PhosAgro warned that the potash market turmoil could hurt markets for other fertilizers too, and could –temporarily – bring a further decline in prices in its key phosphate market.
The Russian-based group, the world's second-ranked producer of phosphate nutrients, warned that the uproar in the potash market created by the break-up of the Belarusian Potash Company cartel "may have an impact on all fertilizers in terms of cautious customer behaviour".
PhosAgro flagged the potential for "partial delay" of purchases of all fertilizers "until the potash price stabilises in the short term".
Potash giant Uralkali, on quitting BPC, forecast a potential slump in potash prices below $300 a tonne, from some $400 a tonne, although other producers have questioned the likelihood of such a large drop in price, and many observers are awaiting signs of where values will find a floor.
'Prices will stabilise'
PhosAgro also highlighted the impact of weakening emerging market currencies on phosphate purchases by major importing nations such as India, whose demand remains "a question mark".
While the long-term impact of weaker currencies "is not necessarily negative" for countries which are net crop exporters - such as Brazil, whose real on Wednesday hit its weakest against the dollar since 2008 – "in the short term this causes customers to be cautious about importing fertilizers".
Nonetheless, the group's chairman and chief executive, Andrey Guryev, forecast an end to the decline in phosphate prices, which at the benchmark Tamp export price, averaged $486 a tonne in the first half of the year, down 9.8% year on year.
"Although in the short term we might see additional price pressure, in the longer term, industry fundamentals remain strong," Mr Guryev said.
"We believe that fertilizer demand will strengthen and that DAP [diammonium phosphate] prices will stabilise closer to the levels of marginal phosphate producer cash costs."
'Prices are likely to fall'
However, the comments contrast with a more gloomy outlook earlier this week from Credit Suisse, which cut by $100 a tonne, to $430 a tonne, its forecast for average Tampa phosphate prices next year.
The bank cited in part "lacklustre global demand", flagging the weak Indian rupee, which has cut the affordability of dollar-denominated imports, while saying that Latin American demand was "moderating".
However, Credit Suisse too noted a setback from the weakened market for potash, for which it hasforecast prices falling to $300 a tonne for China, with other importers paying more, up to $350 a tonne for Brazil.
"We observe that the phosphate premium has not exceeded $100 a tonne except when a substantial upmove in the fertilizer price basket has taken place," the bank said, in a report which cut its rating on PhosAgro shares to "neutral" from "outperform".
"In our view DAP prices are likely to fall towards the $400-a-tonne level towards the end of 2013, prior to a modest recovery prior to the North American planting season."
'Challenging market conditions'
PhosAgro's outlook came as it unveiled a 56% drop to 154m roubles ($353m) in earnings for the first half of 2013.
While revenues rose 6.7% to 53.7bn roubles ($1.73m), this was down to raised sales volumes, on which margins were reduced by the lower prices.
"Challenging market conditions… caused a significant decline in our financial results," Mr Guryev said.
However, he also highlighted the group's status as a "low-cost producer", which had allowed PhosAgro to "to generate a 25% ebitda [earnings before interest, taxation, depreciation and amortisation] margin and to maintain almost 100% production capacity utilisation, which I believe distinguishes us from our peers".
PhosAgro shares stood 0.5% lower at 926.40 roubles in afternoon deals in Moscow.