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By John Helmer in Moscow

Uralkali reports spot price for potash goes above $1,000 a tonne as shortages bite.

Uralkali and its global sales agent, Belarusian Potash Company (BPC), revealed this morning that spot-price cargoes of potash will fetch more than $1,000 per tonne of standard grade, including freight and insurance (CIF). Higher grade granular potash will go up to $1,010. The new price will take effect for shipments commencing on July 1.

The announcement has come sooner than Uralkali executives had been forecasting, or industry analysts predicting. The price charge follows on from BPC’s recent negotiations with India and China, which fixed new contract delivery prices at $625 and $650, respectively. A fortnight ago, BPC’s deputy general director, Oleg Petrov, said the $1,000 price threshold was approaching “rather fast”.

Fast it is. The Russian stock market reacted by lifting Uralkali’s share price by 1% in the first hour of trading, another 5% in the second hour. That represents $1.3 billion in extra market capitalization for the company — $11 million per trading minute.

The chief executive of Uralkali, Vladislav Baumgertner, commented: “These price increases are driven by the continuous growth of global demand, historically low inventory levels and unprecedented tightening of the supply for the remainder of 2008 after the agreements reached by the Company in China and India.”

The dwindling global inventories of potash have been noted since late last November. At that time, a report from JP Morgan noted that “potash inventories remain at record lows and product is close to being sold out by all major world suppliers.” In February of this year, China’s potash inventory was reported at 2 million tonnes.

According to Petrov, substantially larger volumes of potash, compared with a year ago, are likely to be sold at the new prices to Brazil, Malaysia, and Indonesia. “The region of Latin America becomes more and more significant market for the company,” Petrov noted.

Brokerage analysts in Moscow are chorusing behind the rising Uralkali share price. “We believe 2008 EBITDA growth could be 20%”, commented Marina Alexeenkova of Renaissance Capital.

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