Sanctions on Belarus’ potash exports, a key revenue earner for the country, are starting to bite, with Lithuania’s decision to stop railing Belarus potash, isolating it from its key export port, Klaipėda, taking effect from Feb. 1.
A Russian troop build-up on Ukraine’s borders has stoked fears of war, and the prospect of sanctions on Russia by the U.S., the U.K., and others, particularly should Moscow send troops into Ukraine.
In an interview with Reuters, Nutrien Ltd.’s Interim President and CEO Ken Seitz said Nutrien could restart up to 4 million mt of idled potash production capacity in Canada in the coming years as it assesses the long-term outlook for sanctions against competitors.
As a first step in increasing production, he said Nutrien may raise output by 700,000 mt to 1 million mt in the second half of 2022 “at low expense.” But it would depend on if sanctions are going to be a longer-term problem for the market, Seitz said.
Canpotex, the export marketing company owned by Nutrien and The Mosaic Co. Ltd., said last week it is fully committed on volumes for potash sales through March 31, 2022, due to “continued strong demand and solid fundamentals for agricultural commodities in key offshore markets” (GM Jan. 28, p. 14).
However, according to BMO Capital Markets analyst Joel Jackson, as cited by the report, global operational capacity exceeds demand by over 10 million mt this year. In a normal situation, the potash market is oversupplied, he said, and believes Nutrien should hold back on any decision to expand “too much too fast.”
Moscow-based VTB Capital analyst Elena Sakhnova believes additional production from competitors will not fully replace Belaruskali/Belarusian Potash Co., which previously sold about 12.5 million mt of potash a year.
Nor does she believe Russian producers will rush to increase their output, citing speculation that Washington may grant a waiver to BPC’s U.S. buyers, essentially postponing sanctions from taking effect on April 1, according to the report.
EuroChem has no plans to accelerate ramp-up of new production, according to the report, citing a company spokesperson, while Uralkali declined to comment to the report on its plans.