Israel Chemical Strikes Deal With China

January 25, 2013 02:58 AM


A group of Chinese companies have inked a deal with Israel Chemicals Limited (ICL). The agreement is for the sale of 660,000 tons of potash during the first half of 2013 as part of a 3 year, 3.3 million ton agreement.

$400 per ton appears to be the magic number for K in the minds of Chinese buyers. Late last year, China held out on Canadian Potash at $470 per ton and recently purchased 1 million tons at $400. This is well below the price agreed upon by China and Canpotex in March. Uralkali has announced it has also recently sold 1 million tons of Potash to a Chinese company for $400 per ton.

Regarding price, Israel Chemicals reports, "The sale price in the signed agreements is similar to the price recently determined in transactions executed with other Potash suppliers to the Chinese market."

Experts have suggested that China's hesitation in the fall to place an order for Canadian Potash at $470 per ton was a leverage move, hoping increased Canadian inventory would pressure pricing to the downside. When Canpotex agreed to $400 per ton, and Uralkali did the same, China purchased a mere 1 million tons at the bargain basement price from each, signaling the entire maneuver may have been little more than China flexing its muscle in the global market to drive K pricing lower.

Meanwhile, PotashCorp of Saskatchewan has been hoping to increase it's 14% stake in Israel Chemicals Limited, but sources inside Israel say a deal with PotashCorp is not likely as it would be perceived as a sale of one of the tiny nation's most lucrative resources.


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