Uralkali potassium chloride capacity to reach 13m t/y in 2012

14 June 2012 15:25  [Source: ICIS news]

LONDON (ICIS)--Uralkali expects to reach an annual production capacity of 13m tonnes of potassium chloride during the second half of 2012, as demand improves, the Russian potash producer said on Thursday.

Uralkali said its operational capability by the end of 2012 will be up by 1.5m tonnes/year to 13m tonnes/year, an increase from 11.5m tonnes/year at the end of last year, due to the completion of its Berezniki-4 expansion.

The company said that following a cautious start to the year, driven by higher-than-usual stocks in the key markets and continuing concerns surrounding the volatile macroeconomic environment, potash demand started to recover in March 2012.

“At the end of the first quarter of 2012 the major suppliers signed contracts with China for the second quarter 2012 at a rollover price of $470/tonne (€371/tonne) on a CFR [cost and freight] basis,” it said.

“In total, China has locked in 1.7m tonnes with an option for an additional 500,000 tonnes. Clarity regarding China has established a price benchmark for the global market and encouraged buyers in other regions to step into the market more actively," Uralkali added.

The company said that at the beginning of the second quarter the market returned to normal following strong demand in Brazil, and seasonal pick-up in application in the US, Europe and Asia.

“As a result, potash inventories depleted across spring application in all major markets excluding India. India resumed potash imports in March 2012 and the 2011–2012 potash contract is expected to be executed by the end of July,” it added.

“Taking into account softer first-quarter global sales, we have adjusted our 2012 consumption forecast to 54m–56m tonnes. With anticipated global potash deliveries of 51m–53m tonnes, we expect that at year-end [2012] potash inventories in major markets should be lower compared to the previous year,” the company said.

Uralkali head of sales and marketing Oleg Petrov said potash prices have proved to be resilient despite ongoing turbulence in financial markets.

“Market instability related to Europe’s fiscal budget concerns has led to certain volatility in agriculture commodity prices. However, crop prices continue to stay at historical heights. The underlying farming economics remains healthy and we expect good potash consumption,” he added.

($1 = €0.79)

By: Leigh Stringer
+44 208 652 3214

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