Uralkali revealed its best-ever quarter for potash
production – implying a sharp slowdown in output ahead if the group is to meet
its downgraded volume target.
The Russian group – which claims to be the world's largest
potash company, with capacity of 13.0m tonnes, a little higher than that of Canada's
PotashCorp – said that it produced 3.1m tonnes of the nutrient in the
That volume, up 29% year on year, was biggest since Uralkali
in 2011 ramped up its size with the takeover of domestic rival Silvinit.
And it took to 6.0m tonnes the group's potash output in the
first half of 2014, a rise of 35% year on year.
The sharp increase in production reflects Uralkali's change
in strategy announced in July last year when it quit the Belarusian Potash Company
cartel, claiming its joint venture partner, Belaruskali, had been selling
outside the consortium without consent.
Uralkali loosened in price discipline, revealing its willingness
to lift production volumes to regain market share.
However, the group last month said it was scaling back its
production forecast for 2014 by 1m tonnes to 11m tonnes, in an effort to give
some support to prices.
"Our strategy is not 'volume over price', or 'price over
volume' - it is a revenue maximisation strategy," Uralkali chief executive Dmitry
Osipov told investors at a capital markets day.
"We believe that, with these 11m tonnes, we will achieve
The company said that, given the "greater stability" in
potash prices, which have stabilised of late after plunging after the BPC
break-up, it was "seeking to maximise its revenue through stimulating prices".
On Thursday, German potash producer K+S also highlighted that
potash values had stabilised, saying that it was "even able to slightly
increase prices in some markets".
Uralkali's 11m-tonne target implies a drop in production in
the second half of 2014 to some 5.0m tonnes.
Uralkali produced 5.5m tonnes in the second half of 2013.
The prospect of a slowdown contrasts with some signs of
improved production among some other potash groups.
PotashCorp on Monday said that it was recalling 47 workers
at its Lanigan mine in Canada's Saskatchewan province thanks to a "tight market"
for granular potash, two weeks after, for the same reason, rescinding lay-off
notices for 50 workers at a New Brunswick mine.
Uralkali shares stood 0.7% higher at 159.08 roubles in late deals.