OAO Uralkali (URKA), the largest potash producer by output, said global shipments of the crop nutrient will recover next year as demand grows from Asia to the U.S.
Deliveries will return to 54 million metric tons to 55 million tons in 2013, Chief Executive Officer Vladislav Baumgertner said today in Moscow. That compares with as little as 48 million tons this year, a 16 percent decline from 2011, Uralkali data show.
Shipments have slumped as China and India, the two largest buyers, delayed purchases as their stockpiles of the potassium- based compound grew. Demand will recover as those inventories shrink and farmers around the world use more fertilizer to revive crops after droughts this year, according to Uralkali.
“The first quarter will still be difficult, but we expect markets will start to recover in April and May when the agricultural season starts in several regions,” Baumgertner told reporters.
Uralkali expects to operate at half capacity in the first quarter and at full strength from May. The ramp-up may see it add 1.5 million tons to 2 million tons of output next year, producing a total of 11 million tons, according to the CEO.
China has delayed its regular potash purchases since a $470-a-ton contract expired in June, while India’s last contract, set at $490 a ton, ended at the end of the first quarter. The agreements with both countries covered supplies through the third quarter.
Uralkali expects to sign a new agreement with China in April or May, and may reach an accord with India in January, Baumgertner said. While both countries are seeking a “small discount” to last year’s prices, the company doesn’t expect charges to fall below $400 a ton, he said.
A discount for China would be “unjustified,” Elena Sakhnova, an analyst at VTB Capital in Moscow, said by phone, citing contract delays. VTB has forecast global shipments at 58 million tons next year, while Potash Corp. of Saskatchewan Inc. (POT:US), the largest producer by market value, predicted shipments of 57 million to 58 million tons.
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