Israel Chemicals Ltd. (ICL) plunged the most in almost five years after OAO Uralkali (URKA) said global potash prices may fall about 25 percent as it quit a trade venture and plans to boost shipments independently.
The shares tumbled 15 percent to 30.18 shekels, the biggest intraday decline since November 2008, at 11:59 a.m. in Tel Aviv. Israel Corp., which holds a 52 percent stake in the maker of fertilizers, dropped 17 percent to 1,744 shekels. The two stocks led declines on the benchmark TA-25 Index, which fell 1.2 percent to 1,209.24.
“The development comes as a surprise which will bring down potash prices to levels that will also hurt Israel Chemicals’ profitability,” Ilanit Sherf, an analyst at Psagot Investment House in Tel Aviv, said today by phone. “Uralkali’s exit from the trade venture may also induce more competition and put further pressure on prices.”
Spokesmen at ICL or Israel Corp. were not immediately available for comment when contacted by Bloomberg News.
Uralkali’s cooperation with Belorusian potash producer Belaruskali reached “a deadlock” after the government in Minsk canceled their joint trader’s exclusive right to export the country’s potash and Belaruskali made independent deliveries, Uralkali said in a statement. The Russian potash producer will switch exports to its own trader, Uralkali Trading, from the joint venture, Belarusian Potash Co., known as BPC.
“The potash price may fall below $300 a ton after the change in our trading policy,” Chief Executive Officer Vladislav Baumgertner told reporters today by phone.
Uralkali plans to run at full capacity after changing trading policy and will boost output to 13 million tons in 2014 from this year’s 10.5 million tons, Baumgertner said. The producer will extend its first-half supply contract with China for the remainder of 2013, meaning it will ship as much as 500,000 tons more potash to China by the end of the year, Baumgertner said.
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