World potash consumption may bounce by more than 10% next
year, supported by a drop in prices to multi-year lows following the break-up
of the Belarusian Potash Company cartel, Uralkali said.
The Russia-based group, the world's biggest potash producer,
lifted to 58m-60m tonnes, from 56m-57m tonnes, its forecast for world consumption
of the fertilizer in 2014.
The upgraded figure, which compares with use of 53m-54m
tonnes expected for this year, reflects a drop in potash prices to their lowest
since at least 2009 - to below $350 a tonne in Brazil, South East Asia and New
Orleans - after Uralkali in July quit the BPC consortium which controlled more
than 40% of world trade.
"Competitive prices… will drive potash demand growth in 2014,"
said Uralkali, which described it new strategy as "prioritising volumes or
prices, depending on the market situation", rather than the "price over volume"
idea followed by the cartel.
'Demand is gradually
Already weaker prices, down from levels of $550 a tonne or
so reached in mid-2011, had encouraged consumption.
"As potash became more affordable for lower income farmers,
and inventories are depleting, we see that demand is gradually recovering," Oleg
Petrov, the Uralkali head of sales and marketing, said.
And demand is expected next year to prove particularly strong
in Brazil and South East Asia, besides in India and in China, the top importing
nation, whose moves in the market are particularly closely watched, as its
import deals set price benchmarks for other buyers.
Although Chinese potash imports in the first nine months of the
year were, at 4.8m tonnes, down 800,000 tonnes year on year, the impact is being
felt on inventories, which Uralkali expected to tumble 1.4m tonnes to 3.5m
tonnes over the full 2013.
In the US, the need to replenish soil nutrient levels after bumper
harvests will spur "very strong" potash demand next year, while Europe will see
a "strong market rebound" in the first quarter of 2014.
The upbeat comments contrast with more cautious outlooks
from some of Uralkali's rivals, with Canada-based PotashCorp earlier this month
revealing it was to axe 18% of its workforce, leaving its potash operations to be "staffed
to run at a reduced level for the foreseeable future".
US-based rival Mosaic last month unveiled the closure of a
US potash mine, and the exit from fertilizer distribution businesses in
Argentina and Chile, in response to "cautious" market behaviour.
Germany's K+S, flagging "considerable uncertainty" in the
potash market, has unveiled a $670m cost-cutting drive.
Concerns have also grown over the viability of some potash expansion
plans, and indeed Uralkali said that "lower potash price should promote
rational decision-making in relation to greenfield projects", while viewing its
own expansion plans as "cost effective".
World potash capacity has grown 3% over the past decade,
compared with a 0.9% annual rise in consumption, the group said.
However, Uralkali too revealed a dent from the market
downturn, unveiling revenues down 19.2% at $856m for the July-to-September
period, as a small rise in volumes failed to make up for a tumble in prices.
The average sales price for potash exports tumbled 27% year
on year to $272 a tonne, with domestic supplies achieving $192 a tonne, down
The group claims it is shielded from the price downturn by "the
most attractive cash costs in the sector".
Uralkali shares stood 0.6% higher at 170.09 roubles in
afternoon deals in Moscow.