OAO Uralkali fell to the lowest level since October 2011 and the most on the Micex Index as the world’s largest potash producer by output neared the end of a $1.6 billion buyback.
The shares retreated as much as 7.5 percent, tumbling 6.6 percent to 198.91 rubles by the close in Moscow. The amount of shares traded was equivalent to about 243 percent of the three-month average. Uralkali declined 6.4 percent to $30.75 in London.
The company said yesterday it bought back about $1.3 billion of shares as part of its buyback program, according to a statement. In November, the company approved a one-year $1.6 billion share buyback after the stock declined.
“The buyback was offering strong support,” Elena Sadovskaya, an analyst at Rye, Man & Gor Securities, said by phone from Moscow. “There are fears that since we’re nearing the limit of the buyback amount, the stock may fall a lot.”
The 14-day relative strength index on Uralkali fell to 14 from 29 yesterday. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential slide.
Uralkali is down 15 percent this year in Moscow and has plunged 25 percent over the past 12 months. The company is the largest producer of potash, a crop nutrient that helps strengthen plants’ root systems. It competes for more than $20 billion in annual sales in the global potash export market with producers including Potash Corp. of Saskatchewan Inc.
“The stock is probably oversold down here and I would be buying into the weakness because they may well initiate another buyback,” Julian Rimmer, a trader at CF Global Trading U.K. Ltd. in London, said by e-mail.
Stockpiles of potash in China, which imports about a fifth of global shipments of the crop nutrient, have grown to about 4 million metric tons, and the domestic price for the fertilizer remains low, Uralkali Chief Executive Officer Vladislav Baumgertner said May 29.