PotashCorp Criticises Low BPC Potash Price Settlement

1 February 2010 (Last Updated February 1st, 2010 18:30)

Potash Corporation of Saskatchewan (PotashCorp) has criticised the potash price finalised by Belarusian Potash (BPC) with Chinese importers for being too low, saying that fertiliser prices are expected to recover later in the year. BPC agreed to sell potash at $350 a metric tonne to Ch

Potash Corporation of Saskatchewan (PotashCorp) has criticised the potash price finalised by Belarusian Potash (BPC) with Chinese importers for being too low, saying that fertiliser prices are expected to recover later in the year.

BPC agreed to sell potash at $350 a metric tonne to Chinese clients, while another company - Israel Chemicals - agreed in mid-December to sell potash at $355 a tonne to China National Offshore Oil, according to Bloomberg.

PotashCorp, along with Mosaic and Agrium, are part of a Canadian export group known as Canpotex that is in talks with Chinese clients over potash prices.

PotashCorp CEO William Doyle said Canpotex had refused to sell potash to Chinese buyers at similar terms as those agreed to by BPC and Israel Chemical.

"From the BPC and maybe even the ICL point of view, I think they will both come to regret their contracts with China by the time the second half of the year rolls around," Doyle said.

"These settlements will go down as absolutely the low point.

"To tie in at this pricing level for the whole year would have been a mistake for us.

"BPC have proved to be a bit of a panic seller."

Canotex and China, which are expected to resume negotiations next week, may not reach a consensus until the second half of the year.

In 2008, potash prices in some parts of the world increased to $1,000 a tonne before plunging as farmers reduced purchases due to a slump in grain prices.