HOUSTON (ICIS)--Brazilian mining company Vale said on Thursday that despite 2013 being challenging for the fertilizer industry, it is optimistic the market is posed to rebound.
Moreover, the domestic market still holds promise for the company, Vale said.
Speaking during a Q4 2013 earning conference call, company officials said there has mainly been an issue with rising fertilizer supplies and falling demand. The company expects the addition of new operations at its plants will help lower its costs and improve its margins in Brazil for 2014.
“It was a very tough year in 2013. There was big disruptions in demand, the devaluation of the rupee made it very difficult for the Indian markets to retain and remain a big importer of fertilizers throughout the year. And also they had some inventory. So we saw one of the biggest players in the market exiting,” said Roger Downey, Vale executive officer for fertilizers.
“What happened is that we have lot of those tons built in the market, they all came to Brazil. Brazil is still presenting a lot of growth. Brazil is being applied by every fertilizer producer in the world as the growth market. So it’s natural that whenever you have changes in the environment like that, that Brazil is going to be hit hard.”
Downey said the company saw very aggressive pricing, especially on behalf of Asian suppliers, with single superphosphate (SSP) prices as low as $120- $130/ton in Brazil. He said Vale is relying on its rock deposits in Brazil and that is making the fertilizer segment more cost competitive.
“What we will see is certainly some improvements in our cost competitiveness. We should also see further improvement in markets and things are looking little better. We’ve already seen the MAP [monoammonium phosphate] prices, which normally are leading indicators as to where phosphate prices are going, have an improvement there, which means that we can be optimistic about where the fertilizer industry is going this year,” Downey said.
He said, in terms of potash, there has been a big disruption in the market structure dating back to last summer. However, early indications are that the market is starting to strive back to a more typical structure and forecast.