Uralkali’s board of directors has announced that it has decided to stop Uralkali’s export sales through Belarusian Potash Co. (BPC) and direct all export volumes through Uralkali Trading.
“Unfortunately, we should state that our cooperation with our Belarusian partners within BPC framework has come to a deadlock,” said Vladislav Baumgertner, Uralkali CEO said in a statement. “It has always been Uralkali’s position that export activities of both producers should go through the unified sales network. This fundamental principle of partnership was violated by the Decree No.566 issued by the Belarusian president on Dec. 22, 2012, which cancelled the exclusive right of BPC to export Belarusian potash. Following the issue of the Decree, Belaruskali has made a number of deliveries outside BPC.”
“We have repeatedly informed our Belarusian partners that such actions were unacceptable and they have ultimately destroyed the fundamentals of our prolonged fruitful cooperation. In this situation we have to re-direct our export deliveries through our own trader.
Still, we thank our Belarusian partners for cooperation within the BPC framework and do not exclude the possibility of cooperation on a mutually beneficial basis in future.”
In a conference call, Baumgertner told reporters that the news could mean that international potash prices could drop below $300/mt CFR, from the current contract price of $400/mt CFR to China. Uralkali also indicated it would run at full capacity in 2014, from 2013’s 10.5 million mt/y. With very low production costs versus its competitors, Uralkali believes prices could drop into the $200s/mt CFR.
Together, Uralkali and Belaruskali represented an estimated 43 percent of the global potash market.
Overseas potash company stock prices immediately began to fall on the news, including Uralkali, Germany’s K+S Group and Israel’s Israel Chemicals Ltd.