PotashCorp Announces Potash Sale to China
Potash Corporation of Saskatchewan Inc. (PotashCorp) today reported that Canpotex Limited has signed a 1.5 million tonne contract with Sinochem, China's largest potash importer, for 2004 sales. This agreement represents the first year of its three-year Memorandum of Understanding signed in August 2003. The agreement includes a 10 percent option and provides a price increase of US $3.00 per tonne. China purchases product in Vancouver and is responsible for ocean freight costs, which have risen dramatically in 2003. This price increase reflects a higher realized price for potash, rather than an offset against ocean freight.
The objective for Canpotex now is to raise the prices for offshore customers that purchase potash with freight costs included to bring all company realized prices at least into parity with China. This effort should reverse the realized price deterioration seen in offshore sales during 2003.
Canpotex is the offshore sales agency for Saskatchewan potash producers and PotashCorp is its largest member, supplying 54.2 percent of its total sales volume.
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