K+S shares plunged 14% after the fertilizer group revealed a plunge in profits blamed largely on weak potash values – even as Belarus revealed it had sold the nutrient to India at the lowest price in a decade.
German-based K+S, the European Union's largest potash group, revealed its operating profits for the April-to-June quarter had plunged by 94% - to E10m, from E179.2m a year before.
While K+S has warned previously that operating profits should, over 2016, "fall significantly below" last year's levels, the extent of the decline in the second quarter stunned investors.
The group's shares plunged 13.7% in early deals in Frankfurt to E18.245, wiping more than $600m from K+S's stockmarket value.
The shares recovered a little ground in afternoon deals to stand at E18.50, a drop of 12.5% on the day – still far outpacing the 2.8% decline in the average Frankfurt share, as measured by the Dax index, on a weak day for world equities amid the fallout from the UK's vote to leave the EU.
The stock price also represented less than half the E41 a share that PotashCorp offered last year in a takeover approach which the Germany group rejected as too low, saying that it "does not at all reflect the fundamental value of K+S".
The group said that the scale of its quarterly profits drop reflected in part weak forward orders in North America for deicing salt, and "unexpectedly high" production outages in German potash due to limits on the permitted levels of waste water it can dispose of.
However, Norbert Steiner, the K+S chief executive, also highlighted a "significantly lower average selling price" of potash, which have continued to be undermined by the failure of China, the top importer, and second ranked India to sign new purchase deals.
In fact, separately on Monday, Belarusian Potash Company, the Belarus potash export group, revealed a long-awaited sales agreement with India's Indian Potash Limited (IPL), for 700,000 tonnes of the nutrient.
However, the price, at $227 a tonne on a cost and freight basis, represented a 32% drop from the $332 a tonne at which BPC agreed to sell potash to India last year.
"The price of the contract is fair and reflects current market conditions of the global potash market," BPC said.
Also on Monday, Credit Suisse pegged potash prices as measured in South East Asia at $230 a tonne, down $5 a tonne week on week, and down by 21% so far this year.
Brazilian values at $215 a tonne – a drop of $10 on the week and 22% for 2016.
However, BPC said that the agreement with IPL would catalyse a recovery in demand from other buyers, many of which have been awaiting an Indian deal, seen as a setting a benchmark for prices worldwide.
"The conclusion of an agreement with IPL will undoubtedly be one of the main drivers for the industry's development," BPC said.
"It will positively affect the global potash market in the near future, add more certainty to all stakeholders and boost demand for potash fertilizers."
By Mike Verdin