INTERVIEW-India deals dent potash producers' tough stance

* BPC, ICL, APC agree to supply potash at $460/tonne-IFFCO

* IFFCO sees 4 pct annual growth in potash demand in India

* Shares of potash producers fall (Adds details from interview, background, comment from Israel Chemicals; All figures in U.S. dollars)

TORONTO, July 13 - Three international companies have agreed to supply Indian buyers with potash at $460 a tonne, well below the current spot market price of around $700 a tonne, the head of India's IFFCO said on Monday.

U.S. Awasthi, managing director of the Indian Farmers Fertiliser Co-operative Limited (IFFCO), named the three as Belarussian Potash Co (BPC), a major supplier of potash to world markets, and its smaller rivals Israel Chemicals (ICL) and Arab Potash Co.

"Whether the price is right or wrong will only be known by consumption patterns. If world potash consumption starts increasing, that means that people were unnecessarily trying to keep high prices," Awasthi told Reuters in an interview.

"BPC, ICL and Arab Potash Co have already given their confirmation (of a lower priced deal). I believe contracts at that price have already been signed with BPC, ICL and APC."

A spokeswoman for Israel Chemicals said the company has not yet signed a contract with India at that price.

The price of potash -- a key crop nutrient -- has remained stubbornly high even as demand has collapsed, as a small group of companies, which account for roughly 75 percent of global supply, cut production drastically to try to maintain pricing.

But concern that the producers' hard line was softening hit potash company stocks last week, after trade publications said India had agreed to buy potash from Russia's Silvinit <SILV.RTS> at a below-market price. [ID:nN10522755]

IFFCO is one of India's largest fertilizer manufacturers and it owns a 34 percent equity stake in Indian Potash Ltd (IPL), the country's largest potash importer. India imports about 5 million tonnes of potash a year, and IPL accounts for about 70 percent of these imports.

Awasthi said Indian buyers were still awaiting confirmation on potash pricing from the potash export consortium Canpotex, which is a partnership between Potash Corp <POT.TO>, Mosaic Co <MOS.N> and Agrium Inc <AGU.TO>.

Shares of Potash Corp, the world's largest potash producer, fell 3 percent to $82.47 on the New York Stock Exchange, while its peers Mosaic and Agrium were also trading lower.

Last week, Silvinit agreed to sell India 850,000 tonnes of potash at a delivered price of $460 a tonne, well below the $625 to $635 per tonne range that all other major producers had originally proposed.

Belarussian Potash Corp. said the Silvinit deal had made it rethink its potash pricing strategy. [ID:nLB456207]

BPC is a 50-50 joint venture between Russia's Uralkali <URKA.MM> and Belaruskali. These two firms, the three in the Canpotex partnership, Silvinit and Germany's K+S <SDFG.DE> account for about 75 percent of global potash supply.

Potash markets have been virtually frozen for months, as sellers refused to cave on potash pricing, even while the price of nitrogen and phosphate fertilizers -- the two other key crop nutrients -- collapsed.

Buyers have been awaiting the pricing of the Indian and Chinese contracts, as the two countries have the clout to negotiate discounts because their annual potash contracts are so big.

Major suppliers are yet to sign supply annual contracts with China, the world's largest potash importer, this year.

If all major potash suppliers agree to supply India and China at about $460 per tonne, analysts see the spot market price of potash falling to slightly above this level.

IFFCO expects potash demand in India to grow annually by about 4 percent per year, Awasthi said.