The potash fertilizer market has attracted perhaps more interest than any other from investment groups, because of the small number of players involved, the geographical concentration of deposits in North America and Russia, high long-term price stability and exceptional profitability.
Consequently, over 60% of global production is traded. The main import markets are China, the US, Brazil and India. As with supply, demand is concentrated with the top six countries, accounting for 80% of global trade.
Historically, potash was seen as a low-value commodity, but its stock has risen in recent years, fuelled by a solid demand growth and strong commodity prices worldwide.
Prices are mainly decided on a contractual basis, with limited spot activity.
The market has seen its share of corporate activity, including BHP Billiton’s ultimately failed bid to acquire of PotashCorp in Canada. In Russia, Uralkali’s merger with Silvinit created one of the world’s largest potash companies.
Higher prices are driving investors to look at new sources. Latin America and Africa are being explored for new mines, and traditional producing areas, such as North America, Russia and China, are set to expand capacity.