Uralkali Sets New Fertilizer Price

14.12.2009 — News

THE PERM KRAI.

Uralkali JSC has set the limit for the price level on direct shipment of potassium fertilizers in the first six months of 2010 to Russian agricultural producers in the amount of 4,550 roubles per ton (FCA, packing not included). This decision was made in accordance with the terms of agreement between the Russian Association of Fertilizer Producers (RAPU), Uralkali being one of its founders, and the Agroindustrial Union of Russia.

The company's press service informed RusBusinessNews that Uralkali has set a concession for agricultural producers for January-June 2009 in the amount of 3,700 roubles per ton. In July-December, taking into account the difficult situation on financial markets and with the view of supporting the Russian agroindustry sector, this price remained unchanged.

In December 2009 the company had to make the decision on raising the price due to objective economic reasons. Notwithstanding the fact that this year Uralkali has reduced production costs, due to a significant reduction of capacity utilization it failed to avoid the increase of costs for potassium chloride production per ton. Furthermore, the substantial difference between prices for Russian agricultural producers and global potassium chloride prices in 2009 led to a situation whereby some of the product intended for domestic market was exported by mala fide consumers and thus was not used in the Russian agricultural sector.

The level of prices set for direct shipments to agricultural producers is the maximum. During the first six months of 2010 the price can be reviewed to be under 4,550 roubles. Moreover, it will, in any case, be substantially lower than the existing global potassium chloride price level.

The agreement between RAPU and the Agroindustrial Union on cooperation with the purpose of meeting the demands of agricultural commodity producers for mineral fertilizers in 2008-2012 was signed on 17 October 2008. It stipulates that Russian mineral fertilizer producers have to declare the price levels for their products to agricultural producers twice a year.