Uralkali: potash prices to rebound in 2014, sales up
Russia's Uralkali, the world's largest potash producer, has increased market share since breaking up with its partner in Belarus and expects global potash prices to rebound in 2014, the company's head of sales said.
Uralkali is at the center of a row between Russia and Belarus, triggered when the Russian company quit a sales cartel with state-run Belaruskali in July, seeking to maximize sales volumes and rocking the global potash industry.
Since then, global prices of the crop nutrient have decreased and may fall further this year or in early 2014 when supply contracts for top global consumer China are set, Uralkali sales chief Oleg Petrov told Reuters.
China traditionally sets the lowest potash prices, a benchmark for companies negotiating individual contracts with other countries on the fertilizer ingredient.
"All corrections will occur in 2013, reaching a bottom in early 2014 with the contract in China, after which there will be a definite rebound," Petrov said.
In July, Uralkali said it expected global potash prices to fall to below $300 per tonne in the second half - from $400 at that time - because of its decision to leave the alliance.
The company has since changed its mind and, citing robust global demand, expects prices to stay above $300.
"But there might be a correction from current levels this year because Belaruskali and other producers' attempts to place volumes could put pressure on the prices," Petrov said.
He gave no current average price, but said the domestic price in China of about $330 per tonne delivered at the border was a "guideline" for the company's rail supplies.
The company sold about 2.7 million tonnes of potash in the third quarter of 2013, including 0.7 million tonnes in July, when it was still in the partnership with Belarus.
Some sources familiar with the situation say the Kremlin is eager to repair the rift with Belarus, for which potash is a major source of revenue, and that a large stake in Uralkali could be sold to one of several local bidders.
Several sources, however, have said there are no buyers close to doing a deal as of now.
Uralkali CEO Vladislav Baumgertner was detained while visiting Belarus on Aug. 26 and is now under house arrest, facing trial on charges of abuse of office.
Petrov did not comment on the stake sale rumours or on potential options for a settlement to the conflict.
"That's not a commercial question," Petrov said. "But our strategy is the right one for the moment. We had actually lost a lot of the market, and now we're getting it back."