The following is an excerpt from Canaccord Genuity’s Morning Coffee report.
According to The Wall Street Journal, Indian Potash Ltd. has renegotiated an annual contract for the import of roughly one million tonnes of potash at a 12%-plus discount.
An Indian Potash spokesman was quoted as saying the original deal was contracted at $427 a ton.
Uralkali did not comment on the news. Reuters reported earlier this month that potash suppliers had agreed to cut prices for Indian buyers on existing contracts to help them cope with the impact of a weaker rupee, although the size of the contract still needs to be agreed.
A price cut of more than 12% was noted in several media articles. The Indian rupee has fallen by around a fifth since Indian companies signed agreements in February, which has pushed up the local price of the dollar-denominated crop nutrient.
India is the second biggest buyer of potash after China.
Canaccord Genuity AG Analyst Keith Carpenter notes that with buyers largely on the sidelines and producers aggressively attempting to place tonnage, global pricing has weakened further.
Pricing into Brazil declined US$20 per tonne to US$350/360 per tonne, while European pricing declined by 15 euros to 320-340- euros.
No recent import activity was reported into Malaysia and Indonesia. While it was previously announced that the Indian contract price decreased to US$375 per tonne, some buyers continue expecting prices to decline to US$350 per tonne.
Uralkali was reported to already have shipped a third of its optional 500,000 tonne contracted into China and the company commented it will ship a further 500,000 tonnes by the end of the year.
Reports suggest the company has substantially increased its market share in China, attaining 50% versus 29% reported in July.
Potash Corp. of Saskatchewan
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) (NYSE: POT
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) shares rose 2% Tuesday to $32.89, leaving a market cap of $28.4 billion, based on 864.5 million shares outstanding. The 52-week range is $45.13 and $29.67.