Canada's PotashCorp sees no threat from double-dip recession

23 August 2011 18:42  [Source: ICIS news]

HOUSTON (ICIS)--A possible double-dip economic recession in the US would have only a minimal impact on PotashCorp's fertilizer business, the company's chief operating officer (COO) said on Tuesday.

"Effects of another recession would have only a minimal impact because the business fundamentals are strong," said PotashCorp executive vice president and COO David Delaney in a web-based conference with investors.

Delaney noted that strong commodity crop prices and low distributor inventories would keep fertilizer prices high and therefore mitigate any effects of a downturn in the broader economy.

"The demand for food has never been stronger," Delaney said

Delaney said natural gas supply disruptions to Canada-based PotashCorp ammonia plants in Trinidad have resulted in the loss of about 43,000 tonnes of production so far in 2011, as the National Gas Company of Trinidad has had problems with two of its natural gas platforms.

"Hopefully, Trinidad will be long in natural gas in the fourth quarter after a new gas platform comes on line," said Delaney.

Diammonium phosphate (DAP) export volumes will stay strong through 2012 for PotashCorp as China has trimmed its exports while demand in India continues to grow, he said.

PotashCorp expects the global production of potash to reach 63m tonnes in 2012, up from 61m tonnes estimated for 2011. 

PotashCorp's potash capacity will increase from 11m tonnes in 2011 to 13m tonnes in 2012 as production expansions come on line, Delaney said.

The supply/demand outlook over the next five years for potash is tight, he added.

Delaney said the sulphur market will also be tight as demand increases for phosphate fertilizer, adding that sulphur prices are likely to be flat in 2012.

Fertilizer costs as a percentage of revenue from corn production is about 13%, compared with an 18% 10-year average, providing incentive for farmer investment in nutrients, Delaney said.

"We see strong fertilizer sales in the second half of 2011 and throughout 2012," he said.

By: Frank Zaworski
+1 713 525 2653

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