Monday, March 19, 2018

Potash industry is nervous

Bloomberg news reports that the global potash industry is nervous because demand has been increasing and any disruption in supplies could result in shortages.

Earlier this month the roof of a mine in Belarus collapsed and that was enough to trigger stock-market reactions, including on the Toronto Stock Exchange.

Demand has been constantly increasing and any change in production from the world’s top suppliers in Canada, Belarus and Russia has the potential to impact the market dramatically, said Daniel Sherman, a senior analyst for Edward Jones in St. Louis.

“If a large mine in one of those suppliers is hit, it’s clearly going to put a dent in the supply,” Sherman told Bloomberg News by telephone. “One of the key things is the supply is very concentrated.”

State-owned Belaruskali is the world’s second-largest potash producer and is one of three companies, alongside with Russia’s Uralkali and North America’s Canpotex, that accounts for more than 60 percent of total output.

While Belaruskali insists there is no threat to production, the accident has shown how vulnerable the market is to disruptions at a time when demand is poised to rise.

India and China are negotiating supply contracts, buyers are looking to purchase fertilizer ahead of spring in the Northern Hemisphere, and Canadian producers recently idled one million metric tons of output in an effort to bolster prices.