Q3 multi-component ferts demand hit by potash market disruption: bank

06 November 2013 13:50  [Source: ICIS news]

LONDON (ICIS)--Third-quarter multi-component fertilizer demand has been capped by market expectations of price cuts following the potash market disruption caused by the end of the Uralkali-Belaruskali trading cartel, a bank said on Wednesday.

Poland's Zaklady Chemiczne Police (ZChP) – a subsidiary of European fertilizer producer Grupa Azoty – is one European multi-component fertilizer company clearly feeling the effects of the potash dispute fallout, Czech Republic-based investment bank WOOD & Company added.

“We expect to see continued margin pressure in ZChP's third-quarter multi-component fertilizer earnings, with commodity DAP [diammonium phosphate] spreads down 64% year on year in Q3 and NPK [nitrogen phosphorus potassium] down 14% year on year,” said Piotr Diozd, a chemical industry analyst at the bank.

The lower margins would be a key factor in driving ZChP's third-quarter net profit down 50% year on year to approximately Zl 14.4m ($4.6m, €3.4m), WOOD & Company estimated.

At the end of July, Russia's Uralkali broke away from trading partnership Belarusian Potash Co (BPC) – which controlled more than 40% of global potash exports – after accusing its BPC partner, Belaruskali, of selling product independently and destroying the fundamentals of the trading agreement.

Subsequently, in October, North America's 39-year-old Phosphate Chemicals Export Association (PhosChem) was disbanded.

($1 = €0.74,
$1 = Zl 3.11, €1 = Zl 4.18)

By: Will Conroy
+44 20 8652 3214

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