By Rod Nickel
Feb 25 (Reuters) - Potash Corp of Saskatchewan chief executive officer Bill Doyle said on Tuesday it was “logical” to expect potash rivals Uralkali OAO of Russia and Belaruskali to reunite at some point in a move that could bolster the struggling potash industry.
Doyle, speaking at the BMO Capital Markets Global Metals & Mining conference in Hollywood, Florida, said it was unclear when the two potash traders would get back together.
“It would appear to be in their own self-interest,” he said. “So I think it’s logical to presume that they will at some point in time get back together.”
Uralkali quit the Belarusian Potash Company in July 2013 and said it would focus on ramping up sales volume, which accelerated a potash price slide and pressured producer profits. The global potash industry was previously dominated by BPC and a similar North American trading group, Canpotex Ltd, which is owned by Potash Corp, Mosaic Co and Agrium Inc.
Shares of Potash Corp, Mosaic and Agrium rose slightly in Tuesday morning trading.
While a reunion of BPC could return some clout to suppliers, there are some signals it isn’t imminent.
Belaruskali will step into Uralkali’s home turf and supply potash to Russian phosphate and nitrogen fertilizer company Phosagro OAO in 2014, the Russian firm said on Monday.
And on Tuesday, BPC said Belarus had signed a contract to supply potash to China in the first half of 2014.
Regardless of whether Russia and Belarus reforge their partnership, potash prices for April delivery to Brazil are up 16 percent since the start of the year, Doyle said, adding that prices are also rising in southeast Asia and the United States.
A recovery depends on India’s appetite for imported potash and phosphate. India’s government subsidy program that favors nitrogen over the other two crop nutrients has dampened Indian demand since 2010, and there are differing views on when the program may change.
“I would like to be able to say there’s a quick fix for the situation in India, but that’s not our view,” Doyle said. “In fact, we believe India is unlikely to remedy its subsidy imbalance until more pressure mounts for change.”
India is scheduled to hold a general election by May. A new government may get new ministers in place in the second half of 2014, with renewed Indian demand not likely until 2015, Doyle said.
Mosaic, a phosphate and potash producer, is more optimistic.
India ran down its fertilizer inventories last year, and will need to import more potash and phosphate in 2014, said Mosaic chief operating officer Joc O’Rourke, also speaking at the BMO conference.
But O’Rourke cautioned, “if there’s a cloud on the horizon, it’s the potential for weakening agricultural prices in the second half of the year.”