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Brics lining up to support phosphate prices, says PhosAgro

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PhosAgro flagged conditions "supportive" for phosphate prices as, unveiling a jump in profits, it highlighted the potential for helpful dynamics not just from India, but the other Bric countries too - Brazil, China and Russia.

The Russia-based group underlined the improved prospects for India, the top phosphate importer, that it stressed on Thursday, when unveiling a contract with state-run Indian Potash to supply 1.35m tonnes of fertilizers between 2015-2018.

"We are seeing substantial improvements in India," said Andrey Guryev, the PhosAgro chairman and chief executive.

India's imports of diammonium phosphate, or DAP, a major form of the fertilizer, which have "improved dramatically already" this year may reach 5.5m-6m tonnes over 2015 as a whole, up from the "very weak purchases" last year of about 3.5m tonnes.

"Strong pricing environment"

However, PhosAgro flagged other reasons too for what it called a "strong phosphate pricing environment", with Russia potentially to see "solid" fertilizer demand, thanks to a government far support programmes and signs of broader recovery evident in the reviving rouble.

The rouble has recovered some 30% against the dollar over the past four months.

Brazilian demand faced a seasonal increase, with PhosAgro noting "significantly higher activity" in this market over the past month.

Meanwhile, on the supply side, Chinese phosphate exports, undermined early in the year by a "focus on" domestic demand, may remain curtailed thanks to a government drive to improve the efficiency of the country's fertilizer industry.

The measures "may result in continued declines in [phosphate] exports from China as a result of the closure of old and inefficient production units, as well as higher domestic use of better-quality fertilizers", the company said.

Revenues, earnings up

"Looking ahead, I believe supply-demand fundamentals will be supportive of DAP prices," Mr Guryev said.

DAP prices, as measured in the key Tampa export market, averaged $483 a tonne in the January-to-March period, up from $459 a tonne the quarter before.

The comments came as PhosAgrop unveiled earnings of 14.2bn roubles ($228m) for the quarter, up from 1.9bn roubles ($55m) a year before, on revenues up 71% at 50.2bn roubles.

Mr Guryev said that the performance, "the best quarterly results PhosAgro has achieved since my appointment as chief executive", would allow an increase in the group's dividend payout ratio.

The group on Thursday unveiled a dividend of 48 roubles per share, or 16 roubles per depositary receipt.

PhosAgro depositary receipts stood 1.9% higher at $13.15 in afternoon deals in London.


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