After snubbing an autumn contract for four million tons of potash from Canpotex, China has agreed to purchase one million tons at a significantly reduced price. Earlier pricing points had been set at $470/ton. Canpotex reports that a deal was signed with Sinofert on December 31 at $400/ton. Inventories of potash in Canada have skyrocketed in wake of the autumn refusal, and forced PotashCorp into production shutdowns.
With the purchase of one million tons, Sinofert has a long way to go before filling the ten million tons it needs annually to grow its next crop and this hints that the Chinese may be piecemeal price-shopping for K. Had Sinofert purchased more than just one million tons the implication would be that a bottom dollar had been set. As it stands, China's move suggests they may see more room to the downside in K pricing ahead, and are comfortable resupplying hand-to-mouth for the time being.
In the U.S., downstream suppliers are beginning to make purchases in anticipation of the spring application season. Much of the market has been waiting for cues to restock, and while China's one million ton order indicates Canpotex is a seller at $400/ton, the size of the order does more to affirm Sinofert's confidence that potash pricing may fall farther in the coming months.