Canpotex, China potash supply contract coming in early 2014

25 October 2013 00:04  [Source: ICIS news]

HOUSTON (ICIS)--PotashCorp officials said on Thursday that potash exporter group Canpotex is expected to conclude a supply contract with China’s Sinofert in early 2014.

“We will continue to be a major player in China," said Bill Doyle, CEO at PotashCorp. “In our remarks, we said that we anticipate some shipments here during the fourth quarter. I think those will be done on a spot basis with China.”

Doyle made his comments during a conference call on the Canadian fertilizer producer’s Q3 earnings.

“I think you are going to see more of a diversified approach going forward by us,” Doyle said. “The days of exclusivity are probably coming to an end. So I think you will see us with multiple customers in China, and it’s just the fact that market is getting bigger and more diverse [with] more players as the demand grows up.”

Beyond potash, company sales president Stephen Dowdle forecast a significant uptick in urea exports from China, especially if the country eliminates its high tax export regulations.

“We expect that they are going to be somewhere between 9m-10m tonnes of urea exports,” Dowdle said. “It’s apparent from both from a urea perspective as well as from a phosphate perspective that there are ample supplies in China through the domestic production that they can meet their domestic demand.”

He added: “The whole idea behind these high tax export windows was to ensure that there was adequate supply to urea and dry phosphates for China. It seems that the growth and capacity has elevated any fears that there wouldn’t be enough domestic supplies, and so we do expect that these higher levels of certainly urea exports will continue in 2014.”

Beyond taxation rules, China is facing the growing issue of heavy pollution and subsequent public health concerns resulting from using coal in urea production.

“Most of that has produced with coal and coal gasification,” Doyle said. “If you have seeing just in the last 10 days or so [at] some of these pictures coming out of China, there is been small air pollution, shutting down of airports, traffic at a standstill. China is going to be under more and more pressure to take another look at those coal based plants because of the tremendous pollution that they put out.”

By: Mark Milam
+1 713 525 2653

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