The worries over the potash market were stoked from news on
three continents, as data showed North American inventories rising, while Israel-based
ICL and Chile's SQM flagged cautions over the market.
Patricio Contesse, the SQM chief executive, said that the Santiago-based
potash and chemicals group, while achieving a 15.2% rise to $165.2m in earnings
in the July-to-September quarter, faced a "a new set of challenges for the next
These included negotiating a "potash price environment [which]
has been relatively unstable in the past weeks and difficult to predict for the
Demand in South America "remains stronger than markets such
as India and China, where recent developments show that demand has been
weakening", the group said, following a long list of companies to warn over the
impact of the top importing countries delaying on fresh purchase contracts.
Potash producers including Canada's Agrium and PotashCorp,
Germany's K+S and US-based Mosaic have cautioned over the hit to the market
from the hold out by Chinese and Indian buyers for lower prices.
Separately, ICL, which has managed until now to underpin its
potash sales volumes thanks to deliveries of a postponed Indian contract and
strong shipments to Brazil, said that it was losing its resilience to the
impact of the talks.
Completion of the group's outstanding contracts, "and the
delay in the new contracts in India and China is expected to significantly
reduce [potash] shipments in the October-to-December quarter compared with the
[same] quarter of 2011," ICL said, if noting some pick-up in the phosphates
Demand in India, also a major phosphates importer, has seen
a "significant increase" from a period weakened by a late monsoon, "and the market
has stabilised following the start of rains".
ICL saw its operating profits from potash fall 12.2% to
$314.0m in the July-to-September period, on revenues down 6.4% at $657.1m,
depressed by lower selling prices.
Operating profits in phosphates dropped 7.7% to $51.6m, on
revenues down 4.4% at $438.0m.
'No signs of a
The data followed the release of data from PotashCorp
showing North American potash producers efforts to trim inventories coming
unstuck, with stocks rising by nearly 170,000 tonnes last month, after four
months of decline.
While an increase in October is not unusual, as demand wanes
following the height of the autumn fieldwork period, the revival in inventories
increased to 43% their standing above average levels.
There is "still no signs of a meaningful rebound for potash"
demand, AltaCorp managing director John Chu said.
"We view the data as bearish for the potash sector. Despite
indications of strong demand conditions in North America from a larger window
for fall fertilizer applications, higher month-on-month inventory levels
suggest that demand is sluggish."