India, the "enigma" of the potash sector, signed the first
of what is expected to be a clutch of long-awaited import deals, but signalled
volumes which fell short of some market hopes.
The country, the world's second-largest potash importer,
agreed to buy 1.0m tonnes of the nutrient at $427 a tonne from Belarusian
Potash Company, which handles export for Belaruskali and Russia's Uralkali.
While the price paid for the fertilizer, for delivery in the
year to January 2014, was a little higher than some commentators had expected,
and notably more than the $400 a tonne which top importer China paid in deals
signed last month, the volume suggested supplies will remain tight in India.
India, which imported some 3.5m tonnes of potash last year,
has in recent deals sourced most of its requirements from Belarusian Potash
Company and Israel Chemical.
The country's potash buyers have purchased a smaller
proportion from Canpotex, the North American potash marketing giant, which
handles sales for Agrium, Mosaic and PotashCorp.
In fact, said PS Gahlaut, managing director at Indian Potash,
the country's top importer, was reported as saying that total volumes for the
current round of deals would total 3.5m tonnes, in line with 2012 levels.
This would be below the levels of "at the very least 3.8m
tonnes" foreseen by broker AltaCorp, while standing at the bottom of a range of
3.5m-4.5m tonnes which PotashCorp last week forecast India's full-year purchases.
PotashCorp chief executive Bill Doyle told investors then: "We
believe shipments to India will increase from 2012's depressed levels due to
limited inventories in that country, but anticipate there will continue to be a
major gap between its actual consumption and the scientifically recommended
application levels it requires to improve their lagging crop yields."
India's imports "need to be up in the 10m, 11m tonne range" to ensure applications at appropriate levels,
according to Mr Doyle, who said that Indian farmers were applying nine times as
much nitrogen as potash, compared with a 3:1 ratio in the US.
Mr Doyle's comments came as he termed India "an enigma, a
country that would truly benefit from balanced fertility, but is not fully
India's potash consumption has been hurt by a drop in subsidies,
and a weakening of more than 20% in the rupee against the dollar since the last
potash import contracts were sealed in summer 2011.
Then, India paid $479 a tonne.
The latest talks have been signed follows talk that the
budget for the financial year starting in April will include a reduction in the
potash subsidy, and minimum retail price, in expectation of settling cheaper
supplies this time.
While Wednesday's deal follows extensive talks with potash producers, a contract had been seen as likely once China agreed its own deal last month, setting a benchmark for other settlements.