31 January 2013 15:40 [Source: ICIS news]
LONDON (ICIS)--Potash Corporation of Saskatchewan (PotashCorp) expects global potash shipments to jump by 10-11% in 2013 to 55-57m tonnes from approximately 51m tonnes in 2012, the Canadian fertilizer giant announced on Thursday.
In a market forecast released with disappointing fourth-quarter results, PotashCorp revealed it expects potash demand to "accelerate" in 2013 as "buyer confidence has been bolstered by the recent settlement of new contracts with China".
Strong potash demand in Latin America – spearheaded by Brazilian farmers – will see potash shipments to that vast region reach about 10m tonnes this year, the producer said without providing a comparative figure for 2012.
In North America, the market outlook is also seen as positive for producers, with strong demand in the first quarter ahead of the imminent Spring planting season. "Supportive economics and the expectation of large planted acreage are anticipated to result in significant demand at the farm level," PotashCorp said. "We forecast 2013 shipments at approximately 9.5m tonnes."
Turning to Asia, the company expects China to import 6.5-7m tonnes of potash, India 3.5-4.5m tonnes and other countries in the region to import around 8.5m tonnes this year, as "consumption strength that was masked by destocking in 2012 will support demand growth".
PotashCorp posted a 38% slump in fourth-quarter net earnings to $421m (€312m) from $683m in the year-ago period, with revenue for the quarter down at $1.64bn versus $1.86bn in the final quarter of 2011. Fourth-quarter potash sales fell 17% year on year to 1.3m tonnes, with the average realised potash falling to $387/tonne from $431/tonne in the year-ago quarter.
The firm noted the seasonal slowdown in potash demand was exacerbated by delays in the signing of potash contracts with China, with the final price of $400/tonne CFR (cost and freight) down $70/tonne on the previous agreement.Fourth-quarter nitrogen sales were flat at 1.1m tonnes with gas supply curtailments in Trinidad impacting production volumes. "The total average cost of natural gas included in production for the fourth-quarter of 2012, including our hedge position, was $7.01 per MMBtu, an increase from $6.35 in the same period the previous year," PotashCorp said. Fourth-quarter phosphate sales volumes fell to 800,000 tonnes from 900,000 tonnes in the same period last year, as "temporary production constraints at Aurora [in North Carolina] caused by challenging mining conditions primarily impacted saleable tonnage of fertilizer products". Average realized phosphate prices for the quarter were $577/tonne, down from $631/tonne in the fourth-quarter of 2011.
"Our fourth-quarter results were adversely affected by weaker performance in all three nutrients as global fertilizer markets paused in the absence of significant immediate needs and amid lack of direction, particularly in phosphate and potash," said PotashCorp president and CEO, Bill Doyle.
"Despite these temporary challenges, we operated with a consistent approach – temporarily slowing potash production and leveraging our diversified product mix in our other nutrients – to best position our company for the expected rebound in fertilizer demand in 2013."($1 = €0.74)
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