PotashCorp Announces Canpotex Sales Agreement with Sinochem
Potash Corporation of Saskatchewan Inc. announced that Canpotex Limited has signed a 2005 sales contract for 1.5 million tonnes red standard grade potash with Sinochem, China's largest potash importer. The agreement includes a 10 percent additional volume option and provides a price increase of US $40 per tonne over last year's contract price. Canpotex has also contracted for the sale of 0.3 million tonnes of white standard grade potash at a US $43 per tonne price increase over last year's contract price.
Over and above the sale of the two grades of standard product, Canpotex and Sinochem have negotiated a 2005 contract for 0.3 million tonnes of granular potash at prices US $10 above the red standard price. This will be the first time Sinochem has ever taken granular product. In total, Sinochem is expected to take a minimum of 2.1 million tonnes of product from Canpotex in 2005, an increase of 27 percent over the 1.65 million expected sales tonnes in 2004. If the option were exercised on the red standard product, it would represent a 36 percent increase.
Sinochem purchases product delivered to Vancouver and is responsible for ocean freight costs. Therefore the price increases reflect a higher realized price for potash, rather than an offset against ocean freight. This agreement represents the second year of the three-year Memorandum of Understanding signed in August 2003 between Canpotex and Sinochem. Canpotex is the offshore marketing agency for Saskatchewan potash producers and PotashCorp is its largest member, currently supplying 54.2 percent of its total sales volume.
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