Belarusian potash marketer BPC, the world’s largest exporter of fertilizers, has inked a deal with a consortium of Chinese companies who agreed to buy the commodity for $220 a tonne, a $70 per tonne decline on the previous contract.
Supply contracts to China and India traditionally are benchmarks for the fertilizers market. Last year, however, Beijing did not sign new deal due to the oversupply of stocks.
“Although this underlines the magnitude of spot price erosion since 2018, it nevertheless sets a new floor for the market, CRU senior potash analyst, Humphrey Knight, told MINING.COM.
“Suppliers will now hope this finally brings stability to
weak spot prices and ultimately tightens global product availability, Knight
said.
BPC noted the difficult macroeconomic conditions in which negotiations took place, citing sharp devaluations in local currencies, historic collapses in oil prices and other commodities, and the ongoing effects of covid-19.
Stockpiles first
Potash stockpiles are at record high and exporters will likely
want to clear them as soon as possible, the expert said. This means it will be
months before China requires significant fresh supply and, as a result, spot
prices will respond in late 2020.
BPC, the trading division of state-owned miner Belaruskali,
controls more than 20% of the global market.
The consortium of Chinese buyers includes state-owned
Sinochem’s fertilizer arm, Sinofert, China National Agricultural Means of
Production Group and state-owned CNOOC.