Potash may be the subject of a "flurry of buying", driving a "strong rebound" in sector share prices, after China agreed a second import deal for the fertilizer, this time with former Soviet Union producers, AltaCorp analysts said.

Belarusian Potash Company - the marketing consortium for Belarus-based Belaruskali and Russia's Uralkali - revealed it had agreed to sell up to 1.0m tonnes of potash to Chinese buyers for $400 a tonne in the first half of the year.

The deal followed a similar agreement with Canpotex, the North American potash marketing consortium, two weeks ago - for 1.0m tonnes also at $400 a tonne for the January-to-June period – a contract which followed months of wrangling on deal terms.

And, even if the prices of the deals was below market expectations, the elevate volumes evident in both contracts should boost sentiment, Canada-based broker AltaCorp said.

'Strong rebound in demand'

"Given the large size of these two contracts, we suspect this should start a flurry of buying as concerns about securing sufficient supply for the spring planting season may start to emerge," AltaCorp analyst John Chu said.

"We believe these two contracts will set the stage for a strong rebound in potash demand and put a halt to sliding potash prices."

Evidence of a pick-up in demand, and restocking of inventories, should "see a strong rebound in the sector's share price performances", Mr Chu added.

BPC's last agreement with China, unveiled in March last year, was for 500,000 tonnes, with Canpotex winning orders for 700,000 tonnes.

'Positive signal'

Tuesday's deal was welcomed as "a positive signal for the global potash market" by Oleg Petrov, the Uralkali director for sales and marketing, who said it would set a floor price for the nutrient, and heralded "significant delivery volumes".

China, as the top potash importer, typically wins the keenest prices for its deals, with second-ranked India - which sent a delegation to Belarus last week, but is believed to have failed to strike a deal - now expected to settle for about $420 a tonne.

Canpotex has issued prices for South East Asian spot markets of $450 a tonne for standard grade potash, and $460 a tonne for granular grade,

Meanwhile, China is expected soon to settle deals with Israel's ICL, whose last contract was for 670,000 tonnes, and Jordan-based APC.

'Good buying opportunity'

The BPC contract comes the day after Uralkali unveiled production figures for last year of 9.12m tonnes of potash, a fall of 15.8%, and reflecting "lower capacity utilisation at the beginning and at the end of the year".

Many potash producers took downtime at mines in an effort to marry better output with demand which proved depressed for much of the year, reduced in latter months by uncertainty ahead of the sealing of the Chinese contracts.

Uralkali's output figure was "immaterially below our 9.43m-tonne forecast", analysts at VTB Capital said, forecasting that 2013 would be "much better" for Uralkali, following the deals.

"We continue to see Uralkali as a good buying opportunity at the $35-36 level" for its depositary receipts, the broker said, restating a "buy" rating, and a price target of $46.60.

The receipts closed in London at $37.66, a decline of 1.3% on the day.