Phosphate Holdings Inc. CEO Robert Jones told analysts April 27 that the company’s fourth quarter ending Dec. 31, 2008, was “absolutely horrible,” and that he had seen nothing like it in his 35 years in the industry. Results for PHI, which owns Mississippi Phosphates, appeared in the Green Markets dated April 27 (GM April 27, p. 10). PHI lost $58.1 million for the quarter and $3.5 million for the year.
Jones said that by mid-October 2008, demand absolutely vanished. October sales were $14 million, compared to $70 million in September. He said the fourth quarter was 80 percent down from the third.
The company immediately took action to preserve liquidity, halting phosphate rock purchases from October until March. Sulfuric acid production was cut; DAP production was reduced in November to 50 percent of capacity, and did not return to full production until April. By March 31, Jones said DAP inventories were zero. Capital expenditures were kept at a bare minimum, and projects were deferred.
In November, Jones said the company was running out of cash and signed two provisional sales contracts (price based on resale price) that brought in $45-$50 million. The company was also aided by over $21 million in tax refunds, which included both state and federal.
Jones said by November there was hope of some semblance of a fall season, but that the company’s fall season consisted of ten barges and two trucks.
Going into 2009, Jones said the market was dormant until mid-February – and then India bought over 3 million mt. Prices moved up, but have since deteriorated. He said the domestic market has been weather delayed, and he expects rapid movement over the next two months. Currently, PHI said the international market is slow, with interest for small lots in Mexico and South America. PHI said the only major market is India and “they know it,” and as the only region buying they are highly competitive.
PHI has yet to renegotiate a new DAP contract with OCP and hopes to do so for a multi-year period. Other phosphate input prices are weaker now, including sulfur, and Jones predicted weaker ammonia prices for May and June.
The good news, says Jones, is that demand will resurface. He said that for six months the world has basically stopped using phosphate, and this will impact yields. This lack of use is not sustainable. He said PHI’s goal is to survive until the market conditions improve, and that he believes the company will do that, adding that PHI has the operating leverage to recover quickly.