Potash to Extend Production Cuts With Allan Mine Shutdown
Potash Corp. of Saskatchewan Inc. (POT), the world’s largest fertilizer producer by market value, will extend cuts in potash output as buyers of the crop nutrient delay purchases.
Potash Corp., which announced temporary shutdowns at two other mines in Canada last month, plans a four-week shutdown at its Allan operation in Saskatchewan starting Feb. 4, Bill Johnson, a spokesman for Saskatoon, Saskatchewan-based Potash Corp., said today in an interview.
“We’ve long had a history of matching supply to demand,” he said today by telephone. “We take the view that this is a normal course of business for us.”
Mosaic Co. (MOS), North America’s second-largest potash producer, said yesterday that fertilizer buyers are taking a “wait-and- see” attitude toward replenishing inventories by postponing purchases because of concern about the global outlook for economic growth.
Potash helps plants to grow strong roots, resist disease and withstand drought conditions.
“It appears that seasonally slow buying patterns this year have been exacerbated by economic uncertainty,” Jim Prokopanko, Mosaic’s chief executive officer, said yesterday on a conference call. Mosaic’s sales of potash were little changed in fiscal quarter ended in November compared with the previous quarter and down from a year earlier, he said.
Offshore Purchases
India, the largest offshore importer of potash, will delay signing new contracts to buy the nutrient until July and will instead rely on inventories, P.S. Gahlaut, managing director of Indian Potash Ltd., said in an interview in New Delhi today.
India’s current deal with potash suppliers expires at the end of March.
“The import market is a little slow, the domestic market is a little slow, but it’s somewhat seasonal,” Johnson said today. “This is traditionally a bit of a slower time for us.”
Potash Corp.’s latest cut will reduce output by between 150,000 and 160,000 metric tons, Johnson said. Production at the Allan mine will resume in early March.
The shutdown ‘is not good news, but does tend to support our view that industry pricing will remain strong,’’ Mark Connelly, a New York-based analyst at Credit Agricole Securities USA Inc., said today in a note to clients.
Potash Corp.’s Allan, Rocanville and Lanigan mines will probably resume production and may increase rates to make up for lost output, Connelly said.
Potash Corp. fell 2.3 percent to C$42.94 in Toronto. Mosaic dropped 1.2 percent to $52.67 in New York.
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net
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