US Mosaic expects to see 2014 rebound in phosphate market

04 December 2013 22:29 Source:ICIS News

HOUSTON (ICIS)--Looking towards the direction of future phosphate pricing, Mosaic said on Wednesday that the company expects to see the crop nutrient rebound in 2014.

The company has seen some signs of pricing increases through the autumn, but added that typically the time period between December to March is the lowest stretch of demand and movement, Mosaic said.

Speaking during the 6th Annual Citi’s Basic Materials Symposium Conference in New York City, Mosaic said it has seen a steady rise in demand for the nutrient and reasserted that the acquisition of the phosphate segment from CF will prove to be a high-quality asset.

“We think CF was a really good strategic deal,” said Joc O’Rourke, Mosaic CFO. “When we did the deal with CF industries for the phosphate, we called the project, Project Doughnut. And I'm going to tell you why. This is CF, this is Mosaic and it really was the whole in the doughnut for us.”

“In phosphate we've seen a very steady rise in demand and we see a much more balanced market, where we still see ourselves in the high 80s or even 90s in terms of our running rate. And clearly, when we're running in the 90% range, the market is doing well. But the bottom line that means we've got a reasonably tight market and we're doing well,” O’Rourke said.

Mosaic said it remains optimistic about phosphate in the long-term scenario and with the acquisition of CF Industries's phosphate business, the fertilizer producer said it will be optimising a significant amount capital and operating strategy on this market.

In October, Mosaic and CF agreed on a deal for the phosphate business for $1.2bn (€888m) in cash plus $200m to fund CF’s asset retirement obligation escrow. The deal included the phosphate mine and plant in Hardee County, Florida, as well as an ammonia terminal and product warehouse in Tampa Bay, Florida.

O'Rourke said another advantage to the CF acquisition is the inclusion of the ammonia offtake agreement whereby CF will supply Mosaic with approximately 1m tonnes/year. The transaction between the two producers is still anticipated to close in the first half of 2014.

($1 = €0.74)

By Mark Milam