After a lackluster third quarter for most potash manufacturers followed by announcements of temporary mine closures this winter, PotashCorp announced it expects global shipments of potash to rebound in 2013 to between 57 million and 58 million tonnes.
Bill Doyle, chief executive for PotashCorp, issued that statement at a Morgan Stanley investor conference in Boston last week. The reason he is so optimistic is due to the fact that China and India will boost their consumption of potash. The two countries have held off signing any contracts for the next season, which is causing supply to back up in the market and putting pressure on prices.
Doyle said it was possible that China would sign its contract before the end of 2012.
“If you think about the Northern Hemisphere and the planting that will go on for the 2013 crop, there are going to be moves made between now and January in China, in India and other locations around the world to be ready. They are not going to plant without potash,” he said.
China has been reluctant to purchase North American potash since it has large domestic supplies. In India, the government is continuing policies that favor nitrogen over potash, which has become expensive for most farmers.
In addition to addressing the global potash demand outlook, Doyle was asked about PotashCorp’s negotiations with Israel Chemicals Ltd. Although he wouldn’t address the negotiations, he did say that there is no certainty in the talks that it will lead to a transaction.