Belarus begins war with Russia in global fertilizers market
Saudi oil dumping tactics seem to be a contagious example for Belarus, which competes with Russia in the supply of potash fertilizers.
The Belarusian potash company - the trading subsidiary of Belaruskali - has sharply reduced prices for consumers in China.
On April 30, the company announced that it had entered into a contract with a consortium of Chinese buyers (Sinochem, CNAMPGC, CNOOC) at a price of $220 per ton. Compared to the previous contract, Belarusian fertilizers fell by $70 per ton, or almost 32%.
The company noted that the deal "creates a solid foundation for stabilization, recovery and subsequent progressive development of the global potash market."
Russia's rival, Uralkali, may be forced to completely abandon supplies to China because of the low price offered by Belarus, according to the company's statement published on Tuesday.
"Potassium producers bear high investment costs associated with maintaining existing production facilities and developing new fields. This is necessary to meet the growing global demand for fertilizers. At the same time, the conclusion of contracts at prices similar to those of Belaruskali will reduce the investment costs of companies in the long term and eventually lead to a shortage of potassium chloride in the market," Uralkali said, as cited by finanz.ru.
"In this regard, the company will have to decide whether it is ready to enter into contracts at this price," the press service of Uralkali said.
Uralkali has traditionally been the first to enter into long-term supply contracts with the largest customers - China and India. But this time the deals have been delayed due to the coronavirus pandemic and excess of fertilizers in the Chinese market, where reserves exceed 3.5 million tons.
Uralkali’s contract with India ended on March 31. The Russian government has reduced subsidies for the purchase of fertilizers, which is likely to lead to a reduction in imports.
Last year, Uralkali sold fertilizer to India at $280 per ton. This year the price will have to be reduced to 230-235 dollars.