Uralkali has signed agreements with its domestic customers, complex fertiliser producers Eurochem and Phosagro, to increase the price for potassium chloride to RUR 4,750 per tonne in Q3 2009, effective from July 1st, 2009.
Responding to the economic downturn, in late 2008 Uralkali temporarily reduced the price for potassium chloride to 3,955 RUB per tonne in order to support the Russian agricultural sector and complex fertiliser producers. The reduced price was a 150% decrease on the average price set for complex fertiliser producers for H2 2008. Uralkali maintained this price level throughout H1 2009. The temporary reduction in price for potassium chloride, as well as the improved market environment, has encouraged a return in demand for complex fertiliser, thus allowing Russian producers to resume full capacity operations.
Unlike the complex fertiliser market, consumer demand in the global potash fertiliser market has not yet recovered and Uralkali has operated at lowered capacity throughout H2 2009. This forced the company to sell potassium chloride in the domestic market below the cost of its production. Following the negotiations with Uralkali, Eurochem and Phosagro have agreed to a 20% price increase for potassium chloride in Q3, 2009. At the same time, Russian agricultural producers will continue to enjoy the 3,700 RUB per tonne price set in early 2009 until the end of this year.
Pursuant to the new agreement, Eurochem has received the first shipment of potassium chloride today, July 2, 2009. The shipment to Phosagro is scheduled for July 7, 2009.