FocusPotashCorp strike threat could grow

23 July 2008 23:42  [Source: ICIS news]

By David Rosen

HOUSTON (ICIS news)--The threat of a worker strike at Potash Corporation of Saskatchewan (PotashCorp) could lead to more labour unrest, in turn unsettling the industry if fertilizer prices remain high, market sources said on Wednesday.

Tensions increased between PotashCorp and the United Steelworkers union at three Canadian facilities on Wednesday.

The union delivered a strike notice to the company and PotashCorp delivered a lock-out notice to the workers, company spokesperson Tom Pasztor said.

The company may now lock out the workers from its plants or the union members may walk away from their worksites as soon as Friday morning - a day after PotashCorp is set to release its quarterly earnings.

Meanwhile, stock prices for PotashCorp and industry peers Mosaic and CF Industries on Wednesday plunged more than ten points on the New York Stock Exchange.

If the PCS union succeeds in its negotiations, workers at other companies may rise up and demand a bigger share of their company’s profits as high prices persist for fertilizers such as ammonia, urea and phosphates, a producer said.

“That would definitely be en vogue with the way fertilizer prices have gone lately,” the producer said.

Earlier this week, about 500 members of United Steelworkers unions in three of PotashCorp’s five Saskatchewan potash plants gave their bargaining unit permission to strike if current negotiations over salaries and benefits fail.

If the strike goes through, it has the potential to drastically affect prices for potash fertilizer, as demand has already outpaced supply.

Strikes in the fertilizer business are relatively rare compared with other industries such as oil, market participants said, but soaring prices may create an incentive for labour to demand better benefits, sources said.

Potash was trading at $525-920/tonne (€331-580) FOB (free on board) Vancouver last week, up from $525-650/tonne the week before. Ammonia was trading at $585/tonne CFR (cost and freight) Tampa, up from $303/tonne a year earlier, according to global chemical market intelligence service ICIS pricing.

Sellers were aiming for ammonia prices above $700/tonne for August delivery.

Prilled urea was trading at $837.76-859.80/tonne FOB US Gulf last week, up from $319.67-320.77/tonne a year ago, while diammonium phosphate was $1,196.01/tonne FOB Central Florida, up from $406.20/tonne last year at this time.

Workers “think this is a good time to push” for more pay or benefits, another seller said.

The most recent strike in North American fertilizer industry took place in mid-January, when about 400 Yara employees in Trinidad, who were also members of the Oilfield Workers’ Trade Union, walked off the job for a few days to demand a 16.5% salary increase.

“We hadn’t had a strike in 15 years down in Trinidad, and all the sudden ammonia was at $500/tonne and yeah, these guys are threatening strikes. Now’s the right time to ask for more money,” the producer said.

A source called the PotashCorp workers “shrewd cookies”.

The last work stoppage at PotashCorp has not occurred in several years, Pasztor said.

Shares of PotashCorp lost $15.36, or 7.11%, to close at $200.69/share, while CF lost $16.49, or 10.57%, to settle at $139.58.

Mosaic fell $13.63, or 10.07%, to close at $121.75, while Agrium slipped $6.05, or 6.26%, to close at $90.59/share.

($1 = €0.63)

To discuss issues facing the chemical industry go to ICIS connect
For more on ammonia and urea visit ICIS chemical intelligence


By: David Rosen
713-525-2653



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