Cartel breakup should not cause potash price plunge: PotashCorp

07 August 2013 23:59  [Source: ICIS news]

HOUSTON (ICIS)--Prices for potash should not plunge after Uralkali withdrew from its own export sales group, and the firm could even end its dispute with partner Belaruskali, PotashCorp CEO Bill Doyle said on Wednesday.

Doyle said after more than 30 years in the business, he has seen these types of disputes before, although not on such a public scale. Doyle made his comments during a live question and answer session.

He said the fundamentals of the potash business means that not just one company can set the price and that for PotashCorp, their biggest share of market sales, North American farmers, are not impacted by foreign producers like Uralkali.

“We are not concerned…We have been through many bigger battles than this,” said Doyle. “The Russians are minor players in this market and you have to really look at how the marketplace works.”

Doyle said it is very difficult to enter the potash business because of many factors, including cost of investments as well as the length of time to get an operation running at profitable capacity.

He said the sentiment that the price could drop as much as 25% to as low as $300/tonne (€225/tonne) does not seem to be a rational conclusion.

He said there has been a lot of speculation whether this was a calculated move by Uralkali or if it was truly the result of dissatisfaction with its partner Belaruskali. However, Doyle said he has a hard time imagining that either side will take a long-term position that could damage their companies.

“My guess is it will be shorter rather than longer, and the reason I say that is logic tends to prevail,” Doyle said. “I don’t find too many people that self-destruct intentionally.”

In terms of Canpotex, Doyle said there is no credence to talk that the organisation could undergo a similar breakup or a change in strategy, since such a move would be illogical and undermine the strides the group has made in providing fertilizer to farmers around the world, particularly the US.

He said it is anticipated that Canpotex will be able to soon secure a new potash supply contract with China, which typically sets the price globally. The previous contract expired after the first half of this year.

Production from Canpotex’s three companies of PotashCorp, Mosaic and Agrium generally account for about 38% of the global supply.  

($1 = €0.75)

By: Mark Milam
+1 713 525 2653

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