Sinofert Drops as Uralkali Breaks Potash Cartel: Hong Kong Mover

Sinofert Holdings Ltd. (297), a potash distributor, fell to the lowest in a year in Hong Kong after OAO Uralkali broke from a group that controlled about 40 percent of world exports, potentially weakening prices.

Beijing-based Sinofert, which got 24 percent of its sales last year from potash fertilizers, slumped 6.9 percent to HK$1.22 at 11:05 a.m. in Hong Kong, the lowest since July 4, 2012. The benchmark Hang Seng index rose 0.3 percent.

Uralkali, the largest producer, said yesterday it will no longer sell the crop nutrient through Belarusian Potash Co. Shares of Uralkali and its competitors including Saskatoon, Canada-based Potash Corp. of Saskatchewan Inc., which owns 22 percent of Sinofert, tumbled after the announcement.

“Sinofert is one of two potash distributors for Belarusian Potash Co. in China,” Citigroup Inc. analysts Oscar Yee and Horace Chan said in a report. “We expect Sinofert to lose potash market share in China given its focus on sea-bourne trade but limited exposure in rail shipment from Russia.”

Uralkali, based in Berezniki, Russia, sees global potash prices falling below $300 a metric ton, Chief Executive Officer Vladislav Baumgertner said. The last accord Belarusian Potash signed, for sales into China, was agreed at $400 a ton. That’s one of three price agreements whose terms were published in 2013, according to data compiled by Bloomberg.

Sinofert is likely to book an inventory loss in the second half due to potential decline in potash prices, Citigroup said.

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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