Uralkali underlines prospects for potash rebound
Uralkali underlined the potential for potash groups to see record sales this year as the fertilizer giant unveiled a 17% rise in its own revenues, lifted by a "rebound in demand" fostered by Chinese orders.
Oleg Petrov, the Uralkali chief executive, said that the potash market's "sluggish" close to 2013 had given way to improved conditions as "customers returned to active buying, as they sought to replenish depleted stocks and prepare for the spring sowing season".
"We expect the momentum to continue, and global potash deliveries this year may set a new record of 58m tonnes," growth of 7% on 2013, when volumes were curtailed by the market uncertainty following the break-up of the Belarusian Potash Company cartel.
Russia-based Uralkali, which has previously forecast volumes of 56m-58m tonnes this year, last July stunned the market by quitting the joint marketing operation with Belarus peer Belaruskali, prompting a stand-off by buyers as they waited to see where prices would settle.
'Strong demand growth'
Uralkali on Thursday said that fresh orders announced by China, the top importer of the nutrient, had driven a "rebound in potash demand" this year.
"Customers who chose to delay or defer second-half 2013 potash purchases in anticipation of lower spring prices returned to the market in the first quarter of 2014, and this led to a significant increase in potash sales.
"Strong potash demand growth and improved overall agriculture commodity prices translated into higher potash prices in major markets," the group said, in comments which follow data from Canadian rival PotashCorp showing a small recovery in prices in the benchmark Vancouver export market.
Potash shipments in Brazil "continued to grow at a record pace", Uralkali said, echoing data from industry group Anda this week showing rising fertilizer volumes in South America's major agricultural country.
In Central America, potash use has been "supported by strong coffee prices".
And Uralkali forecast firm trade ahead too in many major markets, such as North America, where "demand is expected to be strong in 2014 as farmers replenish declining nutrient levels in their soils after record crop production in 2013".
Europe, where fertilizer wholesalers have been restoring depleted supplies, is expected to show "solid" demand, particularly in countries in the centre and east of the region.
In South East Asia, volumes are expected to grow from 8.1m tonnes last year to 8.4m-8,7m tonnes in 2014, as palm oil growers "invest heavily in fertilizers to maximise returns".
Meanwhile Uralkali nudged higher to 3.7m-4.0m tonnes, from 3.5m-4.0m tonnes, its forecast for Indian imports, citing the support a stronger rupee has given to the affordability of dollar denominated imports.
The comments came as the group unveiled sales of $862m for the first three months of 2014, up 17% year on year, as stronger sales volumes more than offset the impact of lower prices compared with the environment before the BPC break-up.
Uralkali's sales volumes soared 63% year on year to 3.1m tonnes, implying a drop in inventories, with production rising by 38% to 2.9m tonnes.
"Robust demand enabled us to sell a large volume that we produced working at almost full utilisation capacity," Mr Osipov said.
Uralkali ditched the BPC consortium to pursue a strategy of maximising sales volumes, rather than restricting them to underpin prices, amid claims that Belaruskali had been selling potash outside the cartel without the agreement of its partner.
Uralkali depositary receipts, a proxy or shares, stood 2.0% higher at $22.30 in midday deals in London.
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