Intrepid Potash revealed a return to rising sales values for
its potash, and forecast price increases would stick despite the tumble in
grain markets, as the group unveiled a bigger-than-expected return to the black.
The US-based group unveiled earnings of $5.56m for the
April-to-June period a figure which, while down 51% year on year, represented the
first profits in three quarters.
The return to the black reflected in part efforts to cut
costs, as Intrepid and other potash groups struggled against a market thrown
into turmoil after Russia's Uralkali a year ago broke up the Belarusian Potash
Company cartel, which controlled more than 40% of world trade.
The cartel's demise prompted a slump on potash prices, as
buyers stood back, awaiting to see how far prices would fall.
However, Intrepid also noted a return to growth in prices it
achieved for its potash, up 4% quarter on quarter to $363 per tonne, as demand
swelled, although values remained well below the $443 a tonne it achieved in the
same period of 2013.
"Potash demand in the second quarter remained strong and
pricing improved in response to lower inventory levels in North America,
particularly of granular sized product," Intrepid Potash said.
And customer demand has started "strong" in the
July-too-September quarter too, raising the chances of price rises sticking
despite the fall in corn prices to four-year lows, implying lower farmer
"Intrepid does not expect potash pricing to fluctuate
meaningfully during the second half of the year in response to current corn and
soybean pricing as current potash pricing provides good value to the farmer,"
the group said.
Intrepid indeed highlighted the summer potash price rise, to
$463 a tonne in the Midwest, by Canada's PotashCorp, as supporting "an outlook
for stability in pricing into the fall season of 2014".
The comments also come two days after Urakali, nearly exactly
a year after quitting the Belarusian Potash Company, said it may raise by 10%
prices for a 2015 supply contract with China.
Prices agreed by China, as the top potash importer, tend to
set the benchmark for other buyers.
Intrepid reported sales of $110.9m for the April-to-June period,
up 19.7% year on year, and ahead of market expectations of $91.0m.
Besides higher prices, the group also achieved
above-forecast sales volumes of 235,000 tonnes.
Earnings, equivalent to $0.07 per share, beat forecasts of a
However, the stronger sales volumes, up 28% year on year, came
with a hangover, in depleting inventories such that Intrepid lowered to
415,000-435,000 tonnes, from 420,000-440,000 tonnes, its forecast for volumes
in the second half of 2014.
The group produced 411,000 tonnes of potash in the first
half of the year – 67,000 tonnes behind sales.