The Mosaic Co. President and CEO James Prokopanko said last week that a potash deal with China is imminent and could occur before Christmas, or shortly thereafter. He was speaking before the Bank of America Merrill Lynch Global Industries Conference.
PotashCorp also said last week that it is bringing its Lanigan, Sask., potash mine back up quicker than expected due to anticipated demand, as well as overall potash inventory management. Lanigan, which went down Nov. 29, will come back up Jan. 3, 2010, rather than at the end of February, as was originally planned. As a result, the mine will be down only five weeks, rather than 13.
Despite the Lanigan announcement, PotashCorp did opt to take another eight-week turnaround at its New Brunswick mine. The mine, which was down Oct. 11-Dec. 5 for eight weeks, will go down again for another eight weeks beginning Jan. 17. PotashCorp will likely keep many of the mine’s 320 employees on the job doing maintenance work. During the recent downtime, some 90 percent of the employees remained on the job.
A North American buyer told Green Markets that he has seen a shift in attitude from potash suppliers in the last week or so. He said they had gone from anxious to sell to reserved, leading him to believe a deal from China was imminent.
Yara International ASA last week continued to blame high potash prices on slow sales of its NPK products. It said that while demand for its straight nitrogen products has been picking up, NPK remains its most challenging product as farmers continue to delay purchases due to high potash prices.
Prokopanko last week indicated that prices to China might be as low as $325-$355/mt FOB Vancouver.
Bruce Waterman, Agrium senior vice president, finance, and chief financial officer, put the Chinese price somewhere between $300-$460/mt CFR. “When you have an annual contract, and you are over 11 months into the annual contract year and you haven’t settled yet, it shows pretty difficult negotiations.” He added, however, that potash prices in China have gone up to over $400/mt. “Why would the Chinese let that go up to that level, if they are still expecting a big sub-$400/mt price?”
Waterman also said that Chinese port inventory levels for potash have gone down, indicating that they are running short in the interior. “If that’s happening, then they are getting close to being short of potash, which should encourage them to settle.”
For now, however, Waterman said that nobody is buying potash. He said buyers are looking at the relationship between the corn price and nitrogen and phosphate, and those are more in line with historical relationships. “Potash is still high in relative terms. It doesn’t mean it’s not going to stay there, but it’s high. And the bigger issue is everyone knows that when the Chinese settle the contract depending on that price, the price will equalize to the Chinese contract internationally and then it will equalize in North America.”