Nutrien Ltd., Saskatoon, announced on Sept. 11 that it expects to proactively take up to eight-week inventory shutdowns at its Allan, Lanigan, and Vanscoy potash mines in Saskatchewan during fourth-quarter 2019. The production downtime is in response to a short-term slowdown in global potash markets. If all three potash facilities were to remain idled for the full eight weeks, potash production could be reduced by approximately 700,000 mt, and potash annual EBITDA could be reduced by US$100-$150 million.
Despite the current short-term market conditions, the company said it remains positive on potash demand for 2020, as well as the medium- to long-term potash fundamentals. Nutrien said it “remain[s] focused on a gradual ramp up of production to meet demand and to ensure we operate the safest, most reliable, and efficient Potash business in the world.”
Nutrien told Green Markets that the announcement was in response to some temporary softness, mainly in offshore standard grade demand as it negotiates the India and China agreements. “We are still planning for a big fall application period in North America and remain committed to increasing the price for new in season Q4 sales,” a company spokesman said on Sept. 12. “Even if corn does not rally today (after the WASDE report), we see potash and dry phos as still very affordable, and (if weather allows) expect growers will apply P&K strongly this fall.”
“Classic curtailments at Nutrien’s potash mines are an ominous sign for a fertilizer whose prices have fallen 11 percent since February,” said Jason Miner, Bloomberg Intelligence Senior Market Analyst. “At most, the 1 percent (700,000 mt) of global capacity potentially offline could sap 7 percent of Potash-segment EBITDA vs. 2019 guidance. Yet the move shows Nutrien is still responsive, post-merger, and remains the global supply-demand steward. While broadly bearish for fertilizers, we expect conditions could quickly tighten, should 2019 U.S. corn supply begin to look thin.”
Nutrien shares were off 1.35 percent, closing at $51.07 on Sept. 12.
Nutrien told Green Markets on Sept. 12 that it is still assessing the number of layoffs to occur at the three mines. It said it will vary by site, and could be as low as 160 or as high as 250 per site. In total, the company said it could range between 600-700 over all sites for the two-month period.