PotashCorp to shut more Canada mines as demand fails to recover

15 November 2012 10:22  [Source: ICIS news]

LONDON (ICIS)--A lack of recovery in demand for potash in major markets has forced Canadian fertilizer producer, Potash Corporation of Saskatchewan (PotashCorp), to announce another slew of inventory-related shutdowns, the producer said late Wednesday.

The producer has announced that it will shut its Allan and New Brunswick mines in Saskatchewan for eight weeks. The Allan mine will not operate from 16 December to 9 February 2013, while New Brunswick will be shut from 30 December to 23 February.

The Allan mine has an operational capacity of 1.6m tonnes, while New Brunswick can produce up to 800,000 tonnes.

Allan will lose about 245,000 tonnes and New Brunswick over 110,000 tonnes of potash production during the shutdown period.

The producer cited its practice of “matching supply with demand” as the reason for the shutdowns.

Demand for the crop nutrient has been hit this year as two of the world’s biggest importers, China and India, delayed signing fresh contracts.

Importers in both countries have expressed their unwillingness to sign contracts until prices are lowered. In the first half of 2012, China paid $470/tonne (€357/tonne) CFR (cost and freight) for muriate of potash, but is now believed to be demanding discounts of $70-120/tonne CFR from the previous price.

PotashCorp has undertaken several shutdowns during the year to cut down production as it hopes to keep prices stable.

Last month, PotashCorp said it would be shutting the Lanigan from 18 November until 12 January while the Rocanville mine will close on 2 December and is due to reopen on 26 January.

The slowdown in demand in the world's biggest markets has impacted other potash producers as well.

On 13 November, US fertilizer maker Mosaic slashed its potash sales forecasts as the delay in signing long-term supply contracts with China and India has resulted in weakening price expectations, leading other international buyers to delay purchases of the crop nutrient to avoid price risk.

Mosaic reduced its forecast for potash sales by 400,000 tonnes for the second quarter to 1.3-1.4m tonnes.

($1 = €0.78)

By: Deepika Thapliyal
+44 208 652 3214

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