Uralkali planning on cutting potash prices in Q4 2013

20 September 2013 23:13  [Source: ICIS news]

HOUSTON (ICIS)--Uralkali plans to reduce the price of potash by 12.5% in the fourth quarter to about $221/ton (€166/tonne), the Russian fertilizer producer said on Friday.

The drop in price should impact industrial producers of blended fertilizer products, the company said.

The move to decrease pricing is not unexpected, as Uralkali announced it would be increasing capacity output and putting its focus on volume as opposed to price strategies following its split from the trading partnership Belarusian Potash Company (BPC) in late July.

The withdrawal by Uralkali came after the producer accused its BPC partner, Belaruskali, of selling product independently and destroying the fundamentals of the trading agreement. The decision sent the potash market into immediate turmoil and sent stocks of the various producers of the crop nutrient into a steep decline.

While there has been a calming of the market, and stocks of the various companies have stabilised, the decision has led to a public feud between Russian and Belarus officials that peaked when Uralkali CEO Vladislav Baumgertner was arrested in the Belarus capital of Minsk in late August. The fertilizer executive has been held in detention and charged by authorities with abuse of power.

At the time of the announcement, Uralkali management had predicted the pricing for the crop nutrient could fall by as much as 25% when contract discussion begin later this year for spring applications.

Recently, Uralkali acting CEO Viktor Belyakov said the company plans on having an additional 1m tons of capacity by the end of 2014.

Company officials expect that demand will continue to rise for the crop nutrient, with a potential for global consumption to reach as high as 54m tons, which would eventually offset the current decline experienced with the dissolution of BPC.

($1 = €0.74)

By: Mark Milam
+1 713 525 2653

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