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Bad news from China – K + S under pressure

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HB FRANKFURT / MOSCOW. A potash prices slip in deliveries to China, the shares of Kassel, salt and fertilizer specialist K + S charged on Wednesday. The companies listed on the DAX K + SPapers lost against the market trend was up to 1.9 percent to 40.06 euros and were thus one of the biggest losers in the German blue-chip index.

Stockbrokers attributed the decline to the recent negotiations of Belarusian Potash Company (BPC) with China. A distinctly lower potash prices had been reached as yet as last in Brazil. The Kaliexporteur BPC has identified in the negotiations with the country a major buyer of potash prices $ 350 per tonne for deliveries in the coming year, as the Russian potash producer Uralkali announced. She explained that approximately 1.2 million tons of fertilizer raw material.

The BPS is operated as a joint venture of the distribution arm of Uralkali. The price negotiations with the Middle Kingdom have been months in view of the industry. China is the world’s largest importer of potash, and therefore in a position to set the price standard. BPC had agreed in July in India the sale of 675 000 tons for $ 460 a ton. Addition to nitrogen, phosphate and potash is one of the main components of fertilizers.

"This is the first contract with China since mid-2008," commented analyst Andreas Heine from Chemistry UniCredit in a Kurznote development. The potash price had fallen to within just two weeks by 30 percent. "After the correction in prices two weeks ago in Brazil by $ 500 to $ 400 per ton of price with China reached $ 350 a ton from a further sharp price slide," he said. This negative message could be offset only by a steep increase in volumes.

Many investors had turned to the financial crisis in the agricultural sector in the back and gave rise to a price drop. Then had broken from the fall of 2008, demand for fertilizer, which has so far not fully recovered yet again. Due to the uncertainty of prices of agricultural products and financial difficulties had to farmers by buying back this year. K + S and competitors such as Potash, Mosaic and Yara, but betting on a tightening of demand 2010th Kassel’s example, expected next year, an increase in the volume of potash sold worldwide by 50 percent to 45 million tonnes.