As too much potash supply remains on the global market amid weak worldwide demand, two potash manufacturers announced cutbacks in output. PotashCorp announced it would close mines in Allan and New Brunswick for eight weeks while Mosaic said it would reduce its output.
PotashCorp will close its Allan mine between Dec. 16 and Feb. 9 and its New Brunswick mine will be shut down between Dec. 30 and Feb. 23.
“Not having a contract with India and China is the primary cause of this,” said PotashCorp spokesperson Bill Johnson. “And as a result of that, I think some of our other international customers are also deferring their purchasing to get a bit more clarity on where the market is going.”
Mosaic Chief Financial Officer Larry Stranghoener agreed that lower than expected demand was driving the need to cut back on output.
“We will continue to match production with demand, which may require us to further lower our operating rates,” Stranghoener said at an investor presentation in New York.
The recent announcement for PotashCorp follows on the heels of two mines that were temporarily closed. Lanigan is schedule to close Nov. 18 through Jan. 12. Its Rocanville mine will be closed from Dec. 2 to Jan. 26.
China and India’s delay in signing contracts has caused other buyers to postpone their purchases in anticipation of lower potash prices, which is putting downward pressure on prices.