More potash mine slowdowns to come

OAO Uralkali, one of the world’s largest producers of potash, may be the next company to announce plans to slow its potash mining after world demand appears to be slowing, according to Troika Dialog.

Last week, PotashCorp announced it would shut down its Lanigan mine in Canada for a month. The move will reduce the potash market by 275,000 metric tons. The slowdown is an effort to keep prices from decreasing.

Global demand for potash has been hampered by various issues. India’s demand has been challenged by a newly revised subsidy system. China’s buyers are not rushing to sign up for new shipments.

As a result of the fledgling demand, Uralkali, a Russian potash company, would likely not be able to maintain product levels at full capacity, according to Troika Dialog’s report.

As long as the underlying market conditions remain soft, potash production could slow down for at least part of the third quarter. Other potash producers may follow suit in a matter of weeks with temporary slowdowns. Another factor in the slowdown has to do with uncertainty over crop nutrition needs in the United States after a devastating drought has reduced yields and caused some harvest to begin earlier than normal.

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