June 28, 2016 / 8:22 AM / a year ago

India expects potash miners to offer decade-low price after Belarus deal

MUMBAI, June 28 (Reuters) - Leading global potash producers, including Russia's Uralkali, are likely to supply the crop nutrient to India at the same price Belarus agreed, a key Indian negotiator with overseas suppliers told Reuters.

Belarus on Monday agreed to sell 700,000 tonnes of potash to Indian Potash Limited (IPL) at $227 per tonne, the lowest price in a decade.

"Uralkali has very good relations with Indian buyers. We are hopeful that it will agree to $227," said P.S. Gahlaut, managing director of IPL, the country's biggest importer.

The contract price with Belarus is too low, and Uralkali, the world's biggest potash producer, is not yet ready to sign a potash supply contract with India, said a company spokesman.

"We cannot offer a higher price to any supplier. If they insist, then we can postpone purchases," Gahlaut said.

Usually, the first contract is signed by a major producer and then it becomes a benchmark for other miners. In the past, all suppliers have agreed over the price negotiated in the first contract.

This year, the price agreed upon by Belarus is a third lower than last year, and a few suppliers feel it is too low.

"Belarus agreed to a lower price in a hurry," said an official with a leading potash miner.

Major potash suppliers to India include Uralkali, Potash Corp of Saskatchewan , Agrium Inc, Mosaic, K+S, Arab PotashCo and Israel Chemicals.

Indian companies could sign contracts for another 3 million tonnes in the next few weeks, if other suppliers offer the same price, said an official with a Mumbai-based fertiliser company.

Rashtriya Chemicals and Fertilizers Ltd (RCF), IFFCO and Chambal Fertilisers and Chemicals, and Tata Chemicals are among the key potash buyers in India.

India has nearly 1 million tonnes of carry-forward stocks of potash as last year's drought trimmed consumption, Gahlaut said.

"Carry-forward stocks and the supply of 700,000 tonnes from the new contract are sufficient to cater the demand for next 3-4 months," he said.

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 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. (Additional reporting by Polina Devitt in MOSCOW; Editing by Sherry Jacob-Phillips)

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