13 November 2013 16:53 [Source: ICIS news]
LONDON (ICIS)--Russian fertilizer giant Eurochem on Wednesday revealed a relatively upbeat market outlook for early 2014 despite current "turbulence from several sources" as it identified India and Latin America as the likely drivers of demand over the coming months.
Announcing a 26% slide in third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) to Russian roubles (Rb) 8.7bn ($266m, €196.8m) from Rb11.7bn in the year-ago period, the firm acknowledged that "the challenging third-quarter market backdrop weighed on our year-to-date performance".
Revenues for the 13-week period fell to Rb41bn from Rb47.1bn in Q3 2012. In volume terms, nitrogen sales fell to 1.79m tonnes from 1.94m tonnes in the same quarter of last year and phosphate sales slipped to 565,000 tonnes from 637,000 tonnes over the same year-ago period.
CEO, Dmitry Strezhnev, said: "While the fertilizer sector is facing turbulence from several sources, EuroChem continues with its strategy as the long-term food security agenda remains intact.
"The recent milestones achieved at our VolgaKaliy and Usolskiy projects further solidify our commitment to potash. We have seen numerous changes in the potash industry over the past years and further disruptions remain a possibility. One thing is certain, EuroChem has the most advanced greenfield potash projects globally, on deposits that will make it the world's lowest cost producer."
The Moscow-based company added: "As the second half headwinds across the nutrient landscape subside, the expansion of crop area will continue driving increases in fertilizer demand with most of the tonnage growth expected to come from Asia, primarily India and Latin America.
"In the urea market, prices started firming in the run-up to the closure of the lower tax window in China. Despite the presence of some product in bonded warehouses, it is unlikely to satisfy the bulk of upcoming urea tenders.
"In ammonia, our non-vertically integrated EuroChem Antwerpen nitrogen facility is expected to take full advantage of the renewed affordability of ammonia on the back of its 26% price decline in the first three quarters of 2013."
Turning to phosphates, the company added: "Capacity curtailments during peak off-season are helping to stabilise the market with demand likely to re-emerge in the next couple of months.
"India's absence has been felt globally across all three nutrients. Given the importance of the agricultural sector and its 260 million workers within the Indian economy, we would expect announcements of revisions to the subsidy system to be heard ahead of the May 2014 elections.
"Potash prices appear to be stable at around $300/tonne CFR (cost and freight) China, a level which could promote higher application in emerging markets."
($1 = 0.74, $1 = Rb32.75)
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