Israel Chemicals Ltd. (TASE: ICL) has signed contracts with Chinese customers for the delivery of 550,000 tons of Potash during the second quarter of 2012, with an option for additional deliveries of 120,000 tons. It said that the contracts were at the same price as the contracts signed in the second half of 2011 - $470 per ton, which means that the deals are worth $258.5 million, and could grow to $277.3 million.
Last year, Israel Chemicals signed contracts with Chinese customers for the sale of 500,000 tons of potash at $470 per ton. The company partly attributes the increase in quantity to the fact that it sells directly to manufacturers and distributors who can more accurately estimate demand than brokers.
The contracts follow similar potash contracts in China by Canada's Canpotex and Russia's Belarus Potash Company (BPC). The Chinese have bought 1.8 million tons of potash in just one quarter, including 400,000 tons from BPC, with an option for an additional 100,000 tons, and 500,000 tons from Canoptex, with an option for an additional 200,000 tons. The Chinese ordered 1.3 million tons of potash in 2011, which will be consumed by mid-year. In 2010, Israel Chemicals marked China as a strategic market, and invested resources to expand in it.
Israel Chemicals is due to sign contracts with Indian customers, as the current contracts expire by the end of March. The signings have been delayed, partly because the Indian government asked importers to postpone deliveries scheduled for the first quarter by a couple of months because of large potash inventories at the ports. This delay could have a brief adverse affect on the company's financials for the first quarter.
Israel Chemicals' share price rose 0.4% by mid-afternoon to NIS 43.67, giving a market cap of NIS 55 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2012
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