OREANDA-NEWS. December 24, 2009. The industry agency for fertilizers, Fertecon, reported that BPC (exporting trader of Uralkali and Belaruskali) has agreed to a contract with Chinese buyers CNAMPGC and Sinofert for 1 mt MOP at US 350 cfr. The contract will be signed within the next day or two, reported the press-centre of OTKRITIE Financial Corporation.

Uralkali has announced a conference call for 23 December at 3 pm (London time).

Call-in numbers and conference call details are as follows: UK: +44 203 0032666 Russia Local: +7 499 272 4337

View: The sudden announcement of a conference call devoted to the market outlook confirms that the agreement with China has finally been reached. Nonetheless, we see this news as a marginally negative for potash producers as the reported price of US 350/t is under the CFR basis, which corresponds to roughly US 300/t under FOB basis, which was used in all previous contracts with China.

This is substantially below our forecast (low US 400s/t FOB) and recent market adjustments of \\\\$350 - US 360/t FOB. We expect a further decline of potash prices on the spot markets globally if the Chinese contract prices are officially confirmed today. That said, even at 100% capacity utilization in 2010, Uralkali's financials will be below consensus.

Valuation and Action: We have a HOLD rating for Russian potash stocks (Uralkali and Silvinit) based upon the average price for 2010E of US 460/t CFR. Given the news we would be SELLers today in Uralkali and Silvinit.