Israel Chemicals Ltd. (TASE: ICL) today notified the TASE that it has signed contracts with Chinese customers for the supply of 660,000 tons of potash through June 2013. "The price of sale in the contracts signed is similar to price recently set in transactions with other potash suppliers for the Chinese market," said the company.
The statement presumably refers to the November 2011 contract by Canadian potash cartel Canpotex's contract with China, which set a price of $400 per ton. On this basis, Israel Chemicals' contract is worth $264 million.
Israel Chemicals added, "These agreements are part of the framework agreement recently signed with the customers for the supply of 3.3 million tons of potash over the next three years. The prices for the quantities to be supplied under the framework agreement will be set on the basis of prevailing potash prices at the relevant dates of delivery to the Chinese market."
Israel Chemicals said that although ICL Fertilizers operates potash mines in Spain and England, most of the potash it sells to China is produced from the Dead Sea and exported through Eilat. This gives ICL Fertilizers a logistical advantage for shipping potash to Asia compared with most of its competitors.
In 2010, ICL Fertilizers adopted a new sales and marketing strategy in China, to sell directly to fertilizer producers and distributors. This strategy has increased the number of customers in China and expanded the basket of products that it sells to the Chinese market, as demonstrated by the 2013-15 framework agreements.
ICL Fertilizers president and CEO Dani Chen said, "The Chinese potash market, which is slowly growing to become the world's largest potash market, is again consuming large quantities of potash to ensure a sufficient crop for China's huge population. The increase in the number of our Chinese customers, the expansion of our potash products line, and the framework agreement to supply more than three millions tons of potash over the next three years express the success of our policy to consolidate our position as a key supplier to the growing Chinese market. We greatly appreciate the confidence the customers have given us, and we promise to continue to be efficient, creative, and reliable in the future to strengthen and consolidated this confidence."
In November, Canpotex, which includes Potash Corporation of Saskatchewan Inc. (NYSE; TSX: POT), Agrium (TSX; NYSE: AGU), and Mosaic Company (NYSE: MOS), signed a contract with Chinese customers at a substantial reduction in price: $400 per ton, $70 less than the price in the previous contract in March 2012, and $30 less than market forecasts.
Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2013
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