By Rajendra Jadhav and Tova Cohen
MUMBAI/TEL AVIV (Reuters) - Israel Chemicals (ICL)
ICL's decision could pressure other key producers such as Russia's Uralkali
Indian Potash Ltd (IPL), one of that country's biggest fertiliser importers, is buying around 600,000 tonnes of potash at $227 per tonne on a cost and freight (CFR) basis with a credit period of 180 days, said the industry sources, who declined to be named.
The price is a third lower than last year. In late June, Belarus agreed to supply 700,000 tonnes of potash at the same rate to India, one of the world's top buyers of the material.
Following Reuters' story, ICL issued a statement citing "media reports on the matter" and confirmed the first agreement for the sale of potash to India was signed on Monday. "Additional agreements are expected to be signed in the coming days," it said, providing no details of quantities or prices.
Shares in ICL were up 2.3 percent at 15.24 shekels at 1105 GMT, outpacing a gain of 0.3 percent in the Tel Aviv blue chip index.
"Some certainty has been restored to the market now that the contract with India has been signed," said Yehonatan Shohat, an analyst with brokerage Leader Capital Markets.
He noted that last year ICL sold a total of 800,000 tonnes of potash to Indian customers and he expects the company will reach around that amount this year when it signs the additional contracts.
Uralkali, the world's biggest potash producer, has said the price agreed by Belarus was too low and it was not yet ready to sign a potash supply contract with India.
But Indian officials have said $227 was the new benchmark. Prices were as high as $490 three years ago.
"Already two producers have agreed this price. It is not possible for India to offer a higher price," said one of the sources involved in the latest deal.
India and China, the world's biggest fertiliser consumers, usually sign contracts earlier in the year. This year, deals were delayed as high stocks held by farmers in the wake of falling prices for agricultural commodities meant there was no rush to agree a deal.
India's deal is a rare instance of the country signing a potash supply contract with a major producer before China.
Shohat does not expect potash prices to recover in the coming year. "There is stagnation or even a decline in the amounts of potash being bought relative to 2015 and I don't see capacity cuts by potash producers during the year," he said.
(Editing by Joseph Radford/Mark Heinrich)
