January 17, 2012

 

Uralkali going up the charts for potash production

Uralkali moved closer towards being the world's top potash producer, even as the buying power of top importers China and India are being questioned.

 

Canada's PotashCorp will, on headline terms, retain its title as the world's top producer in 2011, with output likely to come in at roughly 9.5 million tonnes to judge by the pace of the first nine months of the year.

 

That is ahead of the 8.72 million tonnes produced under the Uralkali name, a figure including some seven months' contribution from Silvinit, the rival potash group acquired last May.

 

However, at an underlying level, factoring in Silvinit for the full year, Uralkali's output climbed to 10.83 million tonnes, well ahead of the figure that PotashCorp will achieve, and a 650,000-tonne rise year on year.

 

The record ensured Uralkali's "leading position in world potash production", Vladislav Baumgertner, the Uralkali chief executive, said.

 

And further expansion is already in the works, with the group this year set to "carry on its development programme", and longer-term undertaking a scheme, announced last year, to near-double capacity with the next decade.

 

However, the bullish production talk comes amid some concerns about the resilience of demand in India - where buyers attempted, and failed, to negotiate cuts to prices swollen by the tumbling rupee.

 

Indian potash prices have more than doubled since March last year, to more than INR11,000 (US$210) per tonne, according to the Fertiliser Association of India.

 

PS Gahlaut, managing director of Indian Potash, said last week that the country may delay until July a fresh supply contract, because of the high prices.

 

Meanwhile, in China, research group CRU International said that that country's potash imports may fall in 2012 for the first time in three years, from 6.5m tonnes to six million tonnes, as low fruit and vegetable prices discourage orders from a sector responsible for half the nation's consumption of the nutrient.

 

Meanwhile, potash inventories are building in North America, where stocks jumped by 406,000 tonnes last month to their highest for nearly two years, data from PotashCorp showed.

 

The rise put inventories 13% above their five-year average.

 

Prices, nonetheless, continued to rise, nudging US$500 a tonne in Vancouver.

 

Uralkali depositary receipts, a proxy for shares, closed up 0.4% at US$35.60 in London.