Uralkali Trading Signs Independent Potash Tender to China

August 1, 2013 04:34 AM

The news of Uralkali's departure from the Belorussian Potash Company (BPC) had been looked upon skeptically by some. Potash stocks worldwide crashed on fears of oversupply from FSU potash producers earlier this week. But Uralkali appears to be serious about going forward without BPC as evidenced today by news that Uralkali has already secured a tender with China for 2013railtrack potash shipments. The sendout is only half of the 1 million tons originally tendered through the BPC consortium, but suggests Uralkali is more than able to make deals on its own.

Uralkali accounts for roughly one fifth of the world's total potash production with the bulk of its sendouts headed for China and Latin America. Uralkali officials have been very vocal about the reason for the split.

"It has always been Uralkali's position that export activities of both producers should go through the unified sales network," said company CEO, Vladislav Baumgertner. But Belaruskali is reported to have sold potash outside BPC which was against the guidelines of the partnership. "We have repeatedly informed our Belarusian partners that such actions were unacceptable and they have ultimately destroyed the fundamentals of our prolonged fruitful cooperation. In this situation, we have to redirect our export deliveries through our own trader," Mr. Baumgertner said.

Some industry watchers believe the two FSU former partners will patch things up and restart the partnership. But Uralkali Trading Company has already made sales for this year to China on its own, and with China's support, Uralkali should have no problem going it alone. The breakup is expected to inspire production at or near capacity for each of the two producers and the resulting oversupply will lower potash prices worldwide.

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