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PotashCorp flags 'tightness' in potash market

PotashCorp flagged "ongoing tightness" in potash as it extended the lift of one of its Canadian mines, as the market for the fertilizer showed signs of a small recovery in prices too.

The Canadian potash group said that that it had given a "temporary extension" in operations at its Penobsquis mine in New Brunswick, in eastern Canada, rescinding lay-off notices for 50 staff.

The move to extend production at Penobsquis, originally expected to cease production during the April-to-June quarter, reflected "ongoing tightness in the granular potash market" PotashCorp said - contrasting with the talk of loose supply conditions which has dominated the industry for much of the last year.

However, it found some support from a report released late on Friday by PotashCorp showing potash prices recovering marginally in the Vancouver export market from a six-year low of $300 a tonne.

Supply vs demand

Indeed, the report showed inventories held by producers in North America with Belarus-Russia one of the big potash mining regions falling last month to 2.35m tonnes, their lowest since September 2012.

Inventories were 19.7% lower year on year, the largest rate of decline since July 2011, ending up 15% below the five-year average.

The decline reflected a drop in production of 13.5% year on year to 1.69m tonnes as producers, including PotashCorp, have curtailed output in a market sent reeling by the collapse of the Belarusian Potash Company cartel in July.

Meanwhile, on the consumption side, North American exports were, at 1.11m tonnes, up 4.5% year on year.

PotashCorp shares stood 2.0% higher at Can$39.88 in afternoon deals in Toronto.

Domestic use, although down 3.4% on May 2013, was, at 1.02m tonnes, at a historically high level.

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