Upheaval continues in the global potash market. Inventory in the US continues to grow, Canadian potash producer Agrium Inc. (NYSE; TSX: AGU) has also slashed prices, while Brazilian mining corporation Vale SA (NYSE: VALE) denies that it plans to acquire Minnesota-based Mosaic Company (NYSE: MOS), and Chinese producer Sinofert Holdings Ltd. (HKSE: 0297) has published a profit warning.
Clal Finance analyst Aviran Revivo sums up the situation in one sentence: "The potash market situation is still complicated, and a return to stable demand still appears to be far off."
Israel Chemicals Ltd. (TASE: ICL) is not immune to the turmoil, and its share has been quite volatile of late. The share fell 0.5% by early afternoon to NIS 38.15, giving a market cap of NIS 48.5 billion. The share of parent company Israel Corporation (TASE: ILCO) rose 0.3% to NIS 2,017, giving a market cap of NIS 15.5 billion.
Agrium, a member of Canpotex Ltd. along with Potash Corporation of Saskatchewan Inc. (NYSE; TSX: POT) and Mosaic, has cut its price for potash in the North American market to $512 per ton from $564 per ton, in the wake of the Indian contract by Russian producer OAO Silvinit (RTS: SILV) at $460 per ton two weeks ago.
Revivo says, "The importance of Agrium's price cut isn't its asking price, but because it is a member of Canada's potash marketing corporation, Canoptex. The price cut means that Agrium has broken the rigid price discipline taken by Canoptex in the past year. It is interesting to again see how the smaller players in the market set the price trends, while the major player, Potash Corporation, sits on the side and is liable to find itself being dragged after the price trend in the market."
On Thursday, Potash Corporation, the world's largest potash producer, said that North American potash inventories rose by 154,000 tons in June and are currently 115% above the previous five-year average.
Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2009
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