Canpotex sells potash to India at 13 pct discount Thu Feb 7, 2013 12:03pm EST
* Sells 1.1 mln tonnes through 2013 at $427/tonne * Similar to India deal with BPC By Rod Nickel Feb 7 (Reuters) - Canpotex Ltd, the offshore selling agencyfor leading North American potash miners, has signed a newpotash supply contract with Indian buyers at a smaller thanexpected 13 percent discount. The deal to supply India with the crop nutrient for theremainder of 2013 ends a long standoff by Indian buyers thatdented profits for producers like Potash Corp of SaskatchewanInc, one of the miners represented by Canpotex. Thestandoff caused North American supplies to pile higher thannormal. Canpotex also represents Mosaic Co and Agrium Inc. Shares of Potash Corp, which supplies nearly half ofCanpotex's potash, were mixed in New York and Toronto aroundmidday. Mosaic and Agrium stock eased slightly. Canpotex said on Thursday it will sell about 1.1 milliontonnes of the crop nutrient to Indian buyers up to January 2014at a price of $427 per tonne, including costs and freight. Thedeal is similar to one announced a day earlier by Canpotex rivalBelarussian Potash Co (BPC), which will sell 1 million tonnes ofpotash to Indian buyers at the same time. The Canpotex-India deal comes at a price that is higher thanestimates that averaged $416 per tonne in a Jan. 17 Reuters pollof North American analysts. It is however,believed to be a discount of about 13 percent from the lastcontract with India, signed in August 2011. "The closure of this contract and stabilized (demand) untilthe end of the year is really important," said Rick McLellan,senior vice-president of commercial sales for Mosaic, in aninterview. "The Brazil and North American markets are going tobe big markets for us, so it's one more piece of momentum forthe overall potash market." Mosaic makes up a little over 40 percent of Canpotex'spotash product. Canpotex did not identify the buyers, but key Indian potashusers include Indian Farmers Fertiliser Cooperative, CoromandelInternational, Tata Chemicals and ZuariGlobal. The deal is positive for potash markets, said analyst SteveHansen of Raymond James. It confirms that potash prices hit afloor with the lower-priced Canpotex deal with China at the endof December, and should help draw down producers' inventories,he said. New supply contracts with China and India, top consumers ofthe crop nutrient, were initially expected by late summer.Canpotex announced a new six-month supply contract with China'sSinofert Holdings Ltd on Dec. 31 to sell 1 milliontonnes of potash at an estimated $400 per tonne. The deal with India gives Canpotex producers a slightlybetter net return per potash shipment than the China contract,McLellan said, after accounting for factors like highertransportation costs to India. "The need to move the volume was there and this was a goodprice," he said. "We've established a lower price and there'sprobably upside from here in the spot markets." Potash contracts with China and India typically set a floorfor global prices, with spot buyers like Brazil paying apremium.