Uralkali underlined the revival in demand for potash, pegged
world industry volumes in the first half of the year at a record high, as the fertilizer
giant unveiled a smaller fall in earnings than investors had expected.
The Russian-based group - the world's biggest potash
producer by production, at 10.0m tonnes last year, and capacity, at 13.0m
tonnes – said that 2014 had been a "strong year for potash sales so far".
The return of customers who in the second half of 2013
delayed purchases, after Uralkali's break-up of the Belarusian Potash Company
cartel sent prices tumbling, drove global industry sales to 33m tonnes, a
record high and up 15% year on year.
"Several producers announced that they were fully committed
for first half 2014 shipments," Uralkali said.
The rise had been evident in "stronger-than-ever" sales in
the European Union and former Soviet Union markets, where demand is seen
growing to 10.6m-10.8m tonnes this year, from 10.2m tonnes in 2013.
In North America, where demand looks like remaining "solid",
volumes "may return to the record high levels seen in 2010" of 9.8m-10.0m
tonnes, while in Brazil, where demand is "significantly increased", sales are
expected to set an all-time high of 8.6m-8.8m tonnes.
Indeed, in Brazil, "strong demand and limited availability
of granular potash" has driven potash prices up some $35-40 a tonne so far this
year, Uralkali said, in a somewhat more bullish assessment than that on Wednesday
from Chilean rival SQM.
Uralkali acknowledged that a weak monsoon had led to "weaker-than-expected"
demand in India, the second ranked potash importing country, but stood by a
forecast nonetheless of world potash volumes hitting 56m-58m tonnes this year,
up from 54m tonnes in 2013.
Indeed, "global potash demand in 2014 may exceed the 2011
level," of 57m tonnes, "which would set a new record.
"Increases are expected in all major regions, partially
aided by restocking needs," the group said forecast that dynamic will "continue
to support potash prices in major spot markets".
The upbeat market assessment came even as Uralkali unveiled
a drop of 6.8% in earnings to $370.9m for the first half of the year.
Revenues rose 6.9% to $1.73bn, with a 42% rise in sales
volumes more than making up for a drop in prices, which for Uralkali were 30%
lower on export markets at $220 a tonne, although the lower values fed through
into weaker margins.
However, the drop in profits was less than that expected by
analysts, who have forecast earnings of $330m.
Nonetheless, Uralkali shares stood 0.4% lower at 141.27
roubles in late deals in Moscow, where stocks
weakened overall, by 2.0% according to the Micex index, thanks to raised