ICL agrees on potash contracts with Chinese buyers

10:16 AM | May 11, 2020 | Natasha Alperowicz

ICL Ltd. (Tel Aviv, Israel) says it has signed several contracts with its customers in China to supply a combined 910,000 metric tons of potash, with options for additional 490,000 metric tons, by the end of 2020. The selling price is $70/metric ton below previous contracts and is in line with recently settled contract prices in China, ICL says. The contracts form part of a three-year framework agreement signed in 2018 between ICL and its Chinese customers.

 

The contracts follow a similar agreement signed between Belarus Potash Co. (BPC; Minsk), one of the world's biggest suppliers of potash fertilizers accounting for about 20% of the total export market, and a consortium of Chinese buyers including Sinochem, CNAMPGC, and CNOOC, for potash deliveries during 2020. The new contract price is $220/metric ton, a $70/metric ton decline on the previous contract.  

 

BPC says the price of the new contract with China provides a solid foundation for the stabilization, restoration, and development of the worldwide potash market, but Uralkali (Berezniki, Russia), another major potash player, strongly disagrees. In a statement issued following the BPC announcement, Uralkali said the commercial conditions agreed on by BPC with China do not reflect the real market situation that is developing or its outlook. “The price that has been agreed is not appropriate either for the length of that particular contract, or for the industry as a whole,” Uralkali says. The company adds that potash producers incur high investment costs to maintain existing production capacities and develop new deposits. “If contracts are agreed at the price levels agreed by BPC, in the long term this will drive producers to cut their capital investment and, ultimately, will lead to a shortage of potassium chloride in the market,” the company says.

 

ICL Ltd. is the new name of the former Israel Chemicals.