The Chinese state-owned chemicals group was not expected to formalise its decision but three sources said it had given up on efforts to put together a consortium to thwart BHP's hostile offer.
"It's finished," one of the sources said. Another source said the idea of Sinochem forming a counterbid had faltered in recent weeks.
"I'd be surprised if the Chinese formalized their withdrawal, but there's no ... way they are doing anything. It's been dead for five to six weeks," one source said.
The sources declined to be identified because they were not authorised to talk to media.
Sinochem had hired Deutsche Bank and Citigroup to explore options to foil BHP's offer, sources had previously told Reuters. Both banks declined to comment.
China's main worry is that a BHP takeover of Potash could push up the price of potash, a nutrient essential for boosting grain production to meet booming food needs.
Political obstacles in Canada meant any Chinese bid would have to be part of a consortium to succeed.
Sinochem had approached Singapore's Temasek Holdings to join a consortium that might bid but the state investor had made no decision, sources have previously told Reuters. Temasek declined to comment.