February 24, 2012

 

Mosaic, PotashCorp dim hopes for potash market revival

 

 

After Mosaic cut it projections for potash demand worldwide and PotashCorp disclosed it was extending shutdowns at its two biggest mines, hopes were dimmed for a revival in the potash market.

 

Canada-based PotashCorp said that temporary closures at its Lanigan and Rocanville mines would be extended up to four weeks to the end of next month.

 

The extension, which will take above three months the shutdown at Rocanville, reflected a company practice "of matching supply with market demand", PotashCorp, the world's top potash group by capacity, said.

 

Separately, Mosaic, the third-ranked potash producer, stepped back from expectations of a rise in global industry potash shipments this year, warning that a fall of up to 1.9 million tonnes may be on the cards.

 

The statements undermine hopes of a revival stoked by smaller rival Intrepid Potash, which last week identified "increased interest" from buyers "as the spring application season approaches", with northern hemisphere farmers soon to start sowing crops such as corn and soy.

 

Demand for potash, and other fertilisers, slowed sharply in the latter months of 2011 as global economic uncertainty, coupled with falling crop prices, sidelined farmers.

 

Mosaic told investors it expected a "pause in potash shipment growth" this year, cutting forecasts for demand in all markets, but in particular India, a major importer, for which consumption estimates were slashed by 1.9 million tonnes.

 

Indian demand has been hurt by the reduced international buying power a weakened rupee, lifting local prices to some INR11,000 (US$224.15) a tonne, twice levels two years ago.

 

Mosaic also resigned itself to a cut in Brazilian potash demand this year, downgrading its forecasts by 800,000 tonnes.

 

It ditched expectations of a rise in demand in North America and the big palm oil producers, Indonesia and Malaysia, too.

 

However, the group, which earlier this month unveiled a potash production cut of 20% for the February-to-May period, said it saw no need to extend the curtailments.

 

And it maintained its forecast for growing world demand for its other main fertiliser class, phosphates.