Co  MOS.N  and Agrium Inc  AGU.TO , to consider 
offering potash at similar prices. 
    Indian Potash Ltd (IPL), one of that country's biggest 
fertiliser importers, is buying around 600,000 tonnes of potash 
at $227 per tonne on a cost and freight (CFR) basis with a 
credit period of 180 days, said the industry sources, who 
declined to be named. 
    The price is a third lower than last year. In late June, 
Belarus agreed to supply 700,000 tonnes of potash at the same 
rate to India, one of the world's top buyers of the material. 
 urn:newsml:reuters.com:*:nL8N19J2SY 
    Following Reuters' story, ICL issued a statement citing 
"media reports on the matter" and confirmed the first agreement 
for the sale of potash to India was signed on Monday.  
"Additional agreements are expected to be signed in the coming 
days," it said, providing no details of quantities or prices. 
    Shares in ICL were up 2.3 percent at 15.24 shekels at 1105 
GMT, outpacing a gain of 0.3 percent in the Tel Aviv blue chip 
index. 
    "Some certainty has been restored to the market now that the 
contract with India has been signed," said Yehonatan Shohat, an 
analyst with brokerage Leader Capital Markets. 
    He noted that last year ICL sold a total of 800,000 tonnes 
of potash to Indian customers and he expects the company will 
reach around that amount this year when it signs the additional 
contracts. 
    Uralkali, the world's biggest potash producer, has said the 
price agreed by Belarus was too low and it was not yet ready to 
sign a potash supply contract with India.  urn:newsml:reuters.com:*:nL4N19K2S6 
    But Indian officials have said $227 was the new benchmark. 
Prices were as high as $490 three years ago. 
    "Already two producers have agreed this price. It is not 
possible for India to offer a higher price," said one of the 
sources involved in the latest deal. 
    India and China, the world's biggest fertiliser consumers, 
usually sign contracts earlier in the year. This year, deals 
were delayed as high stocks held by farmers in the wake of 
falling prices for agricultural commodities meant there was no 
rush to agree a deal. 
    India's deal is a rare instance of the country signing a 
potash supply contract with a major producer before China. 
    Shohat does not expect potash prices to recover in the 
coming year. "There is stagnation or even a decline in the 
amounts of potash being bought relative to 2015 and I don't see 
capacity cuts by potash producers during the year," he said. 
 
 (Editing by Joseph Radford/Mark Heinrich) 
 ((rajendra.jadhav@thomsonreuters.com; +91-22-6180-7153 ; 
Reuters Messaging: 
rajendra.jadhav.thomsonreuters.com@reuters.net)) 
 
Keywords: ICL POTASH/INDIA