Canpotex member Mosaic Co. told investors Jan. 6 that the Canadian potash export group will not follow BPC’s recent contract with Chinese buyers, which was agreed to at $350/mt CFR (GM Jan., 4, p. 1).
“We are not prepared to do business with the Chinese at the current price expectations and the current history of what’s been negotiated with other suppliers, so I just don’t see the price being reflective of what’s going to happen in the New Year,” said Mosaic President and CEO Jim Prokopanko. He said Chinese demand is not what it used to be, and he does not see it as being influential on world pricing going forward.
Prokopanko said that potash is a strong and tightening market. He said that in the past the Chinese deserved a discount due to large quantities and a predictable shipping schedule ?Çô but those are no longer the case. BPC said that China is expected to use 8 million mt of potash in 2010, with 5 million mt being domestic production, 1-1.2 million mt coming from BPC, and the remainder coming from other global sources (GM Jan. 4, p. 1).
Prokopanko cited good demand from other large buyers such as Brazil and India. Mosaic said Brazil’s potash inventories are about as empty (400-600,000 mt) as anyone has seen. India is expected back in the market toward the end of the first quarter.
Prokopanko said Canpotex is able to find customers willing to pay higher prices and there is no point in lower prices for the Chinese business, particularly as small as it potentially is this year. “We’ve made some sales as recently as yesterday in North America at prices higher than that, and we find international customers willing to pay more than what the Chinese negotiated.” The company noted that Brazil is a willing buyer at $400/mt CFR.
Prokopanko did note that producers still have large inventories and that they will find a market clearing price, which will still be handsome versus the numbers of a few years ago. He said Mosaic issued North American potash prices earlier this week. PotashCorp issued new North American numbers soon after the China/BPC deal (GM Jan. 4, pp. 1, 8, 9). Likewise, Agrium Inc. has also issued new North American postings. So far, postings from the three Saskatchewan producers appear to be in the same ball park (see Market Watch, Potash, in this issue).
Prokopanko said that people are just starting to get back to work in the New Year, that the company is getting calls, and that people are prepared to make decisions about their potash pricing and their orders for the spring season. He said that the company is still reluctant to give more guidance on potash. “We just haven’t had the sort of solid book of orders show up just yet.” However, he expects them to come in over the next few weeks.