China’s influence on the international potash market may be tempered, if it starts to sign shorter-term contracts. One industry executive says he thinks the country’s officials will move to using more quarterly contracts rather than year-long buying agreements. Calling annual contracts “nonsensical,” Bill Doyle, PotashCorp President and CEO, says he believes such long-term contracts are detrimental to global food production.
In late December, Belarusian Potash Co. (BPC) signed a contract with Chinese importers for 1.2 million tons of potash at a price of $350 per ton, CFR, to be delivered January through December of 2010. Canpotex Ltd., the export marketing arm of the Saskatchewan potash producers, is set to meet with the Chinese next week. Doyle says it may be the second half of this year before an agreement is concluded, and it will not agree to a price as low as $350 per metric ton. “We did learn to live without China last year. That was instructive.”
He says China’s potash consumption will start to recover this year but will grow considerably in 2011 and beyond. “China will be at least 75-percent dependent on imports of potash going forward, and will need our new capacity to fill their needs in the not-too-distant future.”
He cites International Plant Nutrition Institute forecasts that China will go from needing 10 million metric tons (mmt) to some 26 mmt in 15 years.
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