Prospects for the fertilizer sector are looking sufficiently bright that producers are likely to think of bringing mothballed phosphate capacity back on line, Israel Chemicals has said.

Israel's second largest listed company said that while its overall fertilizer sales remained in decline in the July-to-September period, halving to $677.1m, it had noticed an "increase in demand" for phosphates.

By volume, ICL's phosphate sales for the quarter were, at 387,000 tonnes, down only 10,000 tonnes year on year, a sharp improvement on the 500,000-tonne shortfall in the first six months of the year.

Waning stocks 

The improvement had also been reflected in a fall in key North American inventories as demand recovered at a time when producers, including ICL, have slashed output.

Mosaic, the sector leader, is following up a 1m-tonne cut last year with a similar reduction this year.

"The low levels of stocks are likely to encourage producers to reconsider the production stoppages they had announced," ICL said, adding that it remained upbeat about the prospects for rising cereals demand to revive nutrient sales.

"The fundamental drivers of demand for fertilizers in the long run have not changed significantly," the group said.

Data released by fertilizer giant PotashCorp last week showed stocks of diammonium phosphate, a key ingredient of phosphate nutrients, held by US producers was at 23,000 tonnes running 28% below the five-year average.

Brazil boost 

ICL's comments came as the group, the world's sixth-largest potash producer, unveiled underlying earnings down two-thirds to $278.9m for the third quarter.

Sales slumped 38% to $1.35bn, reflecting a "sharp drop in quantities sold in all of the company's segments of operation" which, beside fertilizer, include industrial products used by carmakers, construction groups and electronics firms.

Potash sales slipped 57% to $245.4m by value, and by 22% to 979,000 tonnes by weight, a decline which represented an improvement on the previous quarter.

"Sales of potash to Brazil have picked up," ICL said.

The group's shares closed 1.6% higher at 52.83 shekels in Tel Aviv.