Intrepid Potash Inc. told analysts Aug. 5 that almost every dealer it spoke with at the Southwestern Fertilizer Conference said they intentionally finished the spring season with their storage bins as empty as possible.
“Over the last few weeks, we have seen a significant uptick in order activity,” said R. L. Moore, Intrepid senior vice president for marketing and sales. “There seems to be recognition in the marketplace that we may experience an early harvest, which means there should be a more favorable application window for potash.
“With the rail orders that were generated in July, coupled with our commitment to supply our consignment warehouse customers and truckload customers, we will likely come close to depleting existing inventories and production through the end of the third quarter.” Moore said current demand patterns are more typical of a normal year.
“Going into the fall, dealers are now indicating a willingness to take inventory risk, are more confident that demand has returned to normal patterns, and are not expressing concerns about current price levels.”
The only market that has been off for Intrepid has been the Rocky Mountain industrial market, which uses standard product. Intrepid is adding granulation capacity to its Moab, Utah, facility so as to provide better flexibility, i.e., sell more granular when standard is in lower demand. The granulation upgrade is expected by the end of the year. The current Intrepid sales ratio is 72% agricultural, 18% industrial, and 10% feed.
Intrepid denied analysts’ suggestions that Agrium Inc. might be taking away some of its market share in the U.S. Robert Jornayvaz, Intrepid’s chairman of the board and CEO, said that the Canadians had inventory that they probably weren’t sure they were going to sell, and that they were aggressive in certain areas because Intrepid had the opportunity to make more sales and it chose not to. “We were thinking that the market was going to firm and is going to continue to firm, and so we chose to pass on certain sales looking forward to what we think is going to be a good third and fourth quarter.”
Intrepid reiterated that it was the Canadians that first started dropping prices in late 2009, not Intrepid, which was selling at higher numbers.
David Honeyfield, Intrepid president and CFO, said the company sold the same number of tons in 2Q 10 as in 2Q 09, while Agrium sold about 10 times as much in the recent quarter than a year ago. Intrepid also suggested that Agrium might have been filling up its own retail outlets with part of the tonnage.
Honeyfield said Intrepid had a better average net realized sales price compared to other North American producers, in part due to its geographic location and the corresponding transportation advantage. He added that granular inventories are currently at prudent levels going into the fall buying season, and that the opportunities to sell exceed anticipated production. Honeyfield said that the company is holding back some tons for its truck markets, because those do tend to be higher margin sales. The company said it matched PotashCorp and Agrium price lists in some areas this summer, but not in others.
Intrepid said it has hired new personnel, and that the Carlsbad West and East facilities should be at full production.
On granular Trio, Intrepid said that every ton it can produce in the second half is spoken for. The company noted that Carlsbad East Mine langbeinite production was slowed down for 14 days in July due to heavy rains. The company’s Trio price goes up $15/st on Sept. 1.