Sinochem extends deal to buy North American potash

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

China's state-owned conglomerate Sinochem Corp said on Friday it has extended an agreement to buy potash from North America's Canpotex Ltd by one year, setting the stage to negotiate a global floor price for the slumping crop nutrient market.

Sinochem said that Canpotex - owned by Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc - would supply the greater of 1 million tonnes of potash, or a third of China's seaborne potash imports in 2014. Under the agreement, Canpotex will continue to sell potash in China exclusively to Sinochem.

BMO Nesbitt Burns analyst Joel Jackson said that the term is intriguing, since such Sinochem agreements have typically been for three years.

"Really, Canpotex's market in China hasn't really grown in the last few years," Jackson said. "It would seem that they're keeping their options open over the mid term."

Potash Corp Chief Executive Bill Doyle has mused this year about potentially selling to multiple Chinese buyers in the future.

Among the companies controlled by Sinochem is Sinofert Holdings Ltd, China's largest fertilizer supplier and distributor.

The actual price at which Canpotex will supply potash to Sinofert has yet to be negotiated, and Potash Corp's Doyle said this month that he expects a Chinese supply contract by the end of January.

A spokesman for Potash Corp, which accounts for the largest share of Canpotex shipments among the three partners, was not immediately available.

The price Sinofert pays for potash usually establishes a global floor price, on which contracts for Indian buyers and spot sales to other countries, such as Brazil, are based.

Potash prices have slumped this year as grain prices tumbled well off their highs and Canpotex rival Belarusian Potash Company broke up this summer.

The last contract between Canpotex and Sinofert, which lapsed in summer, was to supply 1 million tonnes of potash for the first half of 2013 at an estimated $400 per tonne.

The Sinochem-Canpotex agreement includes a $350 million cap on 1 million tonnes, but that doesn't mean China is willing to pay $350 a tonne, Jackson said. Jackson expects China's seaborne contracts to pay $290 per tonne in 2014.

The average price for standard muriate of potash in Southeast Asia was $345 per tonne, down from $455 a year ago, according to data as of Dec. 6 on Mosaic's website.

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

NORAC UC4.5™ & UC5™ Precision Spray Height Control

NORAC offers two Spray Height Control systems that can be installed on most sprayer models. UC5™ is an ISOBUS system ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form