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# Friday’s Insider: Why potash trading is not a cartel anymore

Publication Date: 12.07.2024, 18:00

In the past, potash trading, or MOP, was strictly regulated among the world's main producers. However, this changed one day. Let’s take a retrospective glance at this story.

While everyone is talking about the Indian tender, Uralkali agreed on the potash price with Chinese importers at $273 per metric tonne CFR, down from the previous contractual price of $307 per metric tonne CFR. This is not a good sign for the other MOP producers, who continue shipping to China and India under the “reserve price.”

In the past, the MOP business was a pure cartel, led by the Canadian PotashCorp (later Nutrien), the Russian International Potash Company (later Uralkali), and the Belarusian Potash Company or Belaruskali. Once a year (rarely twice), they all agreed on the frame contract prices with their main core buyers in India, China, and Brazil. Other producers had to follow suit.

It all started changing in 2020-2021 when BPC was first sanctioned by both the US and the EU after the controversial presidential elections in Belarus. Shortly after, following the commencement of the Russian invasion of Ukraine in February 2024, Uralkali, or rather its management, followed suit.

However, even before the sanctions, MOP prices had been very high, ranging from $650-750 per metric tonne FOB Baltic. After the commencement of the war, they escalated further, reaching close to $1000 per metric tonne FOB Baltic. But most importantly, the oligopoly was broken. Both Russians and Belarusians started selling through brokers who had learned how to bypass (or just ignore) the sanctions and, most importantly, how to pay.

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Just after February 2024, Belarusian exports plummeted from almost a million tonnes per month to literally zero (a couple of vessels per month). The Belarusian government needed more money, so opportunities opened up.

Later in 2023, BPC concluded their agreements with China and India (albeit for only three months) and started discharging into bonded warehouses in Brazil. Exports bounced back to 8-9 million tonnes per year. What happened to the price? It dropped well below $200 per metric tonne FOB Baltic.

Both Uralkali and BPC have restored their country restrictions on MOP trading. However, the oligopoly was broken, and the price war continues.

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*About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of [GG-Trading](https://www.gg-trading.com) and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.*

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