* Says contracts priced in the range of $700/tonne
* Key contracts with India, China still to come
* Potash Corp shares up 3.3 pct (Adds analyst comments, background; in U.S. dollars unless noted)
TORONTO, July 9 (Reuters) - Potash Corp of Saskatchewan POT.TO POT.N said on Thursday its export consortium Canpotex has signed a contract with customers in Korea and Taiwan covering potash shipments for the second half of 2009.
Potash Corp, the world’s largest fertilizer maker, said the new contract that varied based on the grade of potash, priced in the range of $700 a tonne on a delivered basis.
Last month, Canpotex signed a contract with Japanese customers covering shipments for the second half of 2009, which were priced at similar levels.
The price of potash — a key crop nutrient — has remained stubbornly high even as demand has collapsed, as a small group of companies, which account for roughly 75 percent of global potash supply, have drastically cut production in a bid to maintain pricing.
Analysts and investors are keenly awaiting the outcome of contract negotiations with China and India, as global potash spot market prices are typically pegged above these key contract prices.
“Due to small volumes, these transactions (with Korea and Taiwan) are not expected to have a meaningful impact on price discovery to larger markets such as China and India, as well as Brazil and Southeast Asia,” BMO Capital Markets analyst Edwin Chee said in a note to clients.
Most analysts now expect these contract prices to decline this year in light of the collapse in demand. The contracts with the two Asian giants are likely to close some time in the next two months.
China is the world’s largest potash buyer and it typically negotiates annual contracts with Belarussian Potash Co (BPC) and Canpotex, at a substantial discount to spot market prices.
BPC is a 50-50 joint venture between Russia’s Uralkali (URKA.MM) and Belaruskali, while Canpotex is a partnership between Potash Corp, Mosaic Co (MOS.N) and Agrium Inc AGU.TO. These five companies along with K+S SDFG.DE and Russia’s Silvinit SILV.RTS account for about 75 percent of global potash supply.
Shares of Potash Corp were up 3.3 percent at C$108.85 on the Toronto Stock Exchange on Thursday afternoon.
$1=$1.16 Canadian Reporting by Euan Rocha; editing by Rob Wilson