Uralkali sees 2014 potash demand up
Over the last ten years, demand for potash grew on average by 0.9% p.a. while global capacity increased by 3% p.a. over the same period. This widening supply/demand gap resulted in reduced capacity utilization rates across the industry and contributed to a decline in potash prices starting from 2012. The downward trend continued into Q3 2013 on the backdrop of market uncertainty following the split of Uralkali from BPC.
Brazil remained the most active market during Q3. According to Brazil’s national fertiliser association (ANDA), potash imports to Brazil in January-September grew 2% y-o-y to 5.95 million tonnes compared to 5.85 million tonnes in the corresponding period in 2012. Farmer economics were favourable, given the Brazilian real’s depreciation against USD and firming of soybean prices. Potash prices eased to USD 310-3304 per tonne by mid-December. Brazil still remains the most active market with strong demand, and ANDA expects the country to import 7.5 million tonnes of potash in 2013. Brazilian market is expected to continue to demonstrate strong demand in 2014 and Uralkali will continue to focus on growing its market share in the country.
In India, the depreciation of the rupee against USD continued to affect importers in Q3. Although the Indian rupee recently recovered to INR62 against the US dollar compared to the record high INR/USD of 67.8 at the end of August, the currency is still showing a depreciation of about 18% since February. Demand from farmers remains relatively moderate. Since India has renegotiated a contract price (currently USD 369 per tonne5), import volumes have picked up. India is expected to import 3.0-3.2 million tonnes of potash in 2013.
According to the customs statistics, China imported 4.8 million tonnes of potash in the first nine months of 2013 compared to 5.6 million tonnes in the corresponding period last year. Deliveries are currently stable supported by demand from compound fertilisers producers. By the end of 2013, potash inventories in China are expected to fall to 3.5 million metric tonnes from 4.9 million metric tonnes at the end of 2012.
The Southeast Asian markets have been monitoring the situation in China and India. Although palm oil prices this year are lower, they are still firm enough to allow for attractive margins to be made by plantation owners. In December, Uralkali signed a joint venture agreement with Federal Land Development Authority of Malaysia through Uralkali Trading SA which represented a successful strategic step to improve the Company’s sales position in Southeast Asia. The joint venture will deliver potash to Malaysia and other countries in the region from January 2014.
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