China to launch antitrust investigation of Uralkali – Alert
China has begun an antitrust investigation into Russian potash producer Uralkali, Bloomberg reported on Nov. 10. The investigation comes just a month before China and Uralkali are set to negotiation new potash supply contracts for 2016.
Russia’s Economy Minister Alexei Ulyukayev said he hopes China’s decision in the case will be fair and the issue resolved, according to news reports. Some analysts said that the probe could have been initiated to push for lower prices. Uralkali had no comment, but the company’s marketing director, Vladislav Lyan, confirmed that Uralkali expects to start supply talks in December.
BCS Financial Group analyst Oleg Petropavlovskiy said that the effect of any Chinese fine – possibly as much as $70 million – would be "negligible" given Uralkali’s expected $2 billion in earnings before interest, taxes, depreciation and amortization. Uralkali’s shipments of potash to China totaled about 2.3 million tons last year, BCS said.
Uralkali recently confirmed that it is thinking about cutting fourth-quarter potash sales. "We are carefully monitoring the development of the situation on the market and we are now considering the possibility of reducing the sales target for the fourth quarter by about 300,000 mt," Lyan told Bloomberg on Nov. 5.