India's second-largest importer of potash Zuari Agro Chemicals Ltd. (534742.BY) expects to renegotiate annual import contracts for the key fertilizer ingredient at a discount by this month, a move that is likely to induce other major global buyers including China to seek cheaper imports.
"The new rates should come in by this month," Suresh Krishnan, the company's managing director told The Wall Street Journal on Tuesday.
The company had inked import deals of around 800,000 tons for this year, which was originally contracted at $427 per ton. Out of this, about 400,000 tons have already been imported.
The renegotiated contract price for the remaining 400,000 tons is likely to be around $375 per ton.
If the deal comes through, Zuari would become the second Indian potash buyer to re-negotiate import prices at a discount. Indian Potash Ltd, the largest importer, said late last month that it has renegotiated annual import contracts totaling about one million tons.
The potash market has been in disarray since Russian producer Uralkali decided to leave a trade partnership with Belarus, effectively ending an informal global pricing cartel. Buyers have mostly remained on the sidelines until new pricing levels became clear.
Indian buyers, who form the second biggest buyer group after China, have sought discounts on their current contracts. They say a slide in the value of the rupee currency against the dollar since early May had made imports more expensive for them.
India meets its potash requirement entirely through imports.
For years, potash--a potassium-based fertilizer ingredient that helps strengthen plant roots--has been sold mostly through two global marketing groups. Belarussian Potash Co., one of the groups, included Uralkali and Belaruskali OAO of Belarus, while North American giant Potash Corp. of Saskatchewan Inc. led the second group.
The two groups, which controlled two-thirds of the $22 billion global potash market between them, used to set almost identical prices in major markets.