Belarussian Potash Co says fertilizer market recovering

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Belarussian Potash Co (BPC), a joint venture between potash producers Uralkali and Belaruskali, expects the fertilizer market to recover this year, allowing it to lift some premium prices that have fallen in the last few months.

BPC, whose prices help set a benchmark for the crop nutrient's market, raised its spot price for Brazilian buyers by $15 to $465 per tonne last month after cutting the price in January for Chinese importers to $400 from $470 and signing a deal with Indian buyers at $427/tonne in early February.

"The potash fertilizer market is indeed recovering. The market conditions allowed us to revise prices for Brazilian importers," BPC Chief Executive Valery Ivanov said in an e-mailed reply to questions from Reuters.

"We do not rule out that we will have a chance to review our prices in other regions as well."

Potash contracts with big importers like China and India typically set a floor for global prices, with spot buyers like Brazil paying a premium.

BPC's Indian and Chinese deals covered supplies of 1 million tonnes each and Ivanov said he expected to sign additional sales contracts with other companies from those countries.

"Of course, we expect prices to rise in future contracts," he said.

Industry insiders and analysts have said BPC and main rival Canpotex Ltd, both of which have been forced to accept lower prices in long-term contracts this year, face supply challenges from new mines planned by BHP Billiton Ltd, K+S AG and a raft of junior players, as well as pressures from buyers smelling an opportunity to seek deals on more favourable terms.

The two control some 70 percent of world potash exports.

Potash is a nutrient that improves yields of corn, rice, palm and other crops, which boomed in the past decade as incomes and food demand in developing countries rose.

Prices soared in 2008, prompting an unsuccessful, $39 billion bid for Potash Corp of Saskatchewan, the world's biggest producer by capacity, from global mining giant BHP Billiton.

They fell back in 2009 and bottomed out in 2010 as farmers balked at sky-high prices. Potash recovered modestly in 2011 before drifting lower last year.

While most in the industry continue to see strong demand growth long into the future, some question whether there is too much new capacity being readied, a case that has gained momentum with the recent lackluster prices.

Ivanov said he expects global potash fertilizer sales to rise to 53-54 million tonnes this year from 49 million to 50 million tonnes in 2012.


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