|Agrimoney.com - http://www.agrimoney.com/news/news.php?id=10730|
|PhosAgro sees Chinese cutbacks curbing phosphate price pressure
By Mike Verdin - Published 17/05/2017
PhosAgro warned against expecting a retreat in phosphate values to gain legs, flagging support to values from Chinese capacity cuts, but acknowledged the dent to prospects for price rise from output increases elsewhere.
The Russian-based fertilizer group, which is one of the world's largest producers of raw material phosphate rock, acknowledged a market retreat from spring highs of $375 a tonne for the key Dap product in the key US Tampa market.
Dap was this week trading at $355 a tonne in Tampa, down $5 week on week, according to analysts at Raymond James.
"We currently see some seasonal softening after the end of the spring season in Europe and North America, and higher export potential from China," said Andrey Guryev, the PhosAgro chief executive.
'Better stability in prices'
However, the pressure from a seasonal uptick in Chinese export supplies was likely to be curtailed by the knock-on effects of capacity cuts in the country.
"Industry consolidation and rationalisation in the country, coupled with production and export curtailments, is likely to provide better stability in prices," Mr Guryev said.
Nonetheless, he cautioned too against foreseeing a rise in values ahead, given the prospect of extra capacity coming online in Morocco and Saudi Arabia, which "may have a limiting factor for any significant price increases".
'Exports to fall'
The comments tally with those of US phosphates giant Mosaic, which has forecast capacity increases ahead of 2m tonnes in Morocco, plus 3m tonnes in Saudi Arabia through the group's joint venture with local operators Saudi Arabian Mining and Saudi Basic Industries.
The Saudi joint venture will probably produce some 300,000-500,000 tonnes this year, Mosaic told investors earlier this month.
Like PhosAgro, Mosaic also forecast a drop in Chinese exports, to about 8.0m tonnes this year, from 9.5m tonnes in 2016 and 11.6m tonnes in 2015, thanks to production curbs.
"With economic and environmental pressures mounting on Chinese producers, we expect their exports to fall," James O'Rourke, the Mosaic chief executive,
Rouble vs dollar
PhosAgro issued its comments as it reported a 46% slump to 12.26bn roubles ($208m) in earnings for the January-to-March quarter.
While sales of major products rose by volume, growng 9.2% to 1.54m tonnes for phosphate-based products, revenues dropped by 21% to 44.40bn roubles, undermined by the strengthening of the currency.
"As a company with mostly dollar-linked sales and rouble-based costs, PhosAgro felt a significant effect from the sharp year-on-year appreciation of the rouble against other currencies, which offset the recent recovery in prices," Mr Guryev said.
"In these circumstances, we remain focused on cost efficiency in order to mitigate the negative impact from foreign exchange fluctuations."
PhosAgro shares stood 1.1% higher at 2,416 roubles in late deals in Moscow.
|© Agrimoney 2017|