Russia potash row seen causing market tumult before price drop

Wed Aug 28, 2013 9:57am EDT
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By Niu Shuping and Rajendra Jadhav

BEIJING/MUMBAI Aug 28 (Reuters) - The global potash market faces short-term turbulence due to a dispute between major exporters Russia and Belarus before a definitive collapse of the sector's once-mighty cartel brings prices for the fertiliser ingredient down sharply.

Belarus this week detained the chief executive of Russia's Uralkali, the world's top potash producer, accusing him of inflicting severe economic damage.

Moscow demanded the release of the CEO, Vladislav Baumgertner. Uralkali controls 20 percent of the world market and is partially owned by Suleiman Kerimov, a billionaire with close ties to Russian President Vladimir Putin's administration.

"We are very concerned as to how things will develop next. Chinese firms must have suspended signing any deals before the situation becomes clear," said a Chinese industry source familiar with the strategies of potash buyers.

The detention is an escalation of a business dispute between the two countries over the future of potash sales. Some key importers are now thinking about suspending talks on purchasing until the matter is clarified.

Belarus also put four managers from Uralkali on Interpol's wanted list, including sales head Oleg Petrov. It remains unclear whether he can travel to China or India, two of the world's biggest users of the crop nutrient, for talks.