Fertecon Potash Market Review

Atlantic Potash Millstream Corporation (‘APMC’) provides a summary of Fertecon’s August Potash Report, noting the outlook on Potash pricing is stable to firm:

Summary

  •     BREAKING: Agrium and PotashCorp understood to be negotiating merger
  •     Canpotex and BPC sold out until October with limited supply for Q4
  •     Uralkali settles Indian and Chinese contracts at established price level
  •     Brazilian prices remain steady at $230-235 although suppliers pushing for higher
  •     US: NOLA fob prices firm $10-12 and major domestic prices gain $5-10/ston
  •     European prices decrease by $25 as suppliers attempt to woo recalcitrant buyers
  •     Uralkali cites slow demand as it reports 10% decrease in 1-half MOP output

Fortnightly Analysis 

The market appears to be taking some time to digest the flurry of recent price increases. However, whilst international spot sales may appear to be slow, suppliers seem calmly confident that the worst is behind them. 

Uralkali announced that it has settled its 2-half 2016 contracts with its long-term Chinese customers at the same price other suppliers established in July i.e. $219 cfr. Additionally, the Russian producer has agreed to supply 650,000 t MOP to IPL in India to cover the period 1 August 2016-31 July 2017, priced at $227 cfr including 180 days’ credit. This will go some way towards supporting the present state of calm which appears to have swept the supply side. 

Also bullish is the flurry of higher prices achieved in the US over the last fortnight: NOLA fob barge prices increased from $185-188 fob to $195-200, whilst ex-warehouse prices in Iowa and Illinois have increased from $220-225 to $225-235/ston. 

In spite of all of these positives, suppliers in Europe and the CIS will see lower average spot prices this week due to the recent decline in NW European cfr prices. Slow demand in Europe has resulted in granular MOP prices deteriorating to €240-250 cfr which has had a negative impact to the tune of $25 on European and CIS suppliers’ high end fob prices. It is worth noting that import demand across the region is very slow and, whilst this lower price has been confirmed by both importers and suppliers, there has actually been very few qualifying sales to test it. For many in the market this price development is not shocking news; it has been widely accepted that the high euro-denominated prices have been too high given the market fundamentals and therefore for most people, this lower price is just a correction – and not a full one at that. It is worth highlighting that in US$ terms, European granular MOP prices average $273.5 cfr – significantly higher than any other granular market. 

In balance, the market is reasonably calm with prices remaining steady-to-firm for the short-term; should the talk of tight supplies prove to be more than just game theory, prices could be in for a mild-to-moderate recovery as we finish Q3 and approach year-end.

For more information on the Potash Market, please visit: www.fertecon.com

Enquiries

Justine James
Gable Communications
T : +44 20 7193 7463
apmc@gablecommunications.com 

Keith Attoe
Chief Executive
Atlantic Potash Millstream Corporation
www.apmcpotash.com

About APMC

APMC is a Canadian exploration and development company with potash mineral rights in a confirmed potash deposit at Millstream, New Brunswick, Canada.  APMC has completed development work on the Millstream Potash Project, more recently receiving an updated NI 43-101 Resource Estimation Report and Economic Appraisal, which was carried out by German based Ercosplan. 

Potash Market

  • The most common use of potash, is as the primary ingredient in the production of agricultural fertilizers. 
  • Together with the two other major plant nutrients (nitrogen and phosphorous), potash is required in large quantities for plant growth as it encourages water retention in plants, increases yields, improves taste and helps plants resist disease. These three major plant nutrients do not have any substitutes but low nutrient-content alternatives such as animal manure, bone meal and compost can be used
  • The most commonly used potash fertilizer is potassium chloride (“KCl”) also known as muriate of potash (“MOP”)
  • The demand for potash is generally dependent on population size and global consumption of agricultural products, particularly food products 
  • The key drivers of increasing demand for fertilizers in general and potash fertilizers in particular are:   
    • A growing global population causing an increasing demand for food. 
    • Changing food consumption patterns, including increased meat consumption by a growing middle-class in developing countries                                            
    • Increased consumption of biofuels, especially in industrialised countries